-----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, Hrni8oZSWZQJ9f+EKMY0joTs9LNr8pXwl0opgGrAIBhUCXyVD2BIFwUJzOeRzTw1 ObAkTcnzZNkgTuIdsmVIfA== 0000820626-97-000029.txt : 19970925 0000820626-97-000029.hdr.sgml : 19970925 ACCESSION NUMBER: 0000820626-97-000029 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 28 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970924 SROS: CSX SROS: NYSE 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: 97684777 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 06/30/97 - ----------------------------------------------------------------------- ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF ----- THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended June 30, 1997 Commission file number 1-9759 IMC GLOBAL INC. (Exact name of Registrant as specified in its charter) Delaware 36-3492467 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2100 Sanders Road Northbrook, Illinois 60062 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 272-9200 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock, par value $1 per share New York Stock Exchange Preferred Share Purchase Rights Chicago Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of the voting stock held by non-affiliates of the Registrant: $2,921,709,929 as of August 29, 1997. Market value is based on the August 29, 1997 closing price of Registrant's common stock as reported on the New York Stock Exchange Composite Transactions for such date. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the registrant's classes of common stock: 92,109,557 shares, excluding 9,798,620 treasury shares as of August 29, 1997. - ------------------------------------------------------------------- - ----------------------------------------------------------------------- 1997 FORM 10-K CONTENTS Item Page - ------------------------------------------------------------------ Part I: 1. Business 1 Company Profile 1 Subsequent Event 2 Business Unit Information 2 Factors Affecting Demand 12 Other Matters 12 2. Properties 15 3. Legal Proceedings 16 4. Submission of Matters to a Vote of Security Holders 16 Part II: 5. Market for the Registrant's Common Stock and Related Stockholder Matters 17 6. Selected Financial Data 18 7. Management's Discussion and Analysis of Results of Operations and Financial Condition 19 8. Financial Statements and Supplementary Data 30 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 55 Part III: 10. Directors and Executive Officers of the Registrant 56 11. Executive Compensation 59 12. Security Ownership of Certain Beneficial Owners and Management 68 13. Certain Relationships and Related Transactions 70 Part IV: 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 70 Signatures 81 - ---------------------------------------------------------------- PART I. Item 1. Business.(1) COMPANY PROFILE IMC Global Inc. (the Company) is one of the world's leading producers of crop nutrients for the international agricultural community and is one of the foremost distributors in the United States of crop nutrients and related products through its retail and wholesale distribution networks. The Company mines, processes and distributes potash in the United States and Canada and is a joint venture partner in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The Company has a 56.5 percent economic interest in IMC-Agrico over the term of the partnership; the remaining interest is held by Freeport-McMoRan Resource Partners, Limited Partnership (FRP). (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K.) The Company believes that it is one of the most efficient North American producers of concentrated phosphates and potash. The Company's retail distribution network, which extends principally to corn and soybean farmers in the eastern Midwest and to cotton, peanut and vegetable farmers in the southeastern United States, is one of the preeminent distributors of crop nutrients and related products. The Company also manufactures nitrogen-based and other high- value crop nutrients which are marketed on a dealer basis, principally in the midwestern and southeastern United States. In addition, the Company sells specialty lawn and garden, turf and nursery products on a national basis and ice-melter products in the Midwest, the eastern snowbelt states and Canada. The three major nutrients required for plant growth are phosphorus, contained in phosphate rock; potassium, contained in potash; and nitrogen. Phosphorus plays a key role in the photosynthesis process. Potassium is an important regulator of plants' physiological functions. - --------------------------------------------------------------------- (1) Except for statements of historical fact contained herein, the statements appearing under Part I, Item 1, "Business;" Part I, Item 3, "Legal Proceedings;" and Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," presented herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: the effect of general business and economic conditions; conditions in and policies of the agriculture industry; risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws or policies of the United States and Canada; changes in governmental laws and regulations affecting environmental compliance, taxes and other matters impacting the Company; the risks attendant with mining operations; the potential impacts of increased competition in the markets the Company operates within; and the risk factors reported from time to time in the reports filed by the Company with the SEC. Nitrogen is an essential element for most organic compounds and plants. These elements are naturally present in the soil but need to be replaced through the use of crop nutrients as crops exhaust them. Currently, no viable crop nutrient substitutes exist to replace the role of phosphate, potash and nitrogen in the development and maintenance of high-yield crops. The Company's business strategy focuses on maintaining and growing its leading position as a crop nutrient producer and distributor through extensive customer service, efficient distribution and transportation and supplying products worldwide at competitive prices by taking advantage of economies of scale and state-of-the-art technology to reduce costs. The Company intends to continue to expand its product distribution and marketing throughout the world through export associations and its international sales force. On March 1, 1996, the Company completed a merger (Merger) with The Vigoro Corporation (Vigoro), which resulted in Vigoro becoming a subsidiary of the Company. The Merger enabled the Company to, among other things, broaden its business mix and reduce the relative importance of generally more price-volatile phosphate-based crop nutrients to the Company's consolidated results. In addition, the Merger expanded the Company's potash customer base to include industrial customers, whereas shipments of potash were previously made primarily to agricultural users. Vigoro also had a significant retail distribution network, giving it direct contact with farmers, the principal consumers of crop nutrient products. Prior to the Merger, a limited amount of products were sold directly to farmers. Following the Merger, the Company restructured its operations into five business units corresponding to its major product lines as follows: IMC-Agrico Crop Nutrients (phosphates), IMC Kalium (potash), IMC AgriBusiness (wholesale and retail distribution), IMC-Agrico Feed Ingredients (animal feed) and IMC Vigoro (specialty products). All information in this Annual Report on Form 10-K has been adjusted to give effect to the Merger. SUBSEQUENT EVENT In August 1997, the Company signed a definitive agreement with Freeport-McMoRan Inc. (FTX), which holds a 51.6 percent interest in FRP, providing for the merger of FTX into the Company. The Company will be the surviving entity and the transaction will be accounted for as a purchase. In the proposed merger (FTX Merger), each share of common stock of FTX would be exchanged for 0.90 shares of the Company's common stock plus one-third of a warrant, with each whole warrant entitling the holder to purchase one share of the Company's common stock at a price equal to $44.50 per share. Immediately prior to the FTX Merger, the sulphur businesses of FRP and the Company (see "Business Unit Information - IMC-Agrico Crop Nutrients - Sulphur," in Part I, Item 1, "Business," of this Annual Report on Form 10-K) will be transferred to Freeport Sulphur Company, a newly-formed subsidiary of FRP. Shares of Freeport Sulphur Company will be distributed to all FRP unitholders, including FTX. As of June 30, 1997, the net carrying value of the Company's sulphur investment was approximately $200.0 million. The Company expects to record a significant non-cash charge on the disposition of this investment in connection with the FTX Merger. The FTX Merger is subject to various closing conditions, including approval by stockholders of FTX and the Company. BUSINESS UNIT INFORMATION The amounts and relative proportions of net sales and operating earnings contributed by the business units of the Company have varied from year to year and may continue to do so in the future as a result of changing business, economic and competitive conditions as well as technological developments. The following business unit discussion should be read in conjunction with the information contained in Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K. IMC-Agrico Crop Nutrients - ------------------------- Net sales for the IMC-Agrico Crop Nutrients (Crop Nutrients) business unit were $1,562.2 million, $1,747.7 million and $1,559.0 million for the years ended June 30, 1997, 1996 and 1995, respectively. Crop Nutrients is a leading United States miner of phosphate rock with 25 million tons of annual capacity. Crop Nutrients' central Florida phosphate mining operations and plants produce phosphate rock, which is one of the primary raw materials used in the production of concentrated phosphates. Crop Nutrients is also a leading United States producer of concentrated phosphates with an annual capacity of approximately four million tons of phosphoric acid (P2O5 equivalent). P2O5 is an industry term indicating a product's phosphate content measured chemically in units of phosphorous pentoxide. Crop Nutrients' concentrated phosphate products are marketed worldwide to crop nutrient manufacturers, distributors and retailers. Crop Nutrients' concentrated phosphate production facilities are located in central Florida and Louisiana. Its annual capacity represents approximately 31 percent of total United States concentrated phosphate production capacity and ten percent of world capacity. The Florida concentrated phosphate facilities consist of three plants: New Wales, Nichols and South Pierce. The New Wales complex is the largest concentrated phosphate plant in the world with an estimated annual capacity of 1.8 million tons of phosphoric acid (P2O5 equivalent). New Wales primarily produces four forms of concentrated phosphates: diammonium phosphate (DAP), monoammonium phosphate (MAP), granular triple superphosphate (GTSP) and merchant grade phosphoric acid. The Nichols facility manufactures phosphoric acid, DAP and granular MAP. The South Pierce plant produces phosphoric acid and GTSP. The Louisiana concentrated phosphate facilities consist of three plants: Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric acid which is then shipped to the Faustina and Taft plants where it is used to produce DAP and granular MAP. The Faustina plant manufactures phosphoric acid, DAP, granular MAP, urea and ammonia. The Taft facility manufactures only DAP. Concentrated phosphate operations are managed to balance Crop Nutrients' output with customer needs. The Nichols and Taft complexes were temporarily idled during fiscal 1997. Subsequent to June 30, 1997, Crop Nutrients resumed production at the Nichols facility; Taft remains closed subject to improvement of market conditions. Phosphate rock, sulphur and ammonia are the three principal raw materials used in the production of concentrated phosphates: Phosphate Rock Crop Nutrients' phosphate mining operations and beneficiation plants are located in central Florida. Crop Nutrients extracts phosphate ore through surface mining after removal of a ten to 50 foot layer of sandy overburden and then processes the ore at one of its five currently operating beneficiation plants where the ore goes through washing, screening, sizing and flotation procedures designed to separate it from sands, clays and other foreign materials. Crop Nutrients has two additional beneficiation plants, one of which has been idle since 1986 and one of which was idled in June 1997. Crop Nutrients' phosphate rock production volume for the years ended June 30, 1997, 1996 and 1995 totaled 22.5 million, 23.7 million and 24.4 million tons, respectively. Although Crop Nutrients sells phosphate rock to other crop nutrient and animal feed ingredient manufacturers, it primarily uses phosphate rock internally in the production of concentrated phosphates. Tons used captively, primarily in the manufacture of concentrated phosphates, totaled 14.2 million, 14.7 million and 14.3 million for the years ended June 30, 1997, 1996 and 1995, respectively, representing 63 percent, 62 percent and 59 percent, respectively, of total tons produced. Product shipments to customers totaled 5.8 million, 7.6 million and 10.7 million tons for the years ended June 30, 1997, 1996 and 1995, respectively. Customer shipments have been reduced in order to maximize relative values of rock and concentrated phosphates by utilizing high-quality reserves for internal upgrading. Crop Nutrients estimates its reserves to be 579 million tons of phosphate rock as of June 30, 1997. These reserves are controlled by Crop Nutrients through ownership, long-term lease, royalty or purchase option agreements. Reserve grades range from 58.0 percent to 78.0 percent bone phosphate of lime (BPL), with an average grade of 66.6 percent BPL. BPL is the standard industry term used to grade the quality of phosphate rock. The phosphate rock mined by Crop Nutrients in the last three years averaged 65.8 percent BPL, which is typical for phosphate rock mined in Florida during this period. Crop Nutrients estimates its reserves based upon the performance of exploration core drilling and technical and economic analyses to determine that reserves so classified can be economically mined at market prices estimated to prevail during the next five years. During 1997, approximately 100 million tons were added to reserves as a result of the agreement to purchase Pine Level. (See "Contingencies - Pine Level Property Reserves," in Part II, Item 7, " Management's Discussion and Analysis of Results of Operations and Financial Condition," in this Annual Report on Form 10-K for further detail.) In addition, approximately 100 million tons of mineralized deposits (as described below) were moved to reserves during the year as the necessary prospect data and analyses were completed. Crop Nutrients also owns or controls phosphate rock resources in the southern extension of the central Florida phosphate district. Resources are mineralized deposits which may be economically recoverable; however, additional prospect data and analyses, including further geological work, drilling, permitting and mining feasibility studies, are required before they may be classified as reserves. Based upon its preliminary analyses of these resources, Crop Nutrients believes that these mineralized deposits differ in physical and chemical characteristics from those historically mined by Crop Nutrients but are similar to some of the reserves being mined by current operations. These resources contain estimated recoverable phosphate rock of approximately 232 million tons with an average grade of approximately 64.0 percent BPL. Some of these resources are located in what may be classified as preservational wetland areas under standards set forth in current county, state and federal environmental protection laws and regulations. Sulphur The Company owns a 25 percent interest in a joint venture which began mining sulphur reserves at Main Pass 299 (Main Pass) offshore Louisiana in April 1992. In fiscal 1997, FRP, the operator of Main Pass, produced 1.9 million long tons of sulphur. Using a hot-water injection process, Main Pass is one of the most thermally efficient sulphur mines in the industry. The Company and FRP have an agreement to supply a significant portion of Crop Nutrients' sulphur requirements. FRP supplies its portion of the requirements through its sulphur division, and the Company supplies its portion of the requirements through its share of Main Pass production and purchases from FRP and third parties. (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K for further detail.) Ammonia Crop Nutrients' ammonia needs are supplied by its Faustina ammonia production facility and by world suppliers, primarily under long-term contracts. Production from the Faustina plant, which has an estimated annual capacity of 560,000 tons of anhydrous ammonia, is primarily used internally to produce DAP, granular MAP and urea. Sales and Marketing Domestically, Crop Nutrients sells its concentrated phosphates to crop nutrient manufacturers, distributors and retailers in the spot market. The Company also uses concentrated phosphates internally for the production of animal feed ingredients (see IMC-Agrico Feed Ingredients), high-value crop nutrients (see IMC AgriBusiness) and consumer lawn and garden as well as professional turf and nursery products (see IMC Vigoro). Virtually all of Crop Nutrients' export sales of phosphate crop nutrients are marketed through the Phosphate Chemicals Export Association (PhosChem), a Webb-Pomerene Act organization. Outside of the United States, the countries which account for the largest amount of Crop Nutrients' sales of concentrated phosphates include China, Japan, Australia and Thailand. The table below shows Crop Nutrients' shipments in thousands of tons of P2O5 equivalent:
1997 1996 1995 ----------- ---------- ------------ Tons % Tons % Tons % ------------- ----------- ------------ Domestic Customers 1,164 30% 1,383 34% 1,319 33% Captive, to other business units 587 15 487 12 504 13 ----- --- ----- --- ----- --- 1,751 45 1,870 46 1,823 46 Export 2,113 55 2,187 54 2,138 54 ----- --- ----- --- ----- --- Total shipments 3,864 100% 4,057 100% 3,961 100% ===== === ===== === ===== ===
Crop Nutrients has contractual commitments from outside customers for the shipment of concentrated phosphates amounting to approximately 800,000 tons (P2O5 equivalent) and phosphate rock amounting to approximately five million tons in fiscal 1998. Other Crop Nutrients also manufactures and markets uranium oxide. Phosphate rock is the source of uranium oxide, with the uranium content varying from deposit to deposit. Uranium oxide production facilities are located in Louisiana and Florida. In Louisiana, Crop Nutrients owns and operates uranium oxide recovery and processing facilities which are located adjacent to its Uncle Sam and Faustina concentrated phosphate plants. In 1997, these facilities recovered 1.0 million pounds of uranium oxide from phosphoric acid produced at these facilities. Crop Nutrients also owns two uranium oxide recovery and processing facilities in central Florida, one located adjacent to its New Wales concentrated phosphate plant and another located adjacent to a concentrated phosphate plant owned and operated by a subsidiary of CF Industries, Inc. (CF). The New Wales and CF facilities have been temporarily idled pending improvement of uranium market conditions. Competition Crop Nutrients operates in a highly competitive global market. Among the competitors in the global phosphate crop nutrient market are domestic and foreign companies, as well as foreign government-supported producers. Phosphate crop nutrient producers compete primarily based on price, and to a lesser extent based on product quality and innovation. IMC Kalium - ---------- Net sales for the IMC Kalium business unit were $524.3 million, $455.6 million and $472.0 million for the years ended June 30, 1997, 1996 and 1995, respectively. IMC Kalium mines, processes and distributes potash in the United States and Canada. IMC Kalium's products are marketed worldwide to crop nutrient manufacturers, distributors and retailers and are also used internally in the manufacture of mixed crop nutrients and, to a lesser extent, animal feed ingredients (see IMC AgriBusiness and IMC-Agrico Feed Ingredients, respectively). IMC Kalium's potash products are also used by IMC Vigoro for consumer and professional lawn and garden products as well as ice-melter (see IMC Vigoro). IMC Kalium also sells potash to customers for industrial use. IMC Kalium operates four potash mines in Canada and two potash mines in the United States. With a total capacity in excess of nine million tons of product per year, IMC Kalium is one of the leading private enterprise potash producers in the world. In 1997, these operations accounted for approximately 13 percent of world capacity. The term "potash" applies generally to the common salts of potassium. Since the amount of potassium in these salts varies, the industry has established a common standard of measurement by defining a product's potassium content in terms of equivalent percentages of potassium oxide (K2O). A K2O equivalent of 60.0 percent is the customary minimum standard for muriate of potash products. Canadian Operations IMC Kalium's four potash mines in Canada are located in the province of Saskatchewan, Canada. Two potash mines are interconnected at Esterhazy, one is located at Belle Plaine and one is located at Colonsay. The combined annual capacity of these four mines is approximately eight million tons. Esterhazy and Colonsay utilize shaft mining while Belle Plaine utilizes solution mining technology. Potash shaft mining takes place underground at depths of over 3,000 feet where continuous mining machines cut out the ore face and move jagged chunks of ore to conveyor belts. The ore is then crushed and moved to storage bins where it awaits hoisting to refineries above ground. In contrast, IMC Kalium's solution mining process involves heated water which is pumped through a "cluster" to dissolve the potash in the ore bed. A cluster consists of a series of boreholes drilled into the potash ore by a portable, all-weather electric drilling rig. A separate distribution center at each cluster controls the brine flow. The solution containing dissolved potash and salt is pumped to a refinery where sodium chloride, a co-product of this process, is separated from the potash through the use of evaporation and crystallization techniques. Concurrently, solution is pumped into a 130-acre cooling pond where additional crystallization occurs and the resulting product is recovered via a floating dredge. Refined potash is dewatered, dried and sized. The Canadian operations produce 26 different potash products, including industrial grades, many through patented processes. Potash Corporation of Saskatchewan Inc. (PCS) controls several potash-producing properties in the province, including a property which consists of reserves located in the vicinity of IMC Kalium's Esterhazy mines. Under a long-term contract with PCS, the Company is obligated to mine and refine these reserves for a fee plus a pro rata share of production costs. The specified quantities of potash to be produced for PCS may, at the option of PCS, amount to an annual maximum of approximately one-fourth of the tons produced by Esterhazy but no more than approximately 1.1 million tons. The current contract extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. IMC Kalium controls the rights to mine 331,660 acres of potash-bearing land in Saskatchewan. This land, of which 69,748 acres have already been mined or abandoned, contains over 4.6 billion tons of potash mineralization (calculated after estimated extraction losses) at an average grade of about 21.0 percent. This ore is sufficient to support current operations for more than a century and will yield more than 1.4 billion tons of finished product with a K2O content of approximately 61.0 percent. IMC Kalium's mineral rights in Saskatchewan consist of 133,102 acres owned in fee, 175,241 acres leased from the province of Saskatchewan and 23,317 acres leased from other parties. All leases are renewable by the Company for successive terms of 21 years. Royalties, established by regulation of the province of Saskatchewan, amounted to approximately $6.4 million, $6.8 million and $6.0 million in 1997, 1996 and 1995, respectively. In August 1995, the Company was chosen by the Minister of State for Mines and Energy for the Canadian province of New Brunswick to explore the potash deposit near the town of Sussex. IMC Kalium is currently performing a geological reassessment of the property and feasibility study to determine whether to develop the deposit. Since December 1985, IMC Kalium has experienced an inflow of water into one of its two interconnected potash mines at Esterhazy. As a result, IMC Kalium has incurred expenditures, certain of which due to their nature were capitalized while others were charged to expense, to control the inflow. Since the initial discovery of the inflow, IMC Kalium has been able to meet all sales obligations from production at the mines. IMC Kalium has considered, and continues to evaluate, alternatives to the operational methods employed at Esterhazy. However, recent changes in the procedures utilized to control the water inflow have proven successful to date and IMC Kalium currently intends to continue conventional shaft mining. Despite the relative success of these modified measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow or remediation costs will not increase to a level which would cause IMC Kalium to change its mining process or abandon the mines. Like other potash producers' shaft mines, IMC Kalium's Colonsay mine is also subject to the risks of inflow of water as a result of its shaft mining operations. The Saskatchewan potash mining industry generally has been unable to secure insurance to cover other risks associated with underground operations. Therefore, IMC Kalium's underground mine operations are not presently insured against, and are not insurable against, business interruption or risk from catastrophic perils, including collapse, floods and other water inflow. In January 1988, the U. S. Department of Commerce (Commerce) signed an agreement with all of the potash producers in Canada, suspending an investigation by Commerce to determine whether Canadian potash was, or was likely to be, sold in the United States at less than "fair value." The agreement stipulated that each such producer's minimum price for potash sold in the United States, compared with its potash prices in Canada, would be based upon a formula to assure that such product was sold in the United States at a price no less than "fair value." In January 1993, this agreement was extended by Commerce for an indefinite period. The Saskatchewan Department of Environmental and Resource Management (Saskatchewan Department) published regulations requiring all potash mine operators to submit facility decommissioning and reclamation plans for approval by the Saskatchewan Department and to provide assurances that the plans will be carried out when the facility is closed. The Company believes the expected life of its facilities in Saskatchewan to be more than 100 years. On April 18, 1997, IMC Kalium filed decommissioning and reclamation plans with the Saskatchewan Department pursuant to the regulations. IMC Kalium is currently in discussions regarding the decommissioning and reclamation plans. Pending completion of these discussions, the Company is unable to estimate with certainty the financial impact of any required decommissioning and reclamation. United States Operations IMC Kalium's two United States potash mines are located in Carlsbad, New Mexico, and Hersey, Michigan. The Carlsbad mine has an annual production capacity of over one million tons of finished product. The ore reserves are of three types: (1) sylvinite, a mixture of potassium chloride and sodium chloride, the same as the ore mined in Saskatchewan; (2) langbeinite, a double sulphate of potassium and magnesium; and (3) a mixed ore, containing both potassium chloride and langbeinite. At this time only the sylvinite and langbeinite ores are mined. Continuous and conventional underground mining methods are utilized for ore extraction at Carlsbad. In the continuous mining sections, drum type mining machines are used to cut sylvinite ore from the face. Mining heights are as low as four feet. In the conventional areas, a wide ore face is undercut and holes drilled to accept explosive charges. Ore from both continuous and conventional sections is loaded onto conveyors, transported to storage areas and then hoisted above ground for further processing at the refinery. Three types of potash are produced at the Carlsbad refinery: muriate of potash, which is the primary source of potassium for the crop nutrient industry; double sulphate of potash magnesia, marketed under the brand name Sul-Po-Mag (registered trademark), containing significant amounts of sulphur, potassium and magnesium, with low levels of chlorine; and sulphate of potash, supplying sulphur and a high concentration of potassium with low levels of chlorine. IMC Kalium believes it is the leading United States producer of double sulphate of potash magnesia and a leading United States producer of sulphate of potash. At Carlsbad, IMC Kalium mines and refines potash from 46,434 acres of reserves which are controlled under long-term leases. These reserves contain an estimated total of 161 million tons of potash mineralization (calculated after estimated extraction losses) in four mining beds evaluated at thicknesses ranging from four to 12 feet. At average refinery rates, these ore reserves are estimated to be sufficient to yield 10.8 million tons of concentrate from sylvinite with an average grade of 60.0 percent K2O and 26.3 million tons of langbeinite concentrate with an average grade of approximately 22.0 percent K2O. At current rates of production, IMC Kalium's reserves of sylvinite and langbeinite are estimated to be sufficient to support operations for approximately ten years and for more than 22 years, respectively. IMC Kalium is currently constructing a 240,000 ton per year Sul-Po-Mag granulation facility at Carlsbad. This facility will convert standard grade Sul-Po-Mag into premium granular grade which has expanded sales opportunities. The $20.0 million project is scheduled to commence production in January 1998. In May 1997, the Company announced that it had reached a definitive agreement to acquire Western Ag-Minerals Company (Western Ag), a subsidiary of Toronto-based Rayrock Yellowknife Resources Inc., for $53.0 million. Western Ag, located in Carlsbad, New Mexico, has annual capacity of 400,000 tons of potash and had calendar-year 1996 gross revenues of approximately $41.0 million. On September 5, 1997, the acquisition of Western Ag was consummated. Since October 1989, IMC Kalium has mined a small amount of potash at Hersey, Michigan, using solution mining technology. The objective of this pilot plant was to test the feasibility of solution mining in the Hersey area and to test new technologies which could be applied to improve efficiencies at both the Belle Plaine and Hersey facilities. IMC Kalium has completed the construction phase of its $60.0 million expansion of this facility and operation has commenced. The plant's current annual potash production capacity is approximately 160,000 tons, and salt capacity is approximately 300,000 tons per year. The Company believes that the commencement of operations at the Hersey plant is an important step forward in its strategy to increase sales and earnings in multiple markets with multiple products. Sales and Marketing Potash is sold throughout the world, with IMC Kalium's largest amount of sales outside of the United States made to China, Japan, Malaysia, Korea, Australia, New Zealand and Latin America. Potash is also used internally in the manufacture of high-value crop nutrients by IMC AgriBusiness and by IMC Vigoro as a major ingredient in its ice-melter product as well as one of the primary nutrients in the consumer lawn and garden and professional turf and nursery products. IMC Kalium's exports from Canada, except to the United States, are made through Canpotex Limited (Canpotex), an export association of Saskatchewan potash producers. Exports from Carlsbad are sold through the Sulphate of Potash Magnesia Association, formed by the Company under the Webb-Pomerene Act. In 1997, 83 percent of the potash produced by IMC Kalium was sold as crop nutrients, while 17 percent was sold for non-agricultural uses. The table below shows IMC Kalium's shipments of potash in thousands of tons:
1997 1996 1995 ------------ ------------ ------------ Tons % Tons % Tons % ------------------------------------------- Domestic (includes Canada) Wholesale 4,471 56% 4,112 57% 4,014 55% Captive, to other business units 1,178 15 1,239 17 1,058 14 ----- --- ----- --- ----- --- 5,649 71 5,351 74 5,072 69 Export 2,357 29 1,864 26 2,281 31 ----- --- ----- --- ----- --- Total shipments 8,006 100% 7,215 100% 7,353 100% ===== === ===== === ===== ===
IMC Kalium has contractual commitments from outside customers for the shipment of potash amounting to approximately 1.8 million tons in fiscal 1998. Competition Potash is a commodity available from many sources and the market is highly competitive. In addition to IMC Kalium, there are six North American producers -- three in the United States and three in Canada, some of which may have greater production capacity than IMC Kalium. Through its participation in Canpotex, IMC Kalium competes outside of North America with various independent potash producers and consortia and other export organizations, including state-owned organizations. IMC Kalium's principal methods of competition, with respect to the sale of potash, include pricing; offering consistent, high-quality products and superior service; as well as developing new industrial and consumer uses for potash. IMC AgriBusiness - ---------------- Net sales for the IMC AgriBusiness business unit were $860.7 million, $802.9 million and $760.8 million for the years ended June 30, 1997, 1996 and 1995, respectively. IMC AgriBusiness operates approximately 260 facilities consisting of retail distribution centers, manufacturing plants and terminals and warehouses. For the year ended June 30, 1997, approximately 52 percent, 46 percent and two percent of IMC AgriBusiness' net sales were from agricultural retail, agricultural wholesale and industrial operations, respectively. Retail Operations IMC AgriBusiness believes it is one of the largest retail crop nutrients distributors in the United States. It operates a network of approximately 215 FARMARKET (registered trademark)s, each of which offers a broad array of IMC AgriBusiness' crop nutrients and related products and services. Approximately 70 percent of the FARMARKETs are located in the eastern Midwest and the remaining in the southeastern regions of the United States, and are generally located in rural areas, primarily serving farmers located within a 15-20 mile radius. The FARMARKETs are clustered near and are partially supplied by IMC AgriBusiness' production plants and terminals, many of which are located on major rivers and have storage facilities for liquid or dry crop nutrient materials. Each FARMARKET custom blends and bulk blends crop nutrients to meet the needs of individual farmers for the specific crops grown in their areas. Crop protection products and seed are also purchased by IMC AgriBusiness and sold through its FARMARKETs. One of the most successful FARMARKET programs is the Balanced Fertility Program which is designed to improve crop production through increased yields per acre. Key elements of this program include soil testing and programs to correct soil deficiencies. FARMARKETs also offer farmers the option of having IMC AgriBusiness' employees apply crop nutrient and crop protection chemicals, thereby saving time, labor costs and the cost of investment in specialized equipment required for such applications. FARMARKETs are generally staffed by a manager, one or two salespeople and two to three hourly employees, some of whom are seasonal employees. IMC AgriBusiness extensively trains its full-time FARMARKET employees in crop nutrient application and agronomics, business management and environmental compliance. This training is deemed to be essential to customer service. The majority of IMC AgriBusiness' salaried FARMARKET employees have obtained certification from the Certified Crop Advisors Program as Certified Crop Advisors. Approximately ten percent of IMC AgriBusiness' FARMARKETs are owned and operated by independent dealers who purchase IMC AgriBusiness' products on consignment. Blending and storage are performed at the dealer's place of business, and the dealer is paid a commission determined by a sliding scale based on the volume and profit margin of the products sold. IMC AgriBusiness recommends prices, approves credit extended by these dealers, owns the FARMARKETs' working capital and often owns its blending equipment. FARMARKET sales, as well as wholesale sales discussed below, are largely concentrated in the spring planting season. Weather has a significant impact on the timing and length of the planting season and, therefore, can have a significant effect on crop nutrient sales prices and volumes. IMC AgriBusiness also offers high technology agricultural advisory services to its retail customers through its Top Soil Precision Ag (Top Soil) operations. Top Soil offers soil sampling via global positioning; crop scouting; yield monitor mapping and interpretation; statistical analysis for yield variation and other crop management services. Wholesale Operations IMC AgriBusiness sells agricultural crop nutrient and crop protection products on a wholesale basis to independent dealers and distributors, including those that perform services similar to those offered by FARMARKETs. The wholesale sales in the southeastern region of the United States include products sold under the brand names RAINBOW (registered trademark) and SUPER RAINBOW (registered trademark) which are produced from granulation plants in Americus, Georgia; Florence, Alabama; Winston Salem, North Carolina and Hartsville, South Carolina. The combined annual production from these plants approximates 650,000 tons. IMC AgriBusiness sells nitrogen-based products, which include anhydrous ammonia, nitrogen solutions and urea, on a wholesale basis in the eastern Midwest region of the United States. A portion of these sales are produced from IMC AgriBusiness' nitrogen plant in East Dubuque, Illinois, which annually produces approximately 290,000 tons of anhydrous ammonia and 220,000 tons of nitrogen solutions. In addition, IMC AgriBusiness markets potash and concentrated phosphates produced by the Company's IMC Kalium and IMC-Agrico Crop Nutrients business units, respectively, on a wholesale basis to independent dealers and distributors in the eastern Midwest and southeastern regions of the United States. Seed, Industrial and Other Operations IMC AgriBusiness sells corn, soybean and wheat planting seed through its FARMARKET system and through its Ohio-based Farmer-Dealer system. The FARMARKETs sell Vigoro (registered trademark) brand seeds as well as most national brands, and the Farmer-Dealer system sells Green Land (registered trademark) brand seeds. IMC AgriBusiness is also actively involved in the breeding and production of identity-preserved crops and is a supplier of proprietary soybeans to Japanese food producers through a partnership with Honda Trading America Corporation. IMC AgriBusiness' primary products sold in the industrial market include nitric acid, liquid ammonium nitrate and food-grade carbon dioxide produced from a nitric acid plant in Cincinnati, Ohio, and the nitrogen plant in East Dubuque, Illinois. The nitric acid plant produces approximately 90,000 tons of nitric acid and 50,000 tons of liquid ammonium nitrate, while the nitrogen plant produces approximately 160,000 tons of food-grade carbon dioxide. IMC AgriBusiness operates a granulation plant in Columbus, Ohio, and several liquid and dry terminal facilities in southern Illinois, southern Indiana and Kentucky along with numerous smaller facilities, which are used for bulk-blending and/or warehousing in connection with its retail and wholesale operations. Raw Materials Substantially all of the potash and phosphate raw materials used by IMC AgriBusiness are supplied by the Company's IMC Kalium and IMC-Agrico Crop Nutrients business units, respectively. IMC AgriBusiness' nitrogen-based products are produced at its plants in East Dubuque and/or purchased from domestic suppliers under long-term contracts based on current market prices. Other Products IMC AgriBusiness produces a broad range of nitrogen-based crop nutrients and related products, including anhydrous ammonia, ammonium nitrate solutions, liquid urea, urea granules and other nitrogen-based solutions. These products are sold alone or mixed with phosphates, potash, micronutrients, non-liquid ammonium nitrate and other materials to produce a variety of bulk-blend crop nutrients in either dry or liquid form. Certain of these products are marketed under the CERTIFIED HARVEST KING (registered trademark) brand. Liquid and dry products are blended according to the specific needs of the farmer. IMC AgriBusiness also mixes dicyandiamide (DCD) with nitrogen solutions under the name N TECH SR (trademark), providing farmers with a more efficient and environmentally-sensitive nitrogen source. The slow release DCD increases absorption of nitrogen by crops, thereby reducing the amount of nitrogen released into the environment. IMC AgriBusiness has a year-to-year renewable purchase agreement with the world's largest producer of DCD. IMC AgriBusiness also produces nitric acid, aqua ammonia and refrigerant-grade ammonia. Nitric acid is sold in various formulations to a wide variety of industrial users for use in metal platings, coatings and water treatment. IMC AgriBusiness also produces food-grade carbon dioxide as a by-product of its ammonia production process. Food-grade carbon dioxide is used in carbonated beverages and as a refrigerant in food processing. Competition The marketing of crop nutrients to farmers on a national basis is highly fragmented. Since crop nutrients are a basic commodity, the principal means of differentiating competing products is through competitive pricing coupled with offering personal services and agronomically-efficient products which allow maximum yields while being sensitive to environmental concerns. IMC AgriBusiness' FARMARKETs were developed to enhance the personal service concept and thereby differentiate IMC AgriBusiness' products from those of competitors. Most of IMC AgriBusiness' FARMARKETs are leaders in their respective area of operation. IMC AgriBusiness believes its nitrogen-based crop nutrients and related products are well positioned in both the retail and wholesale agricultural market sectors and in the industrial market sector. IMC AgriBusiness' principal competitors in the agricultural crop nutrients market include cooperatives, which have the largest market share in a majority of the locations served by the Company, national producers, major grain companies and independent distributors and brokers. IMC-Agrico Feed Ingredients - ---------------------------- In October 1995, the Company acquired the animal feed ingredients business of Mallinckrodt Group Inc. and subsequently contributed it to IMC-Agrico. Net sales for the IMC-Agrico Feed Ingredients business unit were $159.2 million for 1997 and $113.6 million for the partial year 1996. IMC-Agrico Feed Ingredients is one of the world's foremost producers and marketers of phosphate-based animal feed ingredients with an annual capacity in excess of 700,000 tons. IMC-Agrico Feed Ingredients supplies phosphate and potassium based feed ingredients for poultry and livestock to markets in North America, Latin America and Asia. The principal production facilities of IMC-Agrico Feed Ingredients are located adjacent to, and utilize raw materials from, IMC-Agrico's concentrated phosphate complex at New Wales in central Florida. IMC-Agrico Feed Ingredients also markets potassium-based feed products produced at the Company's potash facilities. IMC-Agrico Feed Ingredients has a strong brand position in the $1 billion global market with products such as Biofos (registered trademark), Dynafos (registered trademark), Multifos (registered trademark), Dyna-K (registered trademark) and Dynamate (registered trademark). IMC-Agrico Feed Ingredients operates in a competitive global market. Major integrated producers of feed phosphates and feed grade potassium are located in the United States and Europe. Many smaller producers are located in emerging markets around the world. These producers are not manufacturers of P2O5 and are required to purchase this raw material on the open market. Competition in this global market is driven by quality, service and price. IMC Vigoro - ---------- Net sales for the IMC Vigoro business unit were $102.8 million, $95.1 million and $96.8 million for the years ended June 30, 1997, 1996 and 1995. IMC Vigoro manufactures and sells specialty crop nutrient products consisting of lawn and garden and turf and nursery products as well as packages and sells potassium-based ice melter products. The lawn and garden products are sold throughout the United States primarily to major national retail chains under private label and Vigoro brands, and the turf and nursery products are sold to golf courses, nurseries, landscape contractors and institutions directly and through independent distributors. The environmentally-sensitive, potassium-based ice melter products are sold under various brands throughout the Midwest, the eastern snowbelt states and Canada. FACTORS AFFECTING DEMAND The Company's results of operations historically have reflected the effects of several external factors which are beyond the Company's control and have in the past produced significant downward and upward swings in the Company's operating results. The Company's revenues, approximately 69 percent of which have come from North American sales over the past five years, are highly dependent upon conditions in the North American agriculture industry and can be affected by crop failure, changes in agricultural production practices, government policies and weather. Furthermore, because of the high percentage of its revenues coming from North American sales, the Company's crop nutrients business is seasonal to the extent United States farmers and agricultural enterprises purchase more crop nutrient products during the spring and fall. Approximately 31 percent of the Company's revenues has come from sales outside North America over the past five years. The Company's foreign operations and investments and any future international expansion by the Company are subject to numerous risks, including fluctuations in foreign currency exchange rates and controls, expropriation and other economic, political and regulatory policies of local governments and laws and policies of the United States and Canada affecting foreign trade and investment. Due to economic and political factors, customer needs can change dramatically from year to year. See also Note 21, "Operations by Geographic Area," of Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K for further detail. In 1997, sales of concentrated phosphates and potash to China accounted for approximately 13 percent of the Company's net sales. No single customer or group of affiliated customers accounted for more than ten percent of the Company's net sales. OTHER MATTERS Environmental Matters - --------------------- General In the normal course of its business, the Company mines phosphate and potash, manufactures and blends crop nutrients, and blends crop nutrients with pesticide products. These operations are subject to federal, state, provincial and local environmental, health and safety laws in the United States and Canada, including laws related to air and water quality; management of hazardous and solid wastes; management and handling of raw materials and products; and land reclamation. The Company has expended, and anticipates that it will continue to expend, substantial resources, both financial and managerial, to comply with environmental regulations, permitting and reclamation requirements, and health and safety standards. Additionally, although the Company believes that its operations generally satisfy environmental standards, there can be no assurance that unexpected or additional costs, penalties or liabilities will not be incurred. The Company believes that its expenditures for environmental, health or safety compliance have been significant and expects that these costs will continue to be significant. For fiscal year 1997, environmental capital expenditures were approximately $24 million and were primarily related to air emissions permitting and control; ground and surface water protection; wastewater treatment and control; and solid waste management. Additional expenditures for land reclamation activities totaled approximately $25 million. For fiscal year 1998, the Company expects environmental capital expenditures to be approximately $46 million and expenditures for land reclamation activities to be approximately $24 million. Environmental capital is expected to increase in 1998 as a result of phosphogypsum stack and settling area expansion projects as well as spending for air emissions control and storage tank containment projects. No assurance can be given that greater environmental expenditures will not be required for fiscal year 1998 or that environmental expenditures in future years will not increase. Environmental, health and safety laws and regulations in the United States and Canada relating to the manufacture and application of crop nutrients and to mining activities have changed substantially and rapidly in recent years, and the Company anticipates that these changes will continue. It is the Company's policy to comply with all applicable environmental, health and safety laws and regulations. It is difficult to estimate future compliance costs, however, since certain implementing regulations have not yet been finalized or are subject to varying and conflicting interpretations. Nevertheless, because new environmental standards generally are more restrictive than current requirements, the costs of complying with such regulations could increase substantially. Permitting The Company holds numerous environmental and other permits authorizing operations at each of its facilities. A decision by a government agency to deny an application for a new or renewed permit, or to revoke or substantially modify an existing permit, could have a material adverse effect on the Company's ability to continue operations at the affected facility. Expansion of Company operations also is predicated upon securing the necessary environmental and other permits. IMC-Agrico signed an agreement with Consolidated Minerals, Inc. (CMI) for the purchase of real property (Pine Level) containing approximately 100 million tons of phosphate rock reserves in Florida. In connection with the purchase, IMC-Agrico has agreed to obtain all environmental, regulatory and related permits necessary to commence mining on the property. Successful achievement of such permitting remains to be accomplished in the next five to eight years. Although the Company has successfully permitted mining properties in Florida, if permits were denied or if compliance with permit conditions became cost prohibitive, a complete or substantial inability to mine this property would adversely impact the Company. (See "Contingencies - Pine Level Property Reserves," in Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," in this Annual Report on Form 10-K for further detail.) Air Quality The 1990 Amendments to the Clean Air Act require certain sources to increase controls on emissions of conventional and hazardous air pollutants. During 1997, several of the Company's facilities have applied for, or will apply for, such operating permits. In addition, by the year 2000, the United States Environmental Protection Agency is scheduled to promulgate control standards for hazardous air pollutants applicable to certain of the Company's operations. Capital expenditures, which could be significant, might be necessary to meet the regulatory or permit requirements. Because the operating permits have not been issued and the regulatory requirements have not been finalized, the Company cannot estimate the extent of these expenditures. Process Safety Management and Risk Management Planning Several of the Company's facilities are subject to Process Safety Management (PSM) standards under the Occupational Safety and Health Act and to the Risk Management Planning (RMP) requirements under the Clean Air Act. PSM standards require covered facilities with processes that utilize certain chemicals to implement written safety management plans, procedures and employee training. RMP rules require covered facilities to establish comprehensive plans for preventing and responding to accidental releases. Under RMP, facilities also must release to the public information about regulated processes and release prevention programs, the potential for accidental releases and the facility's "worst case" release scenarios and their potential effects on nearby populations. The Company continues to implement the required programs. As process safety and risk management efforts proceed, the Company will incur costs to complete projects, planning processes and related measures and these costs could be substantial. Management of Residual Materials Phosphate and potash mining and processing produce residual materials that must be managed. Phosphate residuals, consisting primarily of phosphogypsum, typically are stored in phosphogypsum stack systems. Other phosphate mining residuals, clay and other tailings, are used in reclamation. Potash producers generally store tailings, which contain primarily salt, iron compounds and clay, in surface disposal sites. The Company has incurred and will continue to incur significant costs to manage its phosphate and potash residual materials in accordance with environmental laws, regulations and permit requirements. To address concerns about potash tailings management, the Saskatchewan Department published regulations in 1994 requiring all potash mine operators: (i) to submit facility decommissioning and reclamation plans for approval and (ii) to provide assurances that the plans will be carried out. The decommissioning and reclamation plans and related assurances cover all facilities at a mine, including surface disposal sites for potash tailings. In 1997, the Company has filed its decommissioning plans for its three Saskatchewan potash mines. Implementation of the plans will be deferred until an affected facility is permanently closed which the Company does not anticipate in the foreseeable future at any of the locations. Based on potash reserves, each of the mine sites could continue to operate for more than 100 years. Each plan will be renewed every five years until anticipated closure or as requirements of the regulations change. The Company, like all members of the Saskatchewan potash industry, is unable to predict with certainty the financial impact of the regulations on the Company due to the anticipated life of each mine, prospective advances in tailings management technology, and changes from time to time in rules and regulations. The plans are currently under consideration and have been neither approved nor disapproved by the Provincial agency. The mechanism for required financial assurances has not yet been determined by the Province. Costs for decommissioning are likely to be significant although funds are not anticipated to be expended in the foreseeable future. With regard to phosphate processing, Florida law may require IMC- Agrico to close one or more of its unlined phosphogypsum stacks and/or associated cooling ponds after March 25, 2001, if the stack system is demonstrated to cause a violation of Florida's water quality standards. IMC-Agrico has already filed an application with Florida's Department of Environmental Protection to close the unlined gypsum stack at its New Wales facility in central Florida. Closure activities would begin on July 1, 1998 if the plan is accepted and would cost approximately $2.5 million, net of recorded accruals, for construction activities over a period of five years. IMC-Agrico cannot predict at this time whether Florida will require closure of any of its other stack systems. The costs of any such closures could be significant. IMC-Agrico continues to address elevated levels of sulphate and sodium indicators in groundwater at its New Wales facility. In 1992, elevated sulphate levels were detected in groundwater beneath the cooling pond. In response, the Central Florida Regional Planning Council required IMC-Agrico to plug former recharge wells and either show that groundwater indicator levels have returned to acceptable levels or line or relocate the cooling pond. Recent monitoring data have evidenced an improving trend in the sulphate and sodium indicator levels. If the trend continues, IMC-Agrico is expected to obtain an operating permit which will expire in July 1998. If indicators do not reach acceptable levels, options will be pursued to meet the operating needs of the facility. The estimated cost to line or relocate the cooling pond is estimated to be approximately $50.0 million. Remedial Activities The historical use and handling of regulated chemical substances and crop nutrient products in the normal course of the Company's business has resulted in contamination at facilities presently or previously owned or operated by the Company. The Company has also purchased facilities that were contaminated by previous owners through their use and handling of regulated chemical substances. Spills or other unintended releases of regulated substances have occurred in the past, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. The Company cannot estimate the level of expenditures that may be required in the future to clean up contamination from the handling of regulated chemical substances or crop nutrients. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. The cost of any remedial actions that ultimately may be required at these sites currently cannot be determined. The Company believes that it is entitled to at least partial indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities and operations pursuant to indemnification agreements. These agreements address contamination that is attributable to activities occurring prior to the Company's acquisition of facilities from parties including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; BFEL, Ltd.; Estech, Inc. and certain other parties. The Company has already received and anticipates receiving amounts pursuant to certain indemnification agreements for all or some of its expenses incurred to date. Superfund The Comprehensive Environmental Response Compensation Liability Act (CERCLA), also known as "Superfund," imposes liability without regard to fault or to the legality of a party's conduct on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved in, or concluding involvement at, a number of Superfund sites. At none of these sites alone, nor in the aggregate, is the Company's liability currently expected to be material. As more information is obtained regarding the sites and the potentially responsible parties involved, this expectation could change. Employees - --------- The Company had approximately 9,200 employees at June 30, 1997. The work force consisted of 3,603 salaried, 5,520 hourly and 50 temporary or part-time employees. Labor Relations - --------------- The Company has 18 collective bargaining agreements with eight international unions or their affiliated local chapters. Three agreements covering two percent of the hourly work force were negotiated during calendar 1996, and five agreements covering 50 percent of the hourly work force have been negotiated to date in calendar 1997. Resulting wage and benefit increases were consistent with competitive industry and community standards. One agreement covering less than two percent of the hourly work force will expire during the remainder of calendar 1997. The Company has not experienced a significant work stoppage in recent years and considers its employee relations to be good. Item 2. Properties. Information regarding the plant and properties of the Company is included in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Item 3. Legal Proceedings. Environmental Proceedings - ------------------------- Reference is made to "Other Matters - Environmental Matters," in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Sterlington Litigation - ---------------------- ANGUS Chemical Company (ANGUS), numerous third parties alleging personal injury and the Company are involved in various litigation arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. The Company continues to litigate each of the matters arising out of the Sterlington explosion. Approximately 1,300 class action plaintiffs seek damages for personal injuries, "fear and fright," and punitive damages against ANGUS, the Company and other defendants arising from the explosion. Discovery is still not complete, and the trial date has been postponed indefinitely. The Company is unable to estimate the magnitude of its exposure at this time. The Company has settled actions filed by ANGUS with respect to claims for amounts ANGUS paid for settled claims in connection with the explosion and has settled actions filed by ANGUS for claimed rights of direct action against the Company's insurers. In addition, ANGUS' claims for certain environmental claims were dismissed by the trial court and are on appeal. Potash Antitrust Litigation - --------------------------- The Company was a defendant, along with other Canadian and United States potash producers, in a class action antitrust lawsuit filed in federal court in 1993. The plaintiffs alleged a price-fixing conspiracy among North American potash producers beginning in 1987 and continuing until the filing of the complaint. The class action complaint against all defendants, including the Company, was dismissed by summary judgment in January 1997. The summary judgment dismissing the case is currently on appeal by the plaintiffs to the United States Court of Appeals for the Eighth Circuit. The Court of Appeals is expected to rule during calendar 1998. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California case, merits discovery has been stayed and the case is currently inactive. Other - ----- In the ordinary course of its business, the Company is involved in routine litigation. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months ended June 30, 1997. PART II. Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. COMMON STOCK PRICES AND DIVIDENDS
Quarter ---------------------------------------- Fiscal 1997 First Second Third Fourth - ---------------------------------------------------------------------- Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $44.500 $41.000 $42.500 $39.375 Low 35.125 33.875 33.125 33.125 Quarter ---------------------------------------- Fiscal 1996 First Second Third Fourth - ---------------------------------------------------------------------- Dividends per common share $ 0.05 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $33.313 $40.875 $43.250 $39.875 Low 27.000 30.313 33.625 32.250
The Company's common stock is traded on the New York and Chicago Stock Exchanges under the symbol IGL. As of August 29, 1997, the Company had 92,109,557 shares of common stock outstanding, excluding treasury shares. Common stock prices are from the composite tape for New York Stock Exchange issues as reported in The Wall Street Journal. Data in the table above have been restated to reflect a 2-for-1 stock split, effected in the form of a 100 percent stock dividend distributed on November 30, 1995. As of August 29, 1997, the number of registered holders of common stock as reported by the Company's registrar was 451. However, an indeterminable number of stockholders beneficially own shares of the Company's common stock through investment funds and brokers. For the year ended June 30, 1997, the Company paid $30.1 million of cash dividends. The Company's debt instruments contain provisions which limit the Company's ability to pay dividends on its common stock. See "Capital Resources and Liquidity - Financing," in Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K for further detail. Item 6. Selected Financial Data. FIVE YEAR COMPARISON (Dollars in millions except per share amounts)
Years ended June 30, 1997 1996(1)(2) 1995(1)(2) 1994(1)(2) 1993(1)(3) - ---------------------------------------------------------------------- Statement of Operations Data: Net sales $2,982.0 $2,981.0 $2,736.1 $2,125.3 $1,438.1 Sterlington litigation settlement, net - - - - (169.1) Earnings (loss) before income taxes, extra- ordinary item and cumu- lative effect of accounting changes 322.0 238.4 308.8 79.2 (117.0) Provision (credit) for income taxes 117.5 94.1 115.5 34.8 (39.1) -------- -------- -------- -------- ------- Earnings (loss) before extraordinary item and cumulative effect of accounting changes 204.5 144.3 193.3 44.4 (77.9) Extraordinary charge - debt retirement (11.4) - (6.5) (25.2) (2.0) Cumulative effect of accounting changes - - (5.9) - (47.1) -------- -------- -------- -------- ------- Net earnings (loss) $ 193.1 $ 144.3 $ 180.9 $ 19.2 $ (127.0) Earnings (loss) per share: Earnings (loss) before extraordinary item and cumulative effect of accounting changes $ 2.15 $ 1.56 $ 2.12 $ .54$ (1.02) Extraordinary charge - debt retirement (.12) - (.07) (.31) (.03) Cumulative effect of accounting changes - - (.06) - (.62) -------- -------- -------- -------- ------- Net earnings (loss) $ 2.03 $ 1.56 $ 1.99 $ .23$ (1.67) ======== ======== ======== ======== ======= Balance Sheet Data (at end of period): Total assets $3,611.6 $3,436.8 $3,323.2 $3,172.3 $2,343.3 Working capital 592.6 551.8 484.2 499.3 322.7 Working capital ratio 2.4:1 2.5:1 2.1:1 2.4:1 1.9:1 Long-term debt, less current maturities $ 694.8 $ 736.7 $ 750.2 $ 801.6 $ 994.6 Total debt, net of cash on hand 692.1 754.9 620.6 672.1 946.9 Stockholders' equity 1,339.9 1,156.3 1,007.8 856.3 602.3 Total capitalization 2,032.0 1,911.2 1,628.4 1,528.4 1,549.2 Debt/total capitalization 34.1% 39.5% 38.1% 44.0% 61.1% Other Financial Data: Cash provided by operating activities $ 573.0 $ 342.0 $ 554.5 $ 165.5 $ 73.4 Capital expenditures 223.4 172.7 114.9 76.0 137.1 Cash dividends paid 30.1 35.5 24.6 14.2 30.7 Dividends per share .32 .33 .26 .15 .32 Book value per share 14.32 12.52 11.09 9.46 7.91 (1) Restated to reflect the Merger which was accounted for as a pooling of interests. (2) See Notes to Consolidated Financial Statements for a description of acquisitions, accounting change and non-recurring items. Beginning in 1994, operating results reflect the consolidation of the joint venture partnership formed on July 1, 1993 with FRP. (3) Includes charges of $32.4 million from the settlement of a claim relating to losses arising out of a water inflow at one of the Company's potash mines in Canada, partially offset by a gain of $8.1 million from the resolution of a contract dispute with a major uranium customer. Also includes charges of $169.1 million, net of insurance recoveries and legal fees, resulting from the settlement of a lawsuit for damages arising out of an explosion at a nitroparaffins plant in Sterlington, Louisiana, and $47.1 million for the cumulative effect on prior years of adopting Statement of Financial Accounting Standard (SFAS) No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," on July 1, 1992.
Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition. INTRODUCTION The Company is one of the world's leading producers of crop nutrients for the international agricultural community and is one of the foremost domestic distributors of crop nutrients and related products through its retail and wholesale distribution networks. Through its IMC-Agrico joint venture with FRP, the Company is one of the world's leading producers and marketers of phosphate crop nutrients (IMC-Agrico Crop Nutrients) and animal feed ingredients (IMC-Agrico Feed Ingredients). The Company is also a world leading producer and marketer of potash crop nutrients and industrial grade potash through various operations in the United States and Canada (collectively, IMC Kalium). In addition, IMC is one of the nation's leading distributors of crop nutrients and related products, including nitrogen, through its FARMARKET (registered trademark) and Rainbow (registered trademark) distribution networks (collectively, IMC AgriBusiness). The Company also manufactures and distributes consumer lawn and garden products; produces and markets professional products for turf, nursery and horticulture markets; and produces and distributes potassium-based ice melter products (collectively, IMC Vigoro). Through other joint venture operations, the Company produces sulphur and oil and gas. (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K.) The Company's fiscal year ends June 30 and all yearly references herein refer to fiscal years unless otherwise noted. Shares and per share amounts have been restated to reflect a 2-for-1 stock split, effected in the form of a 100 percent stock dividend distributed on November 30, 1995. Change in Fiscal Year Effective with the calendar year ending December 31, 1997, the Company will change from a fiscal year end of June 30 to December 31 in order to permit more effective business planning, including annual budgeting, government reporting and audit functions, as well as align statistical and financial reporting with competitors. The Company will file a transition report on Form 10-K for the calendar year ended December 31, 1997. Merger The Company completed the Merger with Vigoro on March 1, 1996, which resulted in Vigoro becoming a subsidiary of the Company. In connection with the Merger, the Company issued approximately 32.4 million shares of common stock in exchange for all of the outstanding common stock of Vigoro. The Merger has been accounted for as a pooling of interests. Accordingly, the Company's results of operations for all appropriate prior periods presented reflect the Merger. Acquisitions The Company's results of operations have been impacted by several acquisitions consummated during 1995, 1996 and 1997: In January 1995, the Company acquired substantially all of the assets of the Central Canada Potash division (CCP) of Noranda, Inc. for $121.1 million, plus $16.2 million for working capital. In October 1995, the Company acquired Feed Ingredients and subsequently contributed the business to IMC-Agrico. The Company's portion of the purchase price was $67.5 million. In addition, during fiscal 1996 the Company completed several smaller acquisitions, including several retail distribution operations (Agri-Supply) and seed operations (Madison Seed). The Company completed several acquisitions during 1997, including a precision farming operation (Top-Soil); several retail distribution operations (Crop-Maker, Frankfort Supply, Sanderlin and Hutson Ag Services, Inc.); a storage terminal company (Hutson Company, Inc.); and the remaining interest in a subsidiary. Total cash payments for acquisitions during fiscal 1997 were $48.6 million and approximately 200,000 shares of common stock were issued. These acquisitions were accounted for under the purchase method of accounting, and accordingly, results of operations for the acquired companies have been included in the Company's results of operations from their respective dates of acquisition. RESULTS OF OPERATIONS Overview - -------- [CHART] Net Sales - --------- (in millions) 1997 1996 1995 -------- -------- -------- $2,982.0 $2,981.0 $2,736.1 [CHART] Gross Margins - ------------- (in millions) 1997 1996(1) 1995 ------ ------ ------ $770.0 $783.5 $694.6 (1) Before special one-time charges [CHART] Net Earnings - ------------ (in millions) 1997 1996(1) 1995 ------ ------ ------ $193.1 $213.9 $180.9 (1) Before special one-time charges 1997 Compared to 1996 Net sales of $2,982.0 million were essentially unchanged from $2,981.0 million reported in 1996. Gross margins for 1997 were $770.0 million, a decrease of two percent from comparable 1996 margins of $783.5 million, excluding special one-time charges of $26.3 million as discussed below. Net earnings, before an extraordinary charge, of $204.5 million, or $2.15 per share, decreased four percent compared with 1996 net earnings, excluding special one-time charges, of $213.9 million, or $2.31 per share. An extraordinary charge of $11.4 million, or $0.12 per share, related to the early extinguishment of debt, reduced 1997 net earnings to $193.1 million, or $2.03 per share. In 1996, special one-time charges of $69.6 million, or $0.75 per share, reduced net earnings to $144.3 million, or $1.56 per share. These charges, totaling $98.6 million before tax benefits, covered costs related to the Merger, as well as costs associated with, among other things, a corporate restructuring, other asset valuations and environmental issues. In connection with the Merger in 1996, the Company recorded charges totaling $20.2 million, primarily for consulting, legal and accounting services. Immediately following the Merger, the Company adopted a plan to restructure its business operations into a decentralized organizational structure with five stand-alone business units. As a result, the Company recorded restructuring charges totaling $23.1 million. The charges consisted of: (i) $6.5 million for lease terminations resulting from office consolidations and (ii) $16.6 million for severance and related benefits from staff reductions resulting from the termination of approximately 120 employees, primarily middle management personnel, and other related actions. As of June 30, 1997, the following amounts were paid: (a) $20.2 million for charges relating to the Merger; (b) $5.6 million for lease terminations resulting from office consolidations and (c) $13.4 million relating to the termination of approximately 120 employees and other actions. In connection with the 1996 restructuring plan, the Company undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result, the Company recorded charges totaling $58.3 million ($55.3 million net of minority interest) comprised of: (i) $26.3 million ($23.3 million net of minority interest) to cost of goods sold of which $17.5 million was primarily related to the write-off of certain idle plant facilities and other obsolete assets, $5.0 million for environmental matters and $3.8 million for other matters; (ii) $2.4 million of general and administrative expenses for the write-off of miscellaneous assets; (iii) $16.6 million to other income and expense, net, to reduce certain long-term assets to net realizable value and other provisions and (iv) $13.0 million to minority interest for the transfer of 0.85 percent interest of IMC-Agrico Distributable Cash (as defined in the IMC-Agrico Partnership Agreement (Partnership Agreement)) from the Company to FRP. As of June 30, 1997, $29.5 million of non-cash write-offs were charged against the reserve. Fiscal 1997 sales and earnings were driven by Crop Nutrients' results which essentially offset sales and earnings growth in the other business units. Crop Nutrients' sales realizations and volumes declined primarily due to a more competitive marketplace characterized by additional supply made available by other producers which resulted in an 11 percent decline in sales and an 18 percent decline in margins for that business unit when compared to the prior year. 1996 Compared to 1995 Net sales increased nine percent to $2,981.0 million from $2,736.1 million in 1995. Gross margins for 1996 of $783.5 million, excluding special one-time charges, increased 13 percent over 1995 margins of $694.6 million. Net earnings, excluding special one-time charges, of $213.9 million, or $2.31 per share, increased 11 percent over comparable 1995 net earnings of $193.3 million, or $2.12 per share, excluding extraordinary charges and the cumulative effect of an accounting change. As discussed above, special one-time charges of $69.6 million, or $0.75 per share, reduced net earnings for 1996 to $144.3 million, or $1.56 per share. In 1995, a charge of $5.9 million, or $0.06 per share, for the cumulative effect on prior years of a change in accounting for postemployment benefits resulting from the adoption of SFAS No. 112 , "Employers' Accounting for Postemployment Benefits," on July 1, 1994 and an extraordinary charge of $6.5 million, or $0.07 per share, related to the early extinguishment of debt, reduced net earnings to $180.9 million, or $1.99 per share. The increases in 1996 net sales, gross margins and net earnings compared to 1995 reflected improved operating results from the Company's three largest business units and the net impact of various other operating and non-operating factors. IMC-Agrico Crop Nutrients - -------------------------
% Increase Years ended June 30, (Decrease) ------------------------------ ----------- 1997 1996 1995 1997 1996 ------ ------ ------ ----- ----- Net sales (in $1,562.2 $1,747.7 $1,559.0 (11%) 12% millions) Gross margins (in $ 357.8 $ 435.3(c) $ 335.4 (18%) 30% millions) As a percentage 23% 25% 22% of net sales Sales volumes (000 7,281 7,723 7,389 (6%) 5% tons)(a) Average DAP price $ 179 $ 186 $ 162 (4%) 15% per short ton(b) (a)Sales volumes include tons sold captively and represent dry product tons, primarily DAP. (b)FOB plant/mine. (c)Before special one-time charges of $6.9 million.
1997 Compared to 1996 Crop Nutrients' net sales in 1997 decreased 11 percent to $1,562.2 million from $1,747.7 million in 1996. Overall sales volumes of concentrated phosphates, primarily DAP, declined six percent, mainly due to lower domestic shipments of concentrated phosphates resulting from a more competitive marketplace characterized by additional supply made available by other producers, which unfavorably impacted net sales by $52.7 million. International concentrates volumes declined by $29.7 million primarily due to lower GTSP shipments, mainly to Pakistan, Bangladesh and Chile, coupled with management's decision to terminate a long-term tolling agreement in order to pursue more profitable business. In addition, Crop Nutrients, through PhosChem, successfully negotiated, for the first time ever, a two-year concentrated phosphate sales contract with China. In addition, overall sales realizations for concentrated phosphates, particularly DAP, declined four percent as compared to stronger prices in the prior year, which unfavorably impacted net sales by $47.8 million. Net sales were also affected by lower phosphate rock revenues of $47.1 million, resulting primarily from Crop Nutrients' strategic decision to phase out export sales of rock. This action is being taken to maximize relative values of rock and concentrated phosphates by utilizing high-quality reserves for internal upgrading. Gross margins declined 18 percent to $357.8 million in the current year compared to $435.3 million, excluding special one-time charges of $6.9 million, in the prior year, primarily due to the lower volumes and prices discussed above. 1996 Compared to 1995 Crop Nutrients' net sales in 1996 increased 12 percent to $1,747.7 million as compared to $1,559.0 million for 1995. Higher concentrated phosphate prices in 1996, primarily due to increased world demand compared to 1995, favorably impacted sales by $185.0 million. Concentrated phosphate volumes increased, mainly as a result of strong sales to India, Australia, Japan, New Zealand, Pakistan and Brazil. In addition, Crop Nutrients, through PhosChem, successfully negotiated a first-ever calendar year concentrated phosphate sales contract with China. These increases were partially offset by lower phosphate rock shipments due to the Company's strategic decision to phase out export sales of rock as discussed above. Gross margins, before special one-time charges of $6.9 million, increased $99.9 million, or 30 percent, to $435.3 million for 1996 as compared to $335.4 million in 1995. This increase was primarily due to the higher sales realizations for concentrated phosphates discussed above, as well as improvements in phosphate rock sales prices. The favorable impact of price improvements, however, was partially offset by higher phosphate rock production costs, due in large part to higher electricity and maintenance costs, as well as higher fuel costs. IMC Kalium
% Increase Years ended June 30 (Decrease) ------------------------------- ------------ 1997 1996 1995 1997 1996 ------- ------- ------- ---- ---- Net sales (in $ 524.3 $ 455.6 $ 472.0 15% millions) (3%) Gross margins (in $ 197.0 $ 160.3(c) $ 209.0 23% (23%) millions) As a percentage 38% 35% 44% of net sales Sale volumes 8,006 7,215 7,353 11% (000 tons)(a) (2%) Average potash $ 66 $ 64 $ 65 3% (2%) price per short ton(b) (a) Sales volumes include tons sold captively. (b) FOB plant/mine. (c) Before special one-time charges of $7.9 million.
1997 Compared to 1996 IMC Kalium's net sales increased 15 percent to $524.3 million in 1997 from $455.6 million in 1996. Sales increased in 1997 due to higher volumes and sales realizations when compared to the prior year. Overall potash sales volumes increased 11 percent, primarily due to higher international sales volumes, which favorably impacted net sales by $36.2 million, mainly resulting from increased sales to China. In addition, higher domestic sales volumes favorably impacted net sales by $19.6 million, primarily as a result of greater potash demand in North America because of improved weather conditions and additional corn acreage planted in 1997, as well as higher sales of industrial-grade potash. Average sales realizations improved nearly three percent as a result of price increases in September and March, as well as management's decision to eliminate low-margin business, increasing net sales by $12.9 million. Gross margins increased $36.7 million, or 23 percent, to $197.0 million for 1997 as compared to $160.3 million in 1996, excluding special one-time charges of $7.9 million. In addition to the price and volume impacts discussed above, reduced Canadian provincial resource taxes and benefits realized from the renegotiation of transportation terms favorably impacted margins. 1996 Compared to 1995 IMC Kalium's net sales decreased three percent to $455.6 million in 1996 from $472.0 million in 1995. The decline in net sales in 1996 was primarily the result of lower potash export sales volumes due to reduced sales to China, the largest potash export customer, which impacted net sales $27.0 million, coupled with lower average domestic potash sales prices due to excess producer inventories, which impacted revenues by $13.1 million. These decreases were partially offset by the impact of higher potash export sales prices as well as increased domestic shipments, which collectively improved net sales by $23.7 million. Results for 1996 reflected the impact of the inclusion of a full year of net sales for CCP, which was acquired in January 1995. Gross margins, before special one-time charges of $7.9 million, decreased $48.7 million, or 23 percent, to $160.3 million for 1996 as compared to $209.0 million in 1995. This decrease reflected the impact of lower export sales volumes and lower domestic sales prices discussed above. The decrease in domestic prices reflected the intense pressure to lower inventory levels that had risen due to unusually wet spring weather in the midwestern United States. These adverse conditions ultimately necessitated a reduction in potash production to balance output with market requirements. Accordingly, the Company temporarily reduced potash output at four of its six mines by accelerating maintenance schedules and summer vacation shutdowns, beginning in early June 1996 and concluding in mid-August 1996. IMC AgriBusiness - ----------------
(In millions) % Increase Years ended June 30, (Decrease) ------------------------------ ------------ 1997 1996 1995 1997 1996 ------ ------ ------ ---- ---- Net sales $ 860.7 $ 802.9 $ 760.8 7% 6% Gross margins $ 167.3 $ 146.6(a) $ 134.8 14% 9% As a percentage 19% 18% 18% of net sales (a) Before special one-time charges of $5.5 million.
1997 Compared to 1996 IMC AgriBusiness' net sales increased seven percent to $860.7 million in 1997 from $802.9 million in 1996. Higher sales volumes were primarily due to the inclusion of sales from businesses acquired during 1997 in the current year results of operations, coupled with increased sales of ammonia, nitrogen solutions and crop protection products which favorably impacted net sales by $93.1 million in the aggregate. Higher average sales realizations also favorably impacted net sales by $5.1 million, mainly due to management's allocation of business between the various channels of distribution to maximize profits. These increases were partially offset by lower sales volumes of DAP, potash and mixed goods, which unfavorably impacted net sales by $40.4 million. Gross margins of $167.3 million in 1997 increased 14 percent from comparable margins of $146.6 million in 1996, excluding special one- time charges of $5.5 million, mainly due to the impact of volumes and prices discussed above. 1996 Compared to 1995 IMC AgriBusiness' net sales increased six percent to $802.9 million in 1996 as compared to $760.8 million in 1995. The increase in net sales in 1996 reflected the impact of a four percent increase in average sales prices, which favorably impacted revenues by $27.7 million. The increase in sales realizations was the result of improved pricing on select products as well as a change in the mix of products sold. Increased sales volumes, which favorably impacted 1996 net sales by $14.4 million, were primarily the result of the inclusion of sales from the Agri-Supply and Madison Seed operations which were acquired during 1996. Gross margins, before special one-time charges of $5.5 million, increased $11.8 million, or nine percent, to $146.6 million for 1996 as compared to $134.8 million in 1995. The increase in gross margins was primarily the result of increases in sales prices and sales volumes due to the factors discussed above. These increases were partially offset by the impact of higher purchased product and raw material costs. Other - ----- 1997 Compared to 1996 The remaining increases in net sales and gross margins for the year ended June 30, 1997, as compared to the prior year, were primarily the result of the inclusion in fiscal 1997 of a full year of results related to the Feed Ingredients acquisition and higher sales realizations on IMC-Agrico Feed Ingredients' products. 1996 Compared to 1995 The remaining increases in sales and gross margins were primarily the result of the inclusion in fiscal 1996 of a partial year of results related to the Feed Ingredients acquisition in October 1995. Selling, General and Administrative Expenses - --------------------------------------------
(In millions) % Increase Years ended June 30, (Decrease) ------------------------------- ---------- 1997 1996 1995 1997 1996 ------ ------ ------ ---- ---- Selling, general and administra- $ 247.2 $ 227.3(a) $ 200.6 9% 13% tive expenses (a)Before special one-time charges of $2.4 million.
In 1997, selling, general and administrative expenses increased primarily as a result of: (i) the inclusion of a full year of operations of the Feed Ingredients, Agri-Supply and Madison Seed acquisitions during 1996; (ii) the inclusion of a partial year of the operations of the businesses acquired through the Top-Soil, Crop-Maker, Frankfort Supply, Sanderlin, Hutson Ag Services, Inc. and Hutson Company, Inc. acquisitions during 1997; (iii) costs associated with increased sales volumes to The Home Depotr and (iv) Company-wide strategic sourcing and systems projects. Selling, general and administrative expenses increased in 1996 primarily due to higher expenses associated with the inclusion of a full year of operations of CCP, which was acquired during 1995, and a partial year of operations of the businesses acquired through the Feed Ingredients, Agri-Supply and Madison Seed acquisitions during 1996. Merger and Restructuring Charges - -------------------------------- See "Results of Operations - Overview," in Part I, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K. Other (Income) and Expense, Net - --------------------------------
(In millions) % Increase Years ended June 30, (Decrease) ------------------------------- ----------- 1997 1996 1995 1997 1996 ------ ------ ------ ---- ---- Other (income) and $ (5.7) $ (10.5) $ (15.4) (46%) (32%) expense, net
A reduction in average cash invested during 1997 resulted in lower interest income of $5.2 million compared to 1996. Results for 1996 included gains on the sale of investments and properties of $14.1 million offset by merger and restructuring charges of $16.6 million. (See "Results of Operations - Overview," in Part I, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K.) In 1995, other income and expense, net included a gain of $5.0 million from the sale of land in Florida. Interest Expense - ----------------
(In millions) % Increase Years ended June 30, (Decrease) ---------------------------- 1997 1996 1995 1997 1996 ------ ------ ------ ---- ---- Interest expense $ 51.1 $ 64.8 $ 70.2 (21%) (8%)
In 1997, the decrease in interest expense was a direct result of: (i) lower average overall credit line and short-term borrowings as compared to the prior year; (ii) the refinancing of higher cost, long- term indebtedness at lower interest rates and (iii) the redemption of convertible subordinated notes in November 1996. Interest charges in 1996 were lower than the prior year as the Company reduced a portion of its higher cost, long-term indebtedness during the prior fiscal year. Partially offsetting this decrease were interest charges resulting from increases in long-term debt used to fund the acquisition of CCP and other acquisitions during 1995. Income Taxes - ------------ The effective tax rate of 36.5 percent for 1997, while the same as the 1996 rate before special one-time charges, decreased from the 1995 rate of 37.4 percent. The lower effective rate is the result of post- merger planning and restructuring efforts. CAPITAL RESOURCES AND LIQUIDITY Liquidity and Operating Cash Flow - --------------------------------- [CHART] Debt to Total Capitalization - ---------------------------- 1997 1996 1995 ---- ---- ---- 34.1% 39.5% 38.1% [CHART] EBITDA (in millions) - ------- Earnings before minority interest, interest charges, taxes, depreciation and amortization, and net of FRP distributions 1997 1996 1995 ------ ------ ------ $491.7 $509.9 $447.7 [CHART] Cash Provided by Operations - --------------------------- (in millions) 1997 1996 1995 ------ ------ ------ $573.0 $342.0 $554.5 Cash and cash equivalents as of June 30, 1997 were $43.2 million as compared to $9.6 million at June 30, 1996. Cash inflows in 1997 of $573.0 million generated from operating activities coupled with $79.8 million net proceeds from borrowings under available credit facilities were used to fund capital expenditures of $223.4 million, distributions to FRP of $221.2 million, open market purchase of outstanding common stock of $105.1 million, acquisitions of businesses for aggregate consideration of $48.6 million and common stock dividend payments of $30.1 million. The Company generates significant cash from operations and has substantial borrowing capacity to meet its operating and discretionary spending requirements. Net cash provided by operating activities was $573.0 million, $342.0 million and $554.5 million in 1997, 1996 and 1995, respectively. In 1997, working capital increased slightly, mainly due to increased inventory levels, primarily phosphate rock. The decrease in operating cash flow in 1996 reflected the impact of increased working capital levels, largely related to higher receivables and inventories as a result of prolonged wet weather in the spring of 1996. The Company's working capital ratio at June 30, 1997 was 2.4:1 versus 2.5:1 at June 30, 1996. Net cash used in investing activities was $269.9 million, $234.5 million, and $242.7 million in 1997, 1996 and 1995, respectively. These results reflect increased capital spending over the three years. Results for 1997 reflected the Top-Soil, Crop-Maker, Frankfort Supply, Sanderlin, and Hutson acquisitions during the year. The impact of the Feed Ingredients and Madison Seed acquisitions are reflected in the 1996 results, and the CCP acquisition impacted 1995 results. (See "Introduction - Acquisitions," in Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K for further detail.) Net cash used in financing activities was $269.5 million, $301.6 million and $283.7 million for 1997, 1996 and 1995, respectively. Net debt proceeds for 1997 were $79.8 million while net repayments in 1996 and 1995 were $60.1 million and $33.0 million, respectively. Debt to total capitalization improved to 34.1 percent at June 30, 1997 compared to 39.5 percent one year ago, primarily due to a reduction in higher cost, long-term indebtedness. Distributions to FRP reflect the earnings of IMC-Agrico, which increased in 1996, but declined in 1997. Distributions to FRP included in net cash used in financing activities were $221.2 million, $242.0 million and $228.1 million for 1997, 1996 and 1995, respectively. The Company's share of cash distributions from IMC-Agrico increased by 13 percentage points to 58.6 percent effective July 1, 1997. (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K.) Dividends paid for 1997, 1996 and 1995 were $30.1 million, $35.5 million and $24.6 million, respectively. Also, during 1997, $105.1 million was used to finance the repurchase of approximately 2.9 million shares of outstanding common stock. On August 26, 1997, the Board of Directors of the Company authorized the repurchase from time to time in open market transactions of up to an additional five million shares. The Company received cash of $7.1 million, $25.8 million and $2.0 million related to the exercise of stock options in 1997, 1996 and 1995, respectively. Capital Spending - ---------------- [CHART] Capital Expenditures - -------------------- (in millions) 1997 1996 1995 ------ ------ ------ $223.4 $172.7 $114.9 Capital expenditures for 1997 were $223.4 million, an increase of $50.7 million over 1996 expenditures of $172.7 million, due largely to spending related to a salt plant expansion at the Company's Hersey, Michigan facility and the acquisition of the Pine Level property. (See "Contingencies - Pine Level Property Reserves," in Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition," of this Annual Report on Form 10-K for further detail.) The Company estimates that its capital expenditures for fiscal 1998 will approximate $300.0 million. The Company expects to finance these expenditures primarily from operations. (See "Other Matters - Environmental Matters," in Part I, Item 1, "Business," of this Annual report on Form 10-K for a discussion of environmental capital expenditures which are included in the foregoing estimate.) Pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico (which consists of two representatives each from the Company and FRP) prior to making capital expenditures for expansion of its business in any fiscal year in excess of $5.0 million (adjusted annually for inflation). In the event that the Policy Committee fails to approve future capital expenditures, IMC-Agrico's ability to expand its business could be adversely affected. (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K.) Financing - --------- [CHART] Total Debt - ---------- (in millions) 1997 1996 1995 ------ ------ ------ $735.3 $764.5 $824.3 In February 1996, the Company entered into an unsecured credit facility (Credit Facility) with a group of banks. Under the terms of the Credit Facility, the Company and certain of its subsidiaries may borrow up to $450.0 million under a revolving credit facility which matures on March 1, 1999 and $50.0 million under a long-term credit facility which matures on March 2, 2001. In addition, the Company has a maximum availability of approximately $283.0 million under uncommitted money market lines. On August 29, 1997, the Company and its subsidiaries had borrowed $10.0 million under the revolving credit facility, $46.9 million under the long-term credit facility and $84.2 million under the money market lines. The Company has classified borrowings under revolving credit facilities and money market lines as long-term debt since the Company has the ability and the intent to maintain these obligations for longer than one year. Additionally, as of August 29, 1997, $33.3 million was drawn under the Credit Facility as letters of credit principally to support industrial revenue bonds and other debt and credit risk guarantees. Simultaneously with the execution of the Credit Facility, the Company and one of its subsidiaries refinanced certain of its unsecured term loans. The new $120.0 million unsecured term loans (Term Loans) bear interest at rates between 7.12 percent and 7.18 percent and mature at various times between 2000 and 2005. The Credit Facility, Term Loans and Senior Notes (as defined hereinafter) contain provisions which: (i) restrict the Company's ability to make capital expenditures and dispose of assets; (ii) limit the payment of dividends or other distributions to stockholders and (iii) limit the incurrence of additional indebtedness. These debt instruments also contain various financial ratio requirements and other covenants. IMC-Agrico has several agreements with a group of banks to provide it with an aggregate revolving credit facility of $125.0 million (collectively, IMC-Agrico Revolving Credit Facility or Agreements) maturing September 1997, December 1997 and February 1998. The IMC-Agrico Revolving Credit Facility has a letter of credit subfacility for up to $25.0 million. Borrowings under the IMC-Agrico Revolving Credit facility are unsecured with a negative pledge on substantially all of IMC-Agrico's assets and bear interest at rates based on a base rate or an adjusted Eurodollar rate. On August 29, 1997, IMC-Agrico had drawn $8.4 million under the letter of credit subfacility and had borrowings of $88.6 million under the remainder of the IMC-Agrico Revolving Credit Facility. IMC-Agrico has classified borrowings under the IMC-Agrico Revolving Credit Facility as long-term debt since IMC-Agrico has the ability and the intent to maintain these obligations for longer than one year. The Agreements have restrictive covenants including minimum net partners' capital, fixed charge and current ratio requirements; place limitations on indebtedness of IMC-Agrico; and restrict the ability of IMC-Agrico to make cash distributions in excess of Distributable Cash. The Agreements require IMC-Agrico to repay all revolving loans for a minimum of 30 consecutive days within each calendar year. In addition, pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico prior to incurring more than an aggregate of $5.0 million (adjusted annually for inflation) in indebtedness (excluding a total of $125.0 million of indebtedness under the IMC-Agrico Revolving Credit Facility). (See "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K.) The net residual interest included in the receivables shown on the Consolidated Balance Sheet are owned by IMC-Agrico Receivables Company L.L.C. (IMC-Agrico L.L.C.), a special-purpose limited liability company of which IMC-Agrico is the sole equity owner. Under an agreement with a financial institution, IMC-Agrico L.L.C. may sell, on an ongoing basis, an undivided percentage interest in a designated pool of receivables, subject to limited recourse provisions related to the international receivables, in an amount not to exceed $65.0 million. At June 30, 1997, IMC-Agrico L.L.C. had sold a total of $49.3 million of such receivable interests, $32.5 million of which are classified as short-term debt in the Consolidated Balance Sheet. Costs, primarily from discount fees and other administrative costs, totaled $3.4 million, $3.6 million and $2.5 million in 1997, 1996 and 1995, respectively. In fiscal 1997, the Company purchased a total of $166.4 million principal amount of its 9.25 percent senior notes due 2000, 10.125 percent senior notes due 2001 and 10.75 percent senior notes due 2003 (collectively, Senior Notes) prior to maturity in an effort to reduce higher cost indebtedness. As a result, the Company recorded an extraordinary charge, net of taxes, of $10.8 million for the redemption premium and write-off of previously deferred finance charges. In addition, in fiscal 1997, the Company completed the redemption of its outstanding $114.9 million, 6.25 percent convertible subordinated notes due 2001 (Subordinated Notes). In connection with the conversion of the Subordinated Notes, the Company recorded an extraordinary charge, net of taxes, of $0.6 million for write-off of previously deferred finance charges. The Company issued approximately 3.6 million shares of common stock to holders of $114.4 million principal amount of the Subordinated Notes who converted the Subordinated Notes prior to the redemption date. The balance of $0.5 million principal amount was redeemed by the Company for cash. In May 1997, the Company filed a registration statement on Form S-3 to increase debt and equity securities from $140.0 million to $300.0 million. In July 1997, the Company issued $150.0 million of 6.875 percent senior debentures due 2007. The proceeds were used to reduce higher cost indebtedness. DERIVATIVES The Company periodically enters into options to purchase natural gas and entered into DAP futures contracts to manage its exposure to price fluctuations. Net hedging gains and losses are recognized as part of the transactions hedged and were not material during 1997, 1996 or 1995. The Company monitors its market risk on an ongoing basis and currently considers such risk to be minimal. CONTINGENCIES Reference is made to "Sterlington Litigation" and "Potash Antitrust Litigation," in Part I, Item 3, "Legal Proceedings," of this Annual Report on Form 10-K. Pine Level Property Reserves - ---------------------------- In October 1996, IMC-Agrico signed an agreement with CMI for the purchase of real property, Pine Level, containing approximately 100 million tons of phosphate rock reserves. In connection with the purchase, IMC-Agrico has agreed to obtain all environmental, regulatory and related permits necessary to commence mining on the property. Within five years from the date of this agreement, IMC-Agrico is required to provide notice to CMI regarding one of the following: (i) whether they have obtained the permits necessary to commence mining any part of the property; (ii) whether they wish to extend the permitting period for an additional three years or (iii) whether they wish to decline to extend the permitting period. If the permits necessary to commence mining the property have been obtained, IMC-Agrico is obligated to pay CMI an Initial Royalty payment of $28.9 million. In addition to the Initial Royalty payment described above, IMC-Agrico is required to pay CMI a mining royalty on phosphate rock mined from the property to the extent the permits are obtained. Mississippi Chemical Corporation Property Reserves - -------------------------------------------------- In July 1994, IMC-Agrico entered into an option agreement with Mississippi Chemical Corporation (MCC) to purchase land in Florida. The property, along with land previously purchased from MCC, contains approximately 87.5 million tons of phosphate rock reserves. Prior to January 16, 1998, IMC-Agrico may exercise its option to purchase the property for $57.0 million. If IMC-Agrico fails to exercise its option by that date, MCC has the right to sell the property to IMC-Agrico and IMC-Agrico will be obligated to purchase the property for $50.0 million. Other - ----- Reference is made to "IMC Kalium - United States Operations," regarding the Western Ag acquisition, in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Reference is made to "IMC Kalium - Canadian Operations," regarding mining risks, in Part I, Item 1, "Business," of this Annual Report on Form 10-K. The Company does not consider the impact of inflation to be significant in the business in which it operates. ENVIRONMENTAL MATTERS Reference is made to "Other Matters - Environmental Matters," in Part I, Item 1, "Business," of this Annual Report on Form 10-K. SUBSEQUENT EVENT Reference is made to "Subsequent Event," in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Item 8. Financial Statements and Supplementary Data. Page ---- Report of Independent Auditors 31 Consolidated Statement of Earnings 32 Consolidated Balance Sheet 33 Consolidated Statement of Cash Flows 34 Consolidated Statement of Changes in Stockholders' Equity 35 Notes to Consolidated Financial Statements 36 Supplementary Financial Information - Quarterly Results (Unaudited) 55 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders of IMC Global Inc. We have audited the accompanying consolidated balance sheet of IMC Global Inc. (formed as a result of the consolidation of IMC Global Inc. and The Vigoro Corporation) as of June 30, 1997 and 1996 and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for each of the three years in the period ended June 30, 1997. The consolidated financial statements give retroactive effect to the merger of IMC Global Inc. and The Vigoro Corporation on March 1,1996, which has been accounted for using the pooling of interests method as described in the notes to the consolidated financial statements. These consolidated financial statements are the responsibility of the management of IMC Global Inc. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the 1995 financial statements of The Vigoro Corporation which statements reflect net sales of approximately 34 percent of the consolidated financial statement total for the year ended June 30, 1995. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for The Vigoro Corporation, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of IMC Global Inc. at June 30, 1997 and 1996, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 1997, after giving retroactive effect to the merger of The Vigoro Corporation, as described in notes to the consolidated financial statements, in conformity with generally accepted accounting principles. As discussed in the notes to consolidated financial statements, the Company changed its method of accounting for postemployment benefits in 1995. Ernst & Young LLP Chicago, Illinois July 23, 1997, except for Note 22, as to which the date is September 5, 1997 CONSOLIDATED STATEMENT OF EARNINGS (In millions except per share amounts)
Years ended June 30, 1997 1996 1995 - ----------------------------------------------------------------------- Net sales $2,982.0 $2,981.0 $2,736.1 Cost of goods sold 2,212.0 2,223.8 2,041.5 Gross margins 770.0 757.2 694.6 Selling, general and administrative expenses 247.2 229.7 200.6 Merger and restructuring charges - 43.3 - -------- -------- -------- Operating earnings 522.8 484.2 494.0 Other (income) expense, net (5.7) (10.5) (15.4) Interest expense 51.1 64.8 70.2 -------- -------- -------- Earnings before minority interest 477.4 429.9 439.2 Minority interest 155.4 191.5 130.4 -------- -------- -------- Earnings before taxes 322.0 238.4 308.8 Provision for income taxes 117.5 94.1 115.5 -------- -------- -------- Earnings before extraordinary item and cumulative effect of accounting change 204.5 144.3 193.3 Extraordinary charge - debt retirement (11.4) - (6.5) Cumulative effect on prior years of change in accounting for postemployment benefits - - (5.9) -------- -------- -------- Net earnings $ 193.1 $ 144.3 $ 180.9 ======== ======== ======== Earnings per share: Earnings before extraordinary item and cumulative effect of accounting change $ 2.15 $ 1.56 $ 2.12 Extraordinary charge - debt retirement (.12) - (.07) Cumulative effect of accounting change - - (.06) -------- -------- -------- Net earnings $ 2.03 $ 1.56 $ 1.99 ======== ======== ======== Weighted average number of shares and equivalent shares outstanding 95.0 92.7 91.0 (See Notes to Consolidated Financial Statements)
CONSOLIDATED BALANCE SHEET (Dollars in millions except per share amounts)
At June 30, Assets 1997 1996 - ----------------------------------------------------------------- Current assets: Cash and cash equivalents $ 43.2 $ 9.6 Receivables, net 362.5 350.2 Inventories 534.2 476.7 Deferred income taxes 54.2 61.4 Other current assets 20.3 20.3 -------- -------- Total current assets 1,014.4 918.2 Property, plant and equipment, net 2,409.2 2,351.3 Other assets 188.0 167.3 -------- -------- Total assets $3,611.6 $3,436.8 ======== ======== Liabilities and Stockholders' Equity - ----------------------------------------------------------------- Current liabilities: Accounts payable $ 243.0 $ 193.5 Accrued liabilities 138.3 145.1 Short-term debt and current maturities of long-term debt 40.5 27.8 -------- -------- Total current liabilities 421.8 366.4 Long-term debt, less current maturities 694.8 736.7 Deferred income taxes 373.3 315.7 Other noncurrent liabilities 344.5 352.0 Minority interest 437.3 509.7 Stockholders' equity: Common stock, $1 par value, authorized 250,000,000 shares; issued 101,819,151 and 97,863,784 shares in 1997 and 1996, respectively 101.8 97.9 Capital in excess of par value 947.0 821.7 Retained earnings 522.1 359.1 Treasury stock, at cost, 8,256,620 and 5,545,884 shares in 1997 and 1996, respectively (212.2) (107.3) Foreign currency translation adjustment (18.8) (15.1) -------- -------- Total stockholders' equity 1,339.9 1,156.3 -------- -------- Total liabilities and stockholders' equity $3,611.6 $3,436.8 ======== ======== (See Notes to Consolidated Financial Statements)
CONSOLIDATED STATEMENT OF CASH FLOWS (In millions)
Years ended June 30, 1997 1996 1995 - ------------------------------------------------------------------- Cash Flows from Operating Activities - ------------------------------------ Net earnings $ 193.1 $ 144.3 $ 180.9 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation, depletion and amortization 184.4 168.6 166.4 Minority interest 155.4 181.5 130.4 Merger and restructuring charges - 67.3 - Deferred income taxes 63.5 0.3 16.9 Postemployment employee benefits - - 9.5 Other charges and credits, net (11.1) (5.8) (11.2) Changes in: Receivables 9.5 (96.0) 49.3 Inventories (35.3) (55.4) (27.7) Other current assets 0.5 (7.2) 0.3 Accounts payable 19.3 (20.2) 14.1 Accrued liabilities (6.3) (35.4) 25.6 ------- ------- ------- Net cash provided by operating activities 573.0 342.0 554.5 ------- ------- ------- Cash Flows from Investing Activities - ------------------------------------ Capital expenditures (223.4) (172.7) (114.9) Acquisitions of businesses, net of cash acquired (48.6) (74.6) (142.4) Sale of investment - 11.6 - Sales of property, plant and equipment 2.1 1.2 14.6 ------- ------- ------- Net cash used in investing activities (269.9) (234.5) (242.7) ------- ------- ------- Net cash provided before financing activities 303.1 107.5 311.8 ------- ------- ------- Cash Flows from Financing Activities - ------------------------------------ Joint venture cash distributions to Freeport-McMoRan Resource Partners, Limited Partnership (221.2) (242.0) (228.1) Payments of long-term debt (175.4) (93.2) (182.0) Proceeds from issuance of long-term debt, net 245.3 75.6 131.5 Changes in short-term debt, net 9.9 (42.5) 17.5 Cash dividends paid (30.1) (35.5) (24.6) Stock options exercised 7.1 25.8 2.0 Purchase of treasury stock (105.1) - - Other - 10.2 - ------- ------- ------- Net cash used in financing activities (269.5) (301.6) (283.7) ------- ------- ------- Net change in cash and cash equivalents 33.6 (194.1) 28.1 Cash and cash equivalents - beginning of year 9.6 203.7 175.6 ------- ------- ------- Cash and cash equivalents - end of year $ 43.2 $ 9.6 $ 203.7 ======= ======= ======= (See Notes to Consolidated Financial Statements)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (In millions except per share amounts)
Foreign Capital in Currency Common Excess of Retained Treasury Translation Stock Par Value Earnings Stock Adjustment - --------------------------------------------------------------------- Balance at June 30, 1994 $ 96.0 $ 777.2 $ 90.2 $(107.1) $ - Net earnings - - 180.9 - - Dividends ($.26 per share) - - (25.0) - - Restricted stock awards - 0.3 - - - Stock options exercised and other 0.4 5.1 - (0.3) - Foreign currency translation adjustment - - - - (9.9) ------ ------ ------ ------ ------ Balance at June 30, 1995 96.4 782.6 246.1 (107.4) (9.9) Net earnings - - 144.3 - - Dividends ($.33 per share) - - (31.3) - - Stock options exercised and other 1.1 24.6 - (0.1) - Issuance of common stock pursuant to acquisitions 0.4 14.5 - 0.2 - Foreign currency translation adjustment - - - - (5.2) ------ ------ ------ ------ ------ Balance at June 30, 1996 97.9 821.7 359.1 (107.3) (15.1) Net earnings - - 193.1 - - Dividends ($.32 per share) - - (30.1) - - Stock options exercised and other 0.3 6.8 - - - Issuance of common stock pursuant to acquisitions - 7.7 - 0.2 - Conversion of convertible notes 3.6 110.8 - - - Purchase of treasury shares - - - (105.1) - Foreign currency translation adjustment - - - - (3.7) ------ ------ ------ ------ ------ Balance at June 30, 1997 $ 101.8 $ 947.0 $ 522.1 $(212.2) (18.8) ====== ====== ====== ====== ====== (See Notes to Consolidated Financial Statements)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions except as otherwise indicated) 1. Business of the Company ----------------------- IMC Global Inc. (the Company), which operates in a single industry segment, is the parent corporation of several subsidiaries and joint venture operations which together comprise one of the world's leading producers of phosphate and potash crop nutrients as well as animal feed ingredients. The Company mines and processes potash in the United States and Canada and has a 56.5 percent economic interest in IMC-Agrico Company (IMC-Agrico), the nation's leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The remaining interest is held by Freeport-McMoRan Resource Partners, Limited Partnership (FRP). The Company also markets and distributes crop nutrients and related products on a wholesale basis through independent dealers and cooperatives, and on a retail basis through its farm service outlets. In addition, the Company sells potash and certain other products to industrial users in the United States and Canada. Through its interests in other joint ventures, the Company also produces sulphur and oil and natural gas. (See also Note 22, "Subsequent Events," of Notes to Consolidated Financial Statements.) 2. Summary of Significant Accounting Policies ------------------------------------------ Basis of Presentation The consolidated financial statements include the accounts of the Company and all subsidiaries which are more than 50 percent owned and controlled; the Company proportionately consolidates its 25 percent interest in the sulphur joint venture. All significant intercompany accounts and transactions are eliminated in consolidation. Certain amounts in the consolidated financial statements for periods prior to June 30, 1997 have been reclassified to conform to the current presentation. The Company's fiscal year ends June 30. Change in Fiscal Year Effective with the calendar year ending December 31, 1997, the Company will change from a fiscal year end of June 30 to December 31 in order to permit more effective business planning, including annual budgeting, government reporting and audit functions, as well as align statistical and financial reporting with competitors. The Company will file a transition report on Form 10-K for the calendar year ended December 31, 1997. Use of Estimates Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents which are reflected at their approximate fair value. The effect of foreign currency exchange rate fluctuations on the total cash and cash equivalents balance was not significant. Concentration of Credit Risk Domestically, the Company sells its products to farmers primarily in the midwestern and southeastern United States. Internationally, the Company's products are sold primarily through one Canadian and two U.S. export associations. In 1997, sales of concentrated phosphates and potash to China accounted for approximately 13 percent of the Company's net sales. No single customer or group of affiliated customers accounted for more than ten percent of the Company's net sales. Receivables Under an agreement with a financial institution, IMC-Agrico Receivables Company, L.L.C. (IMC-Agrico L.L.C.), a special purpose limited liability company of which IMC-Agrico is the sole equity owner, may sell, on an ongoing basis, an undivided percentage interest in a designated pool of receivables, in an amount not to exceed $65.0 million. Effective, January 1, 1997, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," which requires the sale of receivables sold with recourse to be classified as short-term debt. Inventories Inventories are valued at the lower of cost or market (net realizable value). Cost for substantially all of the Company's inventories is calculated on a cumulative annual-average cost basis. Cost for the remaining portion of inventories, primarily for products sold through the Company's retail farm service outlets, is determined using the first-in, first-out method. Property, Plant and Equipment Property (including mineral deposits), plant and equipment are carried at cost. Cost of significant assets includes capitalized interest incurred during the construction and development period. Expenditures for replacements and improvements are capitalized; maintenance and repair expenditures, except for repair and maintenance overhauls (Turnarounds), are charged to operations when incurred. Expenditures for major Turnarounds are deferred when incurred and amortized into cost of goods sold on a straight-line basis, generally over an 18-month period. Turnarounds are large-scale maintenance projects that are performed regularly, usually every 18 to 24 months, on average. Turnarounds are necessary to maintain the operating capacity and efficiency rates of the production plants. The deferred portion of the Turnaround expenditures is classified in other assets in the Company's Consolidated Balance Sheet. Depreciation and depletion expenses for mining operations, including mineral interests, are determined using the unit-of-production method based on estimates of recoverable reserves. Other asset classes or groups are depreciated or amortized on a straight-line basis over their estimated useful lives as follows: buildings, 17 to 45 years; machinery and equipment, 3 to 25 years. In fiscal 1997, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The statement requires the recognition of an impairment loss on a long-lived asset held for use when events and circumstances indicate that the estimate of undiscounted future cash flows expected to be generated by the asset are less than its carrying amount. Goodwill Goodwill, representing the excess of purchase cost over the fair value of net assets of acquired companies, is generally amortized using the straight-line method over periods not exceeding 40 years. At June 30, 1997 and 1996, goodwill, included in other assets in the Consolidated Balance Sheet, totaled $89.8 million and $68.1 million, respectively. Postemployment Benefits The Company provides benefits such as workers' compensation and disabled employee medical care to certain former or inactive employees after employment but before retirement. Effective July 1, 1994, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits," which requires the Company to accrue the cost of providing such postemployment benefits when the event occurs giving rise to the obligation. Stock-Based Compensation Plans In December 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which establishes a fair value-based method of accounting for stock-based compensation plans. Under SFAS No. 123, the Company has the option of either accounting for its stock-based compensation plans under the fair value method or continuing under the accounting provisions of Accounting Principles Board Opinion No. 25 (APB No. 25). The Company continues to account for its stock-based compensation plans under the provisions of APB No. 25 and, accordingly, no compensation cost has been charged to operations for options granted. (See also Note 18, "Stock Plans," of Notes to Consolidated Financial Statements.) Accrued Environmental Costs The Company's activities include the mining of phosphate and potash, the manufacturing and blending of crop nutrients, and the blending of crop nutrients with pesticide products. These operations are subject to extensive federal, state, provincial and local environmental regulations in the United States and Canada, including laws related to air and water quality; management of hazardous and solid wastes; management and handling of raw materials and products; and the restoration of lands disturbed by mining and production activities. Expenditures that relate to an existing condition caused by past operations of the Company or prior land owners, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental remedial efforts are probable and the cost of such efforts can be reasonably estimated. Revisions to current estimates are made when costs of required remedial efforts change. In 1997, the Company adopted Statement of Position 96-1, "Environmental Remediation Liabilities," promulgated by the American Institute of Certified Public Accountants, which provides new guidance for the accrual of environmental remediation costs. Adoption of this statement did not have a material adverse effect on the Company's financial statements. Derivatives The Company periodically enters into options to purchase natural gas and entered into diammonium phosphate (DAP) futures contracts to manage its exposure to price fluctuations. Net hedging gains and losses are recognized as a part of the transactions hedged and were not significant in the years ended June 30, 1997, 1996 and 1995. The Company monitors its market risk on an ongoing basis and considers such risk to be minimal. Foreign Currencies The functional currency of the Company's Canadian operations is the Canadian dollar. As of June 30, 1997, the Company's cumulative foreign currency translation adjustment resulted in a reduction of stockholders' equity of $18.8 million. Earnings Per Share All share and per share information appearing in the consolidated financial statements and notes herein give effect to the Company's 2-for-1 stock split effected in the form of a 100 percent stock dividend which was distributed on November 30, 1995. Earnings per share are based on the weighted average number of shares and equivalent shares outstanding. Fully diluted earnings per share are not significantly different from primary earnings per share and, accordingly, are not presented. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per Share," which is required to be adopted for financial statements for periods ending after December 15, 1997. The Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The Company's primary earnings per share as reflected in the accompanying Consolidated Statement of Earnings are not materially different from basic and diluted earnings per share calculated under the new methodology. Recently Issued Accounting Standards In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued. This statement establishes standards of reporting and display of comprehensive income and its components in a full set of general purpose financial statements. This statement will be effective for the Company's year ending December 31, 1998. Adoption of this statement is not expected to have a significant effect on the Company's financial statements. In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," was issued. This statement changes the way public companies report segment information in annual financial statements and also requires those companies to report selected segment information in interim financial reports to stockholders. This statement will be effective for the Company's year ending December 31, 1998. Adoption of this statement will result in additional disclosures. 3. Vigoro Merger ------------- In March 1996, the Company completed a merger with The Vigoro Corporation (Vigoro) that resulted in Vigoro becoming a subsidiary of the Company (Merger). Upon consummation of the Merger, the Company issued approximately 32.4 million shares of its common stock in exchange for all of the outstanding shares of Vigoro. The Merger was structured to qualify as a tax-free reorganization for income tax purposes and was accounted for as a pooling of interests. Accordingly, the Company's financial statements for periods prior to the merger date have been restated to reflect the Merger. Summarized operating results of the Company and Vigoro for the eight months ended February 29, 1996 and the year ended June 30, 1995 were as follows:
Eight months Year ended ended February 29, June 30, 1996 1995 -------- -------- IMC GLOBAL INC. Net sales $1,413.5 $1,924.0 Extraordinary item - (6.5) Accounting change - (5.9) Net earnings 102.8 114.7 THE VIGORO CORPORATION Net sales $ 406.5 $ 871.4 Net earnings 12.7 66.2 INTERCOMPANY SALES ELIMINATION $ (41.1) $ (59.3) COMBINED Net sales $1,778.9 $2,736.1 Extraordinary item - (6.5) Accounting change - (5.9) Net earnings 115.5 180.9
4. Merger and Restructuring Charges -------------------------------- In connection with the Merger in 1996, the Company recorded charges totaling $20.2 million, primarily for consulting, legal and accounting services. Immediately following the Merger, the Company adopted a plan to restructure its business operations into a decentralized organizational structure with five stand-alone business units. As a result, the Company recorded restructuring charges totaling $23.1 million. The charges consisted of: (i) $6.5 million for lease terminations resulting from office consolidations and (ii) $16.6 million for severance and related benefits from staff reductions resulting from the termination of approximately 120 employees, primarily middle management personnel, and other related actions. As of June 30, 1997, the following amounts were paid: (a) $20.2 million for charges relating to the Merger; (b) $5.6 million for lease terminations resulting from office consolidations and (c) $13.4 million relating to the termination of approximately 120 employees and other actions. In connection with the 1996 restructuring plan, the Company undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result, the Company recorded charges totaling $58.3 million ($55.3 million net of minority interest) comprised of: (i) $26.3 million ($23.3 million net of minority interest) to cost of goods sold of which $17.5 million was primarily related to the write-off of certain idle plant facilities and other obsolete assets, $5.0 million for environmental matters and $3.8 million for other matters; (ii) $2.4 million of general and administrative expenses for the write-off of miscellaneous assets; (iii) $16.6 million to other income and expense, net, to reduce certain long-term assets to net realizable value and other provisions and (iv) $13.0 million to minority interest for the transfer of 0.85 percent interest of IMC-Agrico Distributable Cash (as defined in the IMC-Agrico Partnership Agreement (Partnership Agreement)) from the Company to FRP. (See also Note 22, "Subsequent Events," of Notes to Consolidated Financial Statements.) As of June 30, 1997, $29.5 million of non-cash write-offs were charged against the reserve. 5. Acquisitions ------------ In January 1995, the Company acquired substantially all of the assets of the Central Canada Potash division (CCP) of Noranda, Inc. for $121.1 million, plus $16.2 million for working capital. The Company used proceeds borrowed under a credit facility to finance the purchase price, while using operating cash to acquire the working capital. The CCP potash mine, located in Colonsay, Saskatchewan, utilizes shaft mining technology and has a current annual capacity of 1.5 million tons and estimated recoverable reserves of 120 years at current production levels. In October 1995, the Company acquired the animal feed ingredients business (Feed Ingredients) of Mallinckrodt Group Inc. and subsequently contributed the business to IMC-Agrico. The Company's portion of the purchase price was $67.5 million. In 1997, the Company completed several acquisitions, including a precision farming operation (Top-Soil); several retail distribution operations (Crop-Maker, Frankfort Supply, Sanderlin, and Hutson Ag Services, Inc.); a storage terminal company (Hutson Company, Inc.); and the remaining interest in a subsidiary. Total cash payments for acquisitions during the year were $48.6 million and approximately 200,000 shares of common stock were issued. These acquisitions were accounted for under the purchase method of accounting, and, accordingly, results of operations for the acquired businesses have been included in the Company's Consolidated Statement of Earnings since the respective dates of acquisition. Pro forma consolidated operating results reflecting these acquisitions would not have been materially different from reported amounts. Common stock issued for acquisitions was $7.9 million, $14.9 million and $4.5 million for 1997, 1996 and 1995, respectively. In fiscal year 1997, liabilities assumed in acquisitions were $40.7 million. 6. IMC-Agrico Cash Sharing ------------------------ IMC-Agrico makes cash distributions to each partner based on formulas and sharing ratios as defined in the Partnership Agreement. For the year ended June 30, 1997, the total amount of cash generated by IMC-Agrico was $382.5 million, of which $210.7 million was distributed to FRP, including $49.8 million payable as of June 30, 1997. On January 23, 1996, the Company and FRP entered into certain amendments to the Partnership Agreement. Effective March 1, 1996, there was a shift of 0.85 cash interest in IMC-Agrico from the Company to FRP. Effective July 1, 1997, the Company's share of cash distributions increased to approximately 58.6 percent. (See also Note 22, "Subsequent Events," of Notes to Consolidated Financial Statements.) 7. Non-Recurring Items -------------------- Non-recurring items included the following: Sale of Investments and Land In 1996, the Company realized a gain of $11.6 million from the sale of a 50 percent interest in Chinhae Chemical Company, a producer of crop nutrients located in South Korea. In 1995, a gain of $5.0 million was realized from the sale of land in Florida. These amounts were included in other income and expense, net in the Consolidated Statement of Earnings. Remediation In 1995, provisions totaling $10.3 million ($5.8 million net of minority interest) were included in cost of goods sold, in the Consolidated Statement of Earnings, for remediation costs associated with a sinkhole beneath a phosphogypsum storage stack at IMC-Agrico's New Wales crop nutrient production facility in Florida and for repair and cleanup costs related to earthen dam breaches at IMC-Agrico's Payne Creek and Hopewell phosphate mining facilities in Florida. 8. Receivables, Net ---------------- Accounts receivable as of June 30 were as follows:
1997 1996 Trade accounts $315.1 $379.0 Non-trade receivables 71.0 37.0 ------ ------ 386.1 416.0 Less: Allowances 6.8 6.3 Receivable interests sold 16.8 59.5 ------ ------ $362.5 $350.2 ====== ======
The carrying value of accounts receivable was equal to the estimated fair value of such assets due to their short maturity. The net residual interest included in the receivables shown on the Consolidated Balance Sheet are owned by IMC-Agrico L.L.C., a special-purpose limited liability company of which IMC-Agrico is the sole equity owner. Under an agreement with a financial institution, IMC-Agrico L.L.C. may sell, on an ongoing basis, an undivided percentage interest in a designated pool of receivables, subject to limited recourse provisions related to the international receivables, in an amount not to exceed $65.0 million. At June 30, 1997, IMC-Agrico L.L.C. had sold a total of $49.3 million of such receivable interests, $32.5 million of which are classified as short-term debt in the Consolidated Balance Sheet. Costs, primarily from discount fees and other administrative costs, totaled $3.4 million, $3.6 million and $2.5 million in 1997, 1996 and 1995, respectively. 9. Inventories ----------- Inventories as of June 30 were as follows:
1997 1996 ------ ------ Products (principally finished) $432.8 $377.8 Operating materials and supplies 110.3 103.9 ------ ------ Gross inventories 543.1 481.7 Less: Inventory allowances 8.9 5.0 ------ ------ Net inventories $534.2 $476.7 ====== ======
10. Property, Plant and Equipment ----------------------------- The Company's investment in property, plant and equipment as of June 30 is summarized as follows:
1997 1996 -------- -------- Land $ 112.2 $ 104.9 Mineral properties and rights 693.7 658.9 Buildings and leasehold improvements 474.0 483.5 Machinery and equipment 2,848.6 2,755.3 Construction in progress 208.7 121.0 -------- -------- 4,337.2 4,123.6 Accumulated depreciation and depletion (1,928.0) (1,772.3) -------- -------- Net property, plant and equipment $2,409.2 $2,351.3 ======== ========
As of June 30, 1997, idle facilities of the Company included two phosphate rock mines, two concentrated phosphates plants and two uranium oxide extraction and processing facilities, all of which remain closed subject to improved market conditions. The net book value of these facilities totaled $62.9 million. In the opinion of management, the net book value of its idle facilities is not in excess of net realizable value. Subsequent to June 30, 1997, the Company announced the temporary closure of one additional phosphate rock mine and resumed production at one of its concentrated phosphate plants. 11. Accrued Liabilities ------------------- Accrued liabilities as of June 30 were as follows:
1997 1996 ------ ------ Salaries, wages and bonuses $ 38.6 $ 38.3 Taxes other than income taxes 33.3 28.1 Income taxes 21.7 11.8 Environmental 14.7 14.1 Interest 11.6 11.7 Restructuring 1.8 14.9 Other 16.6 26.2 ------ ------ $138.3 $145.1 ====== ======
12. Financing Arrangements ---------------------- Short-term borrowings were $32.5 million and $22.7 million as of June 30, 1997 and 1996, respectively, which primarily consisted of revolving credit facilities with various financial institutions, vendor financing arrangements and sale of receivables classified as short-term debt as of June 30, 1997, as required by SFAS No. 125. The weighted-average interest rate on short-term borrowings was 5.8 percent, 6.3 percent and 6.3 percent for 1997, 1996 and 1995, respectively. Long-term debt at June 30 consisted of the following:
1997 1996 ------ ------ Revolving and long-term credit facilities, variable rates $175.4 $ 95.4 Money market borrowings 162.1 - Term loans, maturing through 2005 120.0 120.0 9.45% Senior debentures, due 2011 100.0 100.0 7.525% Industrial revenue bonds, due 2015 75.0 75.0 7.7% Industrial revenue bonds, due 2022 27.1 27.1 9.25% Senior notes, due 2000 4.0 61.6 10.125% Senior notes, due 2001 2.6 60.4 10.75% Senior notes, due 2003 3.4 54.3 6.25% Convertible subordinated notes, due 2001 - 114.9 Other debt 33.2 33.1 ------ ------ 702.8 741.8 Less current maturities 8.0 5.1 ------ ------ $694.8 $736.7 ====== ======
As of June 30, 1997, the estimated fair value of long-term debt described above was approximately the same as the carrying amount of such debt in the Consolidated Balance Sheet. The fair value was calculated in accordance with the requirements of SFAS No. 107, "Disclosures of Fair Value of Financial Instruments" and was estimated by discounting the future cash flows using rates currently available to the Company for debt instruments with similar terms and remaining maturities. In fiscal 1997, the Company purchased a total of $166.4 million principal amount of its 9.25 percent senior notes due 2000, 10.125 percent senior notes due 2001 and 10.75 percent senior notes due 2003 (collectively, Senior Notes) prior to maturity in an effort to reduce higher cost indebtedness. As a result, the Company recorded an extraordinary charge of $10.8 million, net of taxes, for the redemption premium and write-off of previously deferred finance charges. In addition, in fiscal 1997, the Company completed the redemption of its outstanding $114.9 million, 6.25 percent convertible subordinated notes due 2001 (Subordinated Notes). In connection with the conversion of the Subordinated Notes, the Company recorded an extraordinary charge, net of taxes, of $0.6 million for write-off of previously deferred finance charges associated with the Subordinated Notes. The Company issued approximately 3.6 million shares of common stock to holders of $114.4 million principal amount of the Subordinated Notes who converted the Subordinated Notes prior to the redemption date. The balance of $0.5 million principal amount was redeemed by the Company for cash. In 1995, the Company purchased $165.0 million principal amount of its Senior Notes prior to maturity in an effort to reduce higher cost indebtedness. As a result, the Company recorded an extraordinary charge of $6.5 million, net of taxes, for the redemption premium and write-off of previously deferred finance charges. In February 1996, the Company entered into an unsecured credit facility (Credit Facility) with a group of banks. Under the terms of the Credit Facility, the Company and certain of its subsidiaries may borrow up to $450.0 million under a revolving credit facility which matures on March 1, 1999 and $50.0 million under a long-term credit facility which matures on March 2, 2001. In addition, the Company has a maximum availability of approximately $283.0 million under uncommitted money market lines. On June 30, 1997, the Company and its subsidiaries had borrowed $50.0 million under the revolving credit facility, $46.9 million under the long-term credit facility and $162.1 million under the money market lines. The Company has classified borrowings under revolving credit facilities and money market lines as long-term debt since the Company has the ability and the intent to maintain these obligations for longer than one year. Additionally, $33.3 million was drawn under the Credit Facility as letters of credit principally to support industrial revenue bonds and other debt and credit risk guarantees. Simultaneously with the execution of the Credit Facility, the Company and one of its subsidiaries refinanced certain of its unsecured term loans. The new $120.0 million unsecured term loans (Term Loans) bear interest at rates between 7.12 percent and 7.18 percent and mature at various times between 2000 and 2005. The Credit Facility, Term Loans and Senior Notes contain provisions which: (i) restrict the Company's ability to make capital expenditures and dispose of assets; (ii) limit the payment of dividends or other distributions to stockholders and (iii) limit the incurrence of additional indebtedness. These debt instruments also contain various financial ratio requirements and other covenants. IMC-Agrico has several agreements with a group of banks to provide it with an aggregate revolving credit facility of $125.0 million (collectively, IMC-Agrico Revolving Credit Facility or Agreements) maturing September 1997, December 1997 and February 1998. The IMC-Agrico Revolving Credit Facility has a letter of credit subfacility for up to $25.0 million. Borrowings under the IMC-Agrico Revolving Credit facility are unsecured with a negative pledge on substantially all of IMC-Agrico's assets and bear interest at rates based on a base rate or an adjusted Eurodollar rate. As of June 30, 1997, IMC-Agrico had drawn $8.7 million under the letter of credit subfacility and had borrowings of $78.5 million under the remainder of the IMC-Agrico Revolving Credit Facility. IMC-Agrico has classified borrowings under the IMC-Agrico Revolving Credit Facility as long-term debt since IMC-Agrico has the ability and the intent to maintain these obligations for longer than one year. The Agreements have restrictive covenants including minimum net partners' capital, fixed charge and current ratio requirements; place limitations on indebtedness of IMC-Agrico; and restrict the ability of IMC-Agrico to make cash distributions in excess of Distributable Cash (as defined in the Partnership Agreement). The Agreements require IMC-Agrico to repay all revolving loans for a minimum of 30 consecutive days within each calendar year. In addition, pursuant to the Partnership Agreement, IMC-Agrico is required to obtain the approval of the Policy Committee of IMC-Agrico prior to incurring more than an aggregate of $5.0 million (adjusted annually for inflation) in indebtedness (excluding a total of $125.0 million of indebtedness under the IMC-Agrico Revolving Credit Facility). (See also Note 22, "Subsequent Events," of Notes to Consolidated Financial Statements.) Cash payments for interest were $52.6 million, $67.0 million and $70.6 million in 1997, 1996 and 1995, respectively. In 1997, $114.4 million of long-term debt was converted to common stock. Scheduled maturities, excluding the revolving credit facilities, for the next five years are as follows: 1998 $ 8.0 1999 8.7 2000 3.3 2001 83.3 2002 5.1 In May 1997, the Company increased its existing registration statement on Form S-3 to issue up to $300.0 million of debt and equity securities. In July 1997, the Company issued $150.0 million of 6.875 percent senior debentures due 2007. The proceeds were used to reduce higher cost indebtedness. 13. Other Noncurrent Liabilities ---------------------------- Other noncurrent liabilities as of June 30 were as follows:
1997 1996 ------ ------ Employee and retiree benefits $143.0 $127.2 Environmental 102.5 102.3 Deferred gain 37.8 40.6 Restructuring charges 28.2 33.4 Other 33.0 48.5 ------ ------ $344.5 $352.0 ====== ======
14. Pension Plans ------------- The Company has non-contributory pension plans that cover approximately 73 percent of its employees. Benefits are based on a combination of years of service and compensation levels, depending on the plan. Generally, contributions to the United States plans are made to meet minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA), while contributions to Canadian plans are made in accordance with Pension Benefits Acts, instituted by the provinces of Saskatchewan and Ontario. Certain other employees are covered by defined contribution pension plans. Employees in the United States and Canada whose pension benefits exceed Internal Revenue Code and Revenue Canada limitations, respectively, are covered by supplementary non-qualified, unfunded pension plans. The components of net pension expense for the years ended June 30, computed actuarially, were as follows:
1997 1996 1995 ----- ----- ----- Service cost for benefits earned during the year $12.5 $10.0 $ 9.0 Interest cost on projected benefit obligation 17.7 15.8 14.7 Return on plan assets (16.8) (28.8) (11.8) Net amortization and deferral 1.9 17.5 (0.1) ----- ----- ----- Net pension expense $15.3 $14.5 $11.8 ===== ===== =====
The plans' assets consist mainly of corporate equity and United States government and corporate debt securities, and units of participation in a collective short-term investment fund. In a number of these plans, the plan assets exceed the accumulated benefit obligations (overfunded plans) and in the remainder of the plans, the accumulated benefit obligations exceed the plan assets (underfunded plans). The funded status, based on an April 1 measurement date, of the Company's pension plans and amounts recognized in the Consolidated Balance Sheet as of June 30 were as follows:
Overfunded Underfunded Plans Plans --------------- --------------- 1997 1996 1997 1996 ------ ------ ------ ------ Plans' assets at fair value $173.7 $163.8 $ 29.8 $ 28.9 Actuarial present value of projected benefit obligations: Vested benefits 136.8 124.2 36.5 34.8 Non-vested benefits 14.4 16.1 5.9 3.0 Accumulated benefit obligations 151.2 140.3 42.4 37.8 Projected future salary increases 46.9 54.6 17.7 3.8 ------ ------ ------ ------ Total projected benefit obligations 198.1 194.9 60.1 41.6 ------ ------ ------ ------ Plans' assets less than projected benefit obligations 24.4 31.1 30.3 12.7 Items not yet recognized in earnings: Unrecognized net gain (13.9) (20.0) (9.8) (2.0) Unrecognized transition liability (asset) 2.2 0.9 (0.7) (0.2) Unrecognized prior service cost (7.7) (10.4) (15.2) (9.5) Additional minimum liability - - 1.8 11.0 Fourth quarter contributions (0.4) (0.6) (1.0) (0.5) ------ ------ ------ ------ Accrued pension liability $ 4.6 $ 1.0 $ 5.4 $ 11.5 ====== ====== ====== ======
Significant actuarial assumptions were as follows:
1997 1996 1995 ---- ---- ---- Discount rate 7.5% 7.6% 8.2% Long-term rate of return on assets 9.5% 9.6% 7.8% Rate of increase in compensation levels 5.1% 5.2% 5.2%
The Company also has defined contribution pension and investment plans (Plans) for certain of its employees. Under each of the Plans, participants are permitted to defer a portion of their compensation. Company contributions to the Plans are based on a percentage of wages earned by the eligible employees or by matching a percentage of employee contributions. The Company's contributions to the Plans totaled $7.3 million, $9.7 million and $9.7 million for the years ended June 30, 1997, 1996 and 1995, respectively. 15. Postretirement and Postemployment Benefit Plans ----------------------------------------------- The Company provides certain health care benefit plans for certain retired employees. The plans may be either contributory or non-contributory and contain certain other cost-sharing features such as deductibles and coinsurance. The plans are unfunded. Employees are not vested and such benefits are subject to change. The components of postretirement benefits other than pensions (OPEBS) expense for years ended June 30 were as follows:
1997 1996 1995 ---- ---- ---- Service cost $1.9 $1.7 $1.5 Interest cost 5.0 5.3 5.3 Net amortization and deferral (1.9) (1.8) (1.5) ---- ---- ---- $5.0 $5.2 $5.3 ==== ==== ====
The significant assumptions used in determining OPEBS costs were as follows:
1997 1996 1995 ---- ---- ---- Discount rate 7.5% 7.5% 8.2% Health care trend rate: Under age 65 8.6% (1) 9.2% (1) 9.8% (1) Over age 65 5.8% (2) 6.0% (2) 6.3% (2) (1) Decreasing gradually to 5.5% in 2003 and thereafter. (2) Decreasing gradually to 5.5% in 1999 and thereafter.
If the health care trend rate assumptions were increased by 1.0 percent, the accumulated postretirement benefit obligation would increase by 6.2 percent as of June 30, 1997. This would have the effect of an 8.1 percent increase on OPEBS expense in 1997. The components of the Company's OPEBS liability as of June 30 were as follows:
1997 1996 ------ ------ Retirees $ 33.8 $ 35.1 Actives: Fully eligible 11.3 13.0 Not fully eligible 31.1 26.6 ------ ------ Total 76.2 74.7 Items not yet recognized in earnings: Unrecognized transition obligation 1.8 Unrecognized prior service cost 10.7 12.1 Unrecognized net gain 11.5 10.5 ------ ------ Accrued postretirement benefits liability $100.2 $ 97.3 ====== ======
The Company also provides benefits such as workers' compensation and disability to certain former or inactive employees after employment but before retirement. The plans are unfunded. Employees are not vested and plan benefits are subject to change. Effective July 1, 1994, the Company adopted SFAS No. 112 to account for disability benefits of certain employees. Prior to July 1, 1994, the Company recognized the cost of providing certain of these benefits on a cash basis. SFAS No. 112 requires the cost of providing these benefits be recognized when it becomes probable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid. Consequently, the Company recognized a $13.3 million liability for postemployment benefits as of July 1, 1994 and recorded a charge of $5.9 million, net of taxes, for the cumulative effect of the Company's unfunded obligation prior to July 1, 1994. The effect of the adoption of SFAS No. 112 on 1995 earnings before the cumulative effect of the accounting change was not material. 16. Income Taxes ------------ Two of the Company's three potash operations that are subject to Canadian taxes, Kalium Canada and Central Canada Potash, are included in the consolidated United States federal income tax return filed by the Company. Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for accounting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of June 30 were as follows:
1997 1996 ------ ------ Deferred tax liabilities Property, plant and equipment $455.6 $437.4 Taxes on undistributed foreign earnings 1.9 19.6 Other liabilities 76.2 50.0 ------ ------ Total deferred tax liabilities 533.7 507.0 ------ ------ Deferred tax assets Alternative minimum tax credit carryforwards 69.9 82.8 Postretirement and postemployment benefits 42.6 39.6 Foreign tax credit carryforward 33.5 27.5 Sterlington litigation settlement 28.6 31.1 Reclamation and decommissioning accruals 24.1 27.4 Restructuring accruals 9.5 25.3 Other assets 39.9 46.5 ------ ------ Total deferred tax assets 248.1 280.2 Valuation allowance (33.5) (27.5) ------ ------ Net deferred tax assets 214.6 252.7 ------ ------ Net deferred tax liabilities $319.1 $254.3 ====== ======
As of June 30, 1997, the Company had alternative minimum tax credit carryforwards of approximately $69.9 million, which can be carried forward indefinitely. In addition, the Company has a foreign tax credit carryforward of approximately $33.5 million. The foreign tax credit carryforward will expire in 2001 to the extent it is not utilized. The realization of the foreign tax credit carryforward is dependent upon the Company's future foreign earnings and taxes. Due to the uncertainty of its ultimate realization, the Company has established a full valuation allowance against this carryforward benefit. The provision for income taxes for the years ended June 30 consisted of the following:
1997 1996 1995 ------ ------ ------ Current Federal $ 22.4 $ 74.0 $ 33.6 State and local 7.0 2.8 8.6 Foreign 26.6 14.9 52.9 ------ ------ ------ 56.0 91.7 95.1 Deferred Federal 42.7 (7.4) 8.1 State and local 2.8 4.4 (0.9) Foreign 16.0 5.4 13.2 ------ ------ ------ 61.5 2.4 20.4 ------ ------ ------ $117.5 $ 94.1 $115.5 ====== ====== ======
The components of earnings before income taxes, extraordinary charge and cumulative effect of accounting change and the effects of significant adjustments to tax computed at the federal statutory rate were as follows:
1997 1996 1995 ------ ------ ------ Domestic $245.8 $195.7 $193.6 Foreign 76.2 42.7 115.2 ------ ------ ------ Earnings before income taxes, extraordinary charge and cumulative effect of accounting change $322.0 $238.4 $308.8 ====== ====== ====== Computed tax at the federal statutory rate of 35% $112.7 $ 83.4 $108.1 Foreign income and withholding taxes 11.0 12.7 19.5 Percentage depletion in excess of basis (12.5) (10.4) (18.1) Merger expenses not deductible for tax purposes - 7.1 - State income taxes, net of federal income tax benefit 6.3 4.8 4.9 Benefit of foreign sales corporation (5.6) (4.3) (2.3) Federal taxes on undistributed foreign earnings - - 4.4 Other items (none in excess of 5% of computed tax) 5.6 0.8 (1.0) ------ ------ ------ Provision for income taxes $117.5 $ 94.1 $115.5 ====== ====== ====== Effective tax rate 36.5% 39.5% 37.4%
United States income and foreign withholding taxes are provided on the earnings of foreign subsidiaries that are expected to be remitted to the extent that taxes on the distribution of such earnings would not be offset by foreign tax credits. The Company has no present intention of remitting undistributed earnings of foreign subsidiaries aggregating $211.7 million at June 30, 1997 and, accordingly, no deferred tax liability has been established relative to these earnings. If these amounts were not considered permanently reinvested, a deferred tax liability of $42.2 million would have been required. Income taxes paid, net of refunds received, were $91.6 million, $125.3 million and $84.7 million for 1997, 1996 and 1995, respectively. 17. Capital Stock ------------- Changes in the number of shares of common stock issued and in treasury were as follows:
1997 1996 ---------- ---------- S> Common stock issued Balance, beginning of year 97,863,784 96,408,200 Common stock issued - 442,653 Stock options exercised 351,001 1,009,466 Conversion of convertible debt 3,604,366 2,265 Award of restricted shares - ,200 ---------- ---------- Balance, end of year 101,819,151 97,863,784 Treasury common stock Balance, beginning of year 5,545,884 5,552,840 Common stock issued (208,364) (9,396) Purchases 2,919,100 2,440 ---------- ---------- Balance, end of year 8,256,620 5,545,884 ---------- ---------- Common stock outstanding, end of year 93,562,531 92,317,900 ========== ==========
Pursuant to a Shareholders Rights Plan adopted by the Company in June 1989, a dividend of one preferred stock purchase right (Right) for each outstanding share of common stock of the Company was issued on July 12, 1989 to stockholders of record on that date. Under certain conditions, each Right may be exercised to purchase one two-hundredth of a share of Junior Participating Preferred Stock, Series C, par value $1 per share, at a price of $75, subject to adjustment. This preferred stock is designed to participate in dividends and vote on essentially equivalent terms with a whole share of common stock. The Rights generally become exercisable apart from the common stock only if a person or group acquires 15 percent or more of the common stock or makes a tender offer for 15 percent or more of the outstanding common stock. Upon the acquisition by a person or group of 15 percent or more of the common stock, each Right will entitle the holder to purchase, at the then-current exercise price of the Right, a number of shares of common stock having a market value at that time of twice the exercise price. The Rights may be redeemed at a price of $.005 per Right under certain circumstances prior to their expiration on June 21, 1999. No event during 1997 made the Rights exercisable. 18. Stock Plans ----------- The Company has various stock option plans (Stock Plans) under which it may grant non-qualified stock options and stock appreciation rights (SARs) to officers and key managers of the Company, accounted for under APB Opinion No. 25. The Stock Plans, as amended, provide for the issuance of a maximum of 9.2 million shares of common stock of the Company which may be authorized but unissued shares or treasury shares. Under the terms of the Stock Plans, the option price per share may not be less than 100 percent of the fair market value on the date of the grant. Stock options and SARs granted under the Stock Plans extend for ten years and generally become exercisable either 50 percent one year after the date of the grant and 100 percent two years after the date of the grant, or in one-third increments: one-third one year after the date of the grant, two-thirds two years after the date of the grant, and 100 percent three years after the date of the grant. The Company also adopted a long-term incentive plan in fiscal 1994 under which officers and key managers were awarded shares of restricted common stock of the Company along with contingent stock units. Based on performance objectives, these shares and units were intended to vest in whole or in part during and at the end of a three-year performance period ending June 30, 1997. On June 30, 1996, the long-term incentive plan was deemed to be fully vested, one year prior to the completion of the performance period, and 141,480 shares of common stock were distributed. Restricted stock was valued on the issuance date, and the related expense amortized over the vesting period. At the Company's 1996 Annual Meeting, the stockholders approved the 1996 long-term incentive plan which replaced the 1994 long-term incentive plan discussed in the preceding paragraph. The new plan became effective October 17, 1996. Under the plan, officers and key managers may be awarded stock or cash upon achievement of specified objectives over a three-year period beginning July 1, 1996. Final payouts are made at the discretion of the Compensation Committee of the Company's Board of Directors whose members are not participants of the plan. In 1997, $5.1 million was charged to earnings for the cost of performance awards earned for the relevant three year period under the 1996 long-term incentive plan. SARs granted totaled 65,250 shares in fiscal 1996. The market price for the SARs was $38.00 in fiscal 1996. A total of 10,650 shares and 69,375 shares were exercised in fiscal 1997 and 1996, respectively. The following table summarizes stock option activity:
1997 1996 ------------------------- ------------- - ---------- Weighted Average Weighted Average Shares Exercise Price Shares Exercise Price --------- ------------- -------- ------------ - - Outstanding at July 1 3,215,892 $23.64 3,592,669 $20.24 Granted 1,902,240 39.00 771,511 35.58 Exercised (350,402) 20.34 (1,006,866) 20.09 Cancelled (72,075) 35.11 (141,422) 27.39 --------- --------- Outstanding at June 30 4,695,655 $29.93 3,215,892 $23.65 ========= ========= Exercisable at June 30 2,216,600 $22.29 1,732,273 $20.37 ========= ========= Available for future grant at June 30 2,296,316 4,126,481 ========= =========
Data related to significant option ranges as of June 30, 1997 and related weighted average price and contract life information follows:
Options Outstanding Options Exercisable -------------------------------- ------------------ Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Prices of Options Life Price of Options Price - ---------------------------------------------------------------------- $11.00 to 16.50 173,7776 years $15.06 173,777 $15.06 16.51 to 24.75 1,459,5058 years 19.74 1,321,077 19.49 24.76 to 37.13 872,5588 years 27.50 555,246 26.48 37.14 to 40.88 2,189,8151 years 38.87 166,500 38.10 - ---------------------------------------------------------------------- $11.00 to 40.88 4,695,6555 years $29.93 2,216,600 $22.29
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 fiscal 1996 consistent with the provisions of SFAS No. 123, the Company's net earnings and earnings per share would have been reduced to the pro forma amounts indicated below:
1997 1996 ------ ------ Net earnings - pro forma $188.8 $142.7 Earnings per share - pro forma 1.99 1.54 Weighted average fair value of options granted 39.04 35.48
For the pro forma disclosures, the estimated fair value of the options is amortized to expense over their expected six year life. These pro forma amounts are not indicative of anticipated future disclosures because SFAS No. 123 does not apply to grants before fiscal 1996. 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:
1997 1996 ------ ------ Expected dividend yield 0.85% 0.85% Expected stock price volatility 25.4% 26.6% Risk-free interest rate (5 year government) 6.4% 6.5% Expected life of options 6 years 6 years
Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion the existing models do not provide a reliable single measure of the value of the employee stock options. Another stock option plan provides for the granting of awards of up to 200,000 shares of common stock to directors of the Company who were directors prior to the Merger and who were not also employees of the Company. Options may be exercised at any time the director holding the option remains a director of the Company and within two years after the director ceases to be a director of the Company. Under the terms of the plan, options granted are exercisable over ten years beginning with the grant date of the option. Options were granted to purchase 24,000 shares and 14,000 shares of common stock in 1997 and 1996, respectively, at an option price of $41.94 and $29.75 per share, respectively. A total of 500 shares and 2,600 shares were exercised in 1997 and 1996, respectively. 19. Commitments ----------- The Company purchases sulphur, natural gas and ammonia from third parties under contracts extending, in some cases, for multiple years. Purchases under these contracts are generally at prevailing market prices. These contracts generally range from one to four years. The Company and FRP have an agreement to supply a portion of the Company's sulphur requirements to IMC-Agrico over the life of the joint venture partnership. Since the term of the sulphur purchase commitment is indeterminable, the dollar value of such commitments has been excluded from the schedule below after the year 2002. (See also Note 22, "Subsequent Events," of Notes to Consolidated Financial Statements.) The Company leases plants, warehouses, terminals, office facilities, railcars and various types of equipment under operating leases. Lease terms generally range from three to five years, although some leases have longer terms. Summarized below is a schedule of future minimum long-term purchase commitments and minimum lease payments under non-cancelable operating leases as of June 30, 1997:
Purchase Lease Commitments Commitments ----------- ----------- 1998 $260.4 $ 19.9 1999 204.0 17.1 2000 120.4 13.9 2001 114.8 11.9 2002 109.7 8.4 Subsequent years 17.5 21.7 ------ ------ $826.8 $ 92.9 ====== ======
Rental expense for 1997, 1996 and 1995 amounted to $31.9 million, $45.6 million and $39.7 million, respectively. International Minerals & Chemical (Canada) Global Limited is committed under a service agreement with Potash Corporation of Saskatchewan Inc. (PCS) to produce annually from mineral reserves specified quantities of potash for a fixed fee plus a pro rata share of total production and capital costs at the potash mines located in Esterhazy, Saskatchewan. The agreement extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. Potash produced for PCS may, at PCS's option, amount to an annual maximum of approximately one-fourth of the Esterhazy mines' production capacity but no more than approximately 1.1 million tons. During 1997, production of potash for PCS amounted to 500,000 tons, or 16 percent of the Esterhazy mines' total tons produced. Mississippi Chemical Corporation Property Reserves In July 1994, IMC-Agrico entered into an option agreement with Mississippi Chemical Corporation (MCC) to purchase land (Property) in Florida. The Property, along with land previously purchased from MCC, contains approximately 87.5 million tons of phosphate rock reserves. Prior to January 16, 1998, IMC-Agrico may exercise its option to purchase the Property for $57.0 million. If IMC-Agrico fails to exercise its option by that date, MCC has the right to sell the Property to IMC-Agrico and IMC-Agrico will be obligated to purchase the Property for $50.0 million. 20. Contingencies ------------- Mining Risks Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines located at Esterhazy, Saskatchewan. As a result, the Company has incurred expenditures, certain of which due to their nature were capitalized while others were charged to expense, to control the inflow. Since the initial discovery of the inflow, the Company has been able to meet all sales obligations from production at the mines. The Company has considered, and continues to evaluate, alternatives to the operational methods employed at Esterhazy. However, recent changes in the procedures utilized to control the water inflow have proven successful to date, and the Company currently intends to continue conventional shaft mining. Despite the relative success of these modified measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. Sterlington Litigation ANGUS Chemical Company (ANGUS), numerous third parties alleging personal injury and the Company are involved in various litigation arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. The Company continues to litigate each of the matters arising out of the Sterlington explosion. Approximately 1,300 class action plaintiffs seek damages for personal injuries, "fear and fright," and punitive damages against ANGUS, the Company and other defendants arising from the explosion. Discovery is still not complete, and the trial date has been postponed indefinitely. The Company is unable to estimate the magnitude of its exposure at this time. The Company has settled actions filed by ANGUS with respect to claims for amounts ANGUS paid for settled claims in connection with the explosion and has settled actions filed by ANGUS for claimed rights of direct action against the Company's insurers. In addition, ANGUS' claims for certain environmental claims were dismissed by the trial court and are on appeal. Potash Antitrust Litigation The Company was a defendant, along with other Canadian and United States potash producers, in a class action antitrust lawsuit filed in federal court in 1993. The plaintiffs alleged a price-fixing conspiracy among North American potash producers beginning in 1987 and continuing until the filing of the complaint. The class action complaint against all defendants, including the Company, was dismissed by summary judgment in January 1997. The summary judgment dismissing the case is currently on appeal by the plaintiffs to the United States Court of Appeals for the Eighth Circuit. The Court of Appeals is expected to rule during calendar 1998. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California case, merits discovery has been stayed and the case is currently inactive. Pine Level Property Reserves In October 1996, IMC-Agrico signed an agreement with Consolidated Minerals, Inc. (CMI) for the purchase of real property, Pine Level, containing approximately 100 million tons of phosphate rock reserves. In connection with the purchase, IMC-Agrico has agreed to obtain all environmental, regulatory and related permits necessary to commence mining on the property. Within five years from the date of this agreement, IMC-Agrico is required to provide notice to CMI regarding one of the following: (i) whether they have obtained the permits necessary to commence mining any part of the property; (ii) whether they wish to extend the permitting period for an additional three years or (iii) whether they wish to decline to extend the permitting period. If the permits necessary to commence mining the property have been obtained, IMC-Agrico is obligated to pay CMI an Initial Royalty payment of $28.9 million. In addition to the Initial Royalty payment described above, IMC-Agrico is required to pay CMI a mining royalty on phosphate rock mined from the property to the extent the permits are obtained. Environmental Matters The historical use and handling of regulated chemical substances and crop nutrient products in the normal course of the Company's business has resulted in contamination at facilities presently or previously owned or operated by the Company. The Company has also purchased facilities that were contaminated by previous owners through their use and handling of regulated chemical substances. Spills or other unintended releases of regulated substances have occurred in the past, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. The Company cannot estimate the level of expenditures that may be required in the future to clean up contamination from the handling of regulated chemical substances or crop nutrients. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. The cost of any remedial actions that ultimately may be required at these sites currently cannot be determined. The Company believes that it is entitled to at least partial indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities and operations pursuant to indemnification agreements. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities from parties including: PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies, Inc.; Estech, Inc. and certain private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date. Other Most of the Company's export sales of phosphate and potash crop nutrients are marketed through three export associations. As a member, the Company is contractually obligated to reimburse the export association for any losses or other liabilities incurred. There were no such operating losses or other liabilities in 1997, 1996 and 1995. The Company also has certain other contingent liabilities with respect to litigation, claims and guarantees of debt obligations to third parties arising in the ordinary course of business. The Company does not believe that any of these contingent liabilities will have a material adverse impact on the Company's financial position. 21. Operations by Geographic Area ----------------------------- Financial information relating to the Company's operations in various geographic areas was as follows:
Net Sales --------------------------------- 1997 1996 1995 -------- -------- -------- United States $2,939.8 $2,910.8 $2,589.0 Canada 306.7 326.9 388.6 Other 24.9 20.9 11.7 Transfers between geographic areas (289.4) (277.6) (253.2) -------- -------- -------- Consolidated $2,982.0 $2,981.0 $2,736.1 ======== ======== ========
Operating Earnings Identifiable Assets --------------------------- --------------------------- 1997 1996 1995 1997 1996 1995 -------- -------- -------- -------- -------- -------- United States $ 399.0 $ 445.5 $ 352.0 $3,095.8 $2,828.0 $2,854.9 Canada 100.5 29.0 130.2 865.4 845.7 734.9 Other 23.5 18.9 10.2 8.4 7.8 8.2 Eliminations (0.2) (9.2) 1.6 (358.0) (244.7) (274.8) -------- -------- -------- -------- -------- -------- Consolidated $ 522.8 $ 484.2 $ 494.0 $3,611.6 $3,436.8 $3,323.2 ======== ======== ======== ======== ======== ========
Transfers of product between geographic areas were at prices approximating those charged to unaffiliated customers. Net sales from the United States, as shown in the preceding table, included sales to unaffiliated customers in other geographic areas as follows:
1997 1996 1995 ------ ------ ------ Far East $641.4 $753.5 $643.9 Latin America 212.6 190.3 121.7 Europe 10.7 10.5 27.1 ------ ------ ------ $864.7 $954.3 $792.7 ====== ====== ======
22. Subsequent Events ----------------- In August 1997, the Company signed a definitive agreement with Freeport-McMoRan Inc. (FTX), which holds a 51.6 percent interest in FRP, providing for the merger of FTX into the Company. The Company will be the surviving entity and the transaction will be accounted for as a purchase. In the proposed merger (FTX Merger), each share of common stock of FTX would be exchanged for 0.90 shares of the Company's common stock plus one-third of a warrant, with each whole warrant entitling the holder to purchase one share of the Company's common stock at a price equal to $44.50 per share. Immediately prior to the FTX Merger, the sulphur businesses of FRP and the Company will be transferred to Freeport Sulphur Company, a newly-formed subsidiary of FRP. Shares of Freeport Sulphur Company will be distributed to all FRP unitholders, including FTX. As of June 30, 1997, the net carrying value of the Company's sulphur investment was approximately $200.0 million. The Company expects to record a significant non-cash charge on the disposition of this investment in connection with the FTX Merger. The FTX Merger is subject to various closing conditions, including approval by stockholders of FTX and the Company. In May 1997, the Company announced that it had reached a definitive agreement to acquire Western Ag-Minerals Company (Western Ag), a subsidiary of Toronto-based Rayrock Yellowknife Resources Inc., for $53.0 million. Western Ag, located in Carlsbad, New Mexico, has annual capacity of 400,000 tons of potash and had calendar-year 1996 revenues of approximately $41.0 million. On September 5, 1997, the acquisition of Western Ag was consummated. QUARTERLY RESULTS (UNAUDITED) (In millions except per share amounts)
Quarter ------------------------------------- First Second Third Fourth Year - --------------------------------------------------------------------- Fiscal 1997 Net sales $ 603.6 $ 665.4 $ 664.8 $1,048.2 $2,982.0 Gross margins 155.5 184.5 171.5 258.5 770.0 Earnings before income taxes 45.0 76.3 61.6 139.1 322.0 Earnings before extra- ordinary item 28.6 48.5 39.1 88.3 204.5 Net earnings 21.1 47.9 39.1 85.0 193.1 Earnings per share: Earnings before extra- ordinary item $ .31 $ .51 $ .41 $ .93$ 2.15(1) Net earnings .23 .50 .41 .90 2.03(1) - ---------------------------------------------------------------------- Fiscal 1996(2) Net sales $ 599.4 $ 709.6 $ 716.9 $ 955.1 $2,981.0 Gross margins 150.7 201.5 185.5 219.5 757.2 Earnings before income taxes 51.7 83.2 2.6 100.9 238.4 Net earnings (loss) 32.1 54.1 (8.3) 66.4 144.3 Earnings (loss) per share $ .35 $ .58 $ (.09)$ .71$ 1.56(1) - ----------------------------------------------------------------------- (1) Due to weighted average share differences, when stated on a quarter and year-to-date basis, the earnings per share for the fiscal years ended June 30, 1997 and 1996 do not equal the sum of the respective earnings per share for the four quarters then ended. (2) The quarterly results reflected above give retroactive effect to the Merger discussed in Note 3 of Notes to Consolidated Financial Statements and, accordingly, the amounts have been restated for all periods prior to the Merger to include the accounts and operations of Vigoro.
Fiscal 1997 Fourth quarter operating results reflected the acquisition of Hutson's Ag Services, Inc. and Hutson Company, Inc. in May 1997. Fiscal 1996 Second, third and fourth quarter operating results reflected the acquisition of Feed Ingredients in October 1995. Third quarter operating results included an after-tax charge of $69.6 million, or $0.75 per share, from charges related to the Merger, as well as costs associated with, among other things, a corporate restructuring, other asset valuations and environmental issues. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. PART III. Item 10. Directors and Executive Officers of the Registrant. DIRECTORS OF THE REGISTRANT The ages and five-year employment history of each member of the Board of Directors at August 29, 1997 is as follows: Raymond F. Bentele - ------------------- Age 60. Retired President and Chief Executive Officer, Mallinckrodt Inc. Mr. Bentele was Executive Vice President of Mallinckrodt Group Inc. (formerly known as IMCERA Group Inc.) from 1989 until his retirement. He is also a director of the Kellwood Company, Mallinckrodt Inc., Legett & Platt Inc. and was previously a director of IMC Global from 1990 to 1991. Mr. Bentele has served as an IMC Global Director since June 1994, and his term expires in April 1998. Mr. Bentele currently serves as Chairman of the Compensation Committee and as a member of the Committee on Directors and Board Affairs. Wendell F. Bueche - ------------------ Age 66. Chairman of the Board of the Company. Mr. Bueche served as Chairman and Chief Executive Officer from August 1994 through June 1997. From February 1993 until August 1994, he served as President and Chief Executive Officer. Mr. Bueche was Chairman of the Board, Chief Executive Officer and President of Allis-Chalmers Corporation from 1986 through 1988. He retired from full-time employment from 1989 until February 1993. Mr. Bueche is also a director of Marshall & Ilsley Corporation, M&I Marshall & Ilsley Bank, WICOR, Inc., Wisconsin Gas Company and Executive Association, American Industrial Partners, L. P. Mr. Bueche has served as an IMC Global Director since July 1991, and his term expires in April 1999. Mr. Bueche currently serves on the Executive Committee and is a non-voting member of the Committee on Directors and Board Affairs. Rod F. Dammeyer - ---------------- Age 56. Managing Director of Equity Group Investments, Inc. Since January 1993, Mr. Dammeyer has served as Chief Executive Officer of Anixter International, Inc. In addition, he has served as President and as a director of Anixter International, Inc. since October 1985. Mr. Dammeyer is a trustee of Van Kampen American Capital, Inc. closed end investment companies and a member of the Chase Manhattan Corporation National Advisory Board. Mr. Dammeyer is also a director of Antec Corporation, Capsure Holdings Corp., Inc.; Jacor Communications, Inc.; Lukens Inc.; Sealy Corporation and TeleTech Holdings, Inc. He previously served as a director of Vigoro from August 1993 until March 1996 and has served as an IMC Global Director since March 1996. His term expires in April 1998. Mr. Dammeyer currently serves on the Compensation Committee. James M. Davidson, Ph.D. - ------------------------- Age 63. Vice President for Agriculture and Natural Resources, University of Florida. Dr. Davidson joined the University of Florida in 1974, became Professor and Assistant Dean for Research in 1979, Professor and Dean for Research, Institute of Food and Agricultural Sciences, and Director, Florida Agricultural Experiment Station, Gainesville, Florida in 1986, and assumed his present position in 1992. Dr. Davidson has served as an IMC Global Director since July 1991, and his term expires in April 1999. Dr. Davidson currently serves as Chairman of the Audit Committee and as a member of the Environmental, Health and Safety Committee. Robert E. Fowler, Jr. - ---------------------- Age 61. President and Chief Executive Officer of the Company. Mr. Fowler served as President and Chief Operating Officer from March 1996 through June 1997. He served as President and Chief Executive Officer of Vigoro from September 1994 through February 1996 and as President and Chief Operating Officer from July 1993 to September 1994. Mr. Fowler served as President and Chief Executive Officer of BCC Industrial Services from June 1991 to June 1993. He is a director of Anixter International, Inc. Mr. Fowler previously served as a director of Vigoro from August 1993 through February 1996 and has served as an IMC Global Director since March 1996. His term expires in April 2000. Mr. Fowler currently serves on the Executive Committee and is a non- voting member of the Committee on Directors and Board Affairs. Harold H. MacKay - ---------------- Age 57. Partner of the law firm MacPherson Leslie & Tyerman in Regina, Saskatchewan, Canada. Mr. MacKay served as managing partner of MacPherson Leslie & Tyerman from 1989 through 1996 and as Chairman of the firm after January 1997, a position from which he is presently on leave of absence while serving as Chair of the Task Force on the Future of the Canadian Financial Services Sector. He is a director of IPSCO Inc. and Weyerhaeuser Canada Ltd. Mr. MacKay previously served as a director of Vigoro from November 1993 until March 1996 and has served as an IMC Global Director since March 1996. His term expires in April 2000. Mr. MacKay currently serves as Chairman of the Environmental, Health and Safety Committee and as a member of the Audit Committee. David B. Mathis - --------------- Age 59. Chairman and Chief Executive Officer of Kemper Insurance Companies. Mr. Mathis served as Chairman, President and Chief Executive Officer of Kemper Insurance Companies from March 1996 to September 1996. From February 1992 through February 1996, he served as Chairman and Chief Executive Officer of Kemper Corporation. Mr. Mathis has been employed by Kemper since 1960 in management positions of successively increasing importance. He is currently a director of Kemper Insurance Companies. Mr. Mathis also serves on the board of trustees of Lake Forest College and is an advisory board member of the J. L. Kellogg Graduate School of Management of Northwestern University. He also serves on the board of directors of Evanston Hospital Corporation and the board of trustees of the Chicago Symphony Orchestra. Mr. Mathis has served as an IMC Global Director since February 1995, and his term expires in April 2000. Mr. Mathis currently serves as Chairman of the Committee on Directors and Board Affairs and as a member of the Executive Committee and the Compensation Committee. Thomas H. Roberts, Jr. - ---------------------- Age 73. Retired Chairman and Chief Executive Officer of DEKALB Energy Company (formerly known as DEKALB Corporation). Mr. Roberts is a director of Pride Petroleum Services. From 1968 through 1988 Mr. Roberts served as a director of International Minerals & Chemical Corporation. Mr. Roberts has served as an IMC Global Director since February 1988, and his term expires in April 1998. Mr. Roberts currently serves on the Audit Committee and the Compensation Committee. Joseph P. Sullivan - ------------------ Age 64. Retired Chairman of the Board of Vigoro, a position he held from March 1991 through February 1996. From March 1991 to September 1994, Mr. Sullivan served as Chief Executive Officer of Vigoro. He served as Chief Operating Officer of Vigoro from March 1991 to July 1993 and as President from January 1986 to March 1991. Mr. Sullivan served as a director of Vigoro from January 1986 through February 1996. He is a director of American Classic Voyages Co. Mr. Sullivan has served as an IMC Global Director since March 1996, and his term expires in April 1999. Mr. Sullivan currently serves as Chairman of the Executive Committee and as a member of the Environmental, Health and Safety Committee. Richard L. Thomas - ----------------- Age 66. Retired Chairman of First Chicago NBD Corporation and The First National Bank of Chicago. Mr. Thomas is also a director of First Chicago NBD Corporation; CNA Financial Corporation; The PMI Group; Inc.; The Sabre Group Holdings, Inc. and Sara Lee Corporation. Mr. Thomas is a life trustee of the Orchestral Association of Chicago, a trustee of Rush-Presbyterian-St. Luke's Medical Center (Chicago) and a trustee of Northwestern University. He is also Chairman of the Board of Trustees of Kenyon College. Mr. Thomas has served as an IMC Global Director since June 1996, and his term expires in April 2000. Mr. Thomas currently serves on the Executive Committee and the Committee on Directors and Board Affairs. Billie B. Turner - ---------------- Age 66. Chairman Emeritus of the Board. Retired President and Chief Executive Officer, a capacity in which he served from the Company's incorporation in 1987 until his retirement in February 1993. He is a director of Cyprus-Amax Minerals Company. Mr. Turner has served as an IMC Global Director since 1987, and his term expires in April 1999. Mr. Turner currently serves on the Environmental, Health and Safety Committee. EXECUTIVE OFFICERS OF THE REGISTRANT The ages and five-year employment history of the Company's executive officers at August 29, 1997 is as follows: Wendell F. Bueche - ----------------- Age 66. Chairman of the Board of the Company. Mr. Bueche served as Chairman and Chief Executive Officer from August 1994 through June 1997. From February 1993 until August 1994, he served as President and Chief Executive Officer. Mr. Bueche was Chairman of the Board, Chief Executive Officer and President of Allis-Chalmers Corporation from 1986 through 1988. He retired from full-time employment from 1989 until February 1993. Mr. Bueche is also a director of Marshall & Ilsley Corporation, M&I Marshall & Ilsley Bank, WICOR, Inc., Wisconsin Gas Company and Executive Association, American Industrial Partners, L. P. Mr. Bueche has served as an IMC Global Director since July 1991, and his term expires in April 1999. Mr. Bueche currently serves on the Executive Committee and is a non-voting member of the Committee on Directors and Board Affairs. Robert E. Fowler, Jr. - --------------------- Age 61. President and Chief Executive Officer of the Company. Mr. Fowler served as President and Chief Operating Officer from March 1996 through June 1997. He served as President and Chief Executive Officer of Vigoro from September 1994 through February 1996 and as President and Chief Operating Officer from July 1993 to September 1994. Mr. Fowler served as President and Chief Executive Officer of BCC Industrial Services from June 1991 to June 1993. He is a director of Anixter International, Inc. Mr. Fowler previously served as a director of Vigoro from August 1993 through February 1996 and has served as an IMC Global Director since March 1996. His term expires in April 2000. Mr. Fowler currently serves on the Executive Committee and is a non- voting member of the Committee on Directors and Board Affairs. C. Steven Hoffman - ----------------- Age 48. Senior Vice President of the Company. Mr. Hoffman served as Senior Vice President, Marketing from 1993 until 1994; Senior Vice President, Sales from 1992 until 1993; Senior Vice President, Wholesale Marketing from 1990 until 1992. John U. Huber - ------------- Age 59 . Senior Vice President of the Company and President of the IMC Kalium business unit. Mr. Huber has served as President of the IMC Kalium business unit since joining the Company in March 1996. Prior to joining the Company, Mr. Huber served as Executive Vice President of The Vigoro Corporation from June 1993 to March 1996. Prior thereto he served as President of Kalium Chemicals, Ltd. (now known as IMC Kalium Ltd.) and as President of Kalium Canada, Ltd. (now known as IMC Kalium Canada Ltd.) from August 1991 to March 1996. B. Russell Lockridge - -------------------- Age 47. Senior Vice President, Human Resources of the Company since joining the Company in July 1996. Mr. Lockridge served as Corporate Director, Executive Compensation and Development at FMC Corporation from 1992 to 1996 and as Human Resource Director for FMC's Chemical Business from 1986-1992. Anne M. Scavone - --------------- Age 34. Controller of the Company. Ms. Scavone served as Director, Joint Venture Finances from April 1995 to April 1996 and as Joint Venture Financial Coordinator from April 1993 to April 1995. Prior to joining the Company, Ms. Scavone was a Manager at Ernst & Young from July 1990 to April 1993. Brian J. Smith - -------------- Age 53. Executive Vice President and Chief Financial Officer of the Company since joining the Company in February 1996. From June 1996 to February 1997, Mr. Smith served as Treasurer. Mr. Smith served as Executive Vice President and Chief Financial Officer at W. R. Grace & Co. from 1989 to 1995. Mr. Smith resigned from the Company effective September 30, 1997. Marschall I. Smith - ------------------ Age 52. Senior Vice President and General Counsel of the Company since joining the Company in 1993. Mr. Smith was Senior Vice President and General Counsel of American Medical International Inc. from 1992 until 1993 and Associate General Counsel of Baxter International Inc.from 1980 to 1992. Robert M. Van Patten - -------------------- Age 52. Senior Vice President of the Company and President of the IMC AgriBusiness business unit. Mr. Van Patten has served as President of the IMC AgriBusiness business unit since joining the Company in March 1996. Prior to joining the Company, Mr. Van Patten served as Executive Vice President of The Vigoro Corporation and as President of Vigoro Industries, Inc. (now known as IMC AgriBusiness Inc.) from June 1993 to March 1996. Prior thereto he served as President of the Agribusiness Division of Vigoro Industries, Inc. All of the Company's executive officers are elected annually, with the terms of the officers listed above to expire in April 1998. No "family relationships," as that term is defined in Item 401(d) of Regulation S-K, exist among any of the listed officers. BENEFICIAL OWNERSHIP OF COMMON STOCK Section 16(a) Beneficial Ownership Reporting Compliance - ------------------------------------------------------- Each director and executive officer of the Company who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act), is required by Section 16(a) of the Exchange Act to report to the SEC, by a specified date, his or her beneficial ownership of or transactions in the Company's securities. Reports received by the Company indicate that all such directors and officers filed all requisite reports with the SEC on a timely basis during fiscal 1997 except that a Form 4 for Dr. Davidson relating to the exercise by Dr. Davidson of IMC Global options was not timely filed with the SEC. Item 11. Executive Compensation. Compensation of Executive Officers - ---------------------------------- The following table sets forth information as to the compensation of the Chief Executive Officer and each of the other four most highly compensated executive officers of the Company serving as such on June 30, 1997. The executive officers listed below are collectively referred to as the "Named Executive Officers" in this Annual Report. SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compansation ---------------------------- ----------------------- - --------- Awards Payouts ---------------------- - ------- Restricted Securities Other Annual Stock Underyling LTIP All Other Name and Fiscal Salary Bonus Compensation Awards Options Payouts Compensation Principal Position Year ($) ($) ($) ($) (#) ($) ($) (12) - ------------------------------------------------------ ----------------------- - ------------------------ W.F. Bueche(1) 1997 600,000 386,256 0 0 89,000(8) 597,364(10) 102,407 Chairman 1996 544,600 425,000 0 0 50,000 1,472,078(11) 48,117 1995 530,040 460,000 0 0 20,000(9) 298,141 52,441 R.E. Fowler,Jr.(2) 1997 450,000 267,408 0 0 158,000(8) 371,024(10) 41,211 President & CEO 1996 148,600 85,000 0 0 0 0 0 B.J. Smith(3) 1997 335,500 160,445 6,947(6) 0 74,000(8) 209,030(10) 29,750 Executive VP & CFO 1996 115,077 60,000 3,996(6) 0 25,000 0 36,442 J.U. Huber(4) 1997 299,075 227,443 12,900(7) 0 64,000(8) 243,036(10) 16,901 Senior VP R.M. VanPatten(5) 1997 278,353 154,894 0 0 54,000(8) 220,957(10) 14,243 Senior VP - ------------------------------------------------------------------------------- - ------------------------ (1) Mr. Bueche retired as CEO of the Company on June 30, 1997. (2) Mr. Fowler's employment with the Company commenced on March 4, 1996. (3) Mr. Smith's employment with the Company commenced on February 26, 1996. Mr. Smith resigned from the Company effective September 30, 1997. (4) Mr. Huber was elected Senior Vice President of the Company on February 25, 1997. (5) Mr. Van Patten was elected Senior Vice President of the Company on February 25, 1997. (6) Represents payments to offset expenses incurred for relocation. (7) Represents payments to compensate Mr. Huber for lower pension benefits to be paid by the Company than were payable under the plan of Mr. Huber's former employer. (8) Represents options granted in June 1997 and August 1996. The Company normally grants options to its executive officers once each fiscal year. Due to the Vigoro merger and the decision of the Board of Directors to change the fiscal year of the Company from June 30 to December 31, the Company made two grants of options during fiscal 1997. The Company did not grant any options to the Named Executive Officers during August 1997. (9) Reflects a 2-for-1 stock split effected in November 1995. (10) Payments were made pursuant to the Company's 1996 Long-Term Performance Incentive Plan. (11) Reflects restricted shares and contingent stock units payouts under the 1994 Long-Term Performance Incentive Plan that vested on June 30, 1996, pursuant to action taken by the Board of Directors. The awards were scheduled to vest on June 30, 1997. (12) Consists of: (i) the value of the benefit for life insurance premiums paid by the Company as follows: Mr. Bueche, $64,881 in fiscal 1997; $39,117 in fiscal 1996; and $34,638 in fiscal 1995; Mr. Fowler, $32,211 in fiscal 1997; Mr. Smith, $19,325 in fiscal 1997 and $6,442 in fiscal 1996; Mr. Huber, $10,151 and Mr. Van Patten, $6,248; (ii) contributions made by the Company to the Company's Defined Contribution Savings Plan as follows: Mr. Bueche, $9,000 in fiscal 1997; $9,000 in fiscal 1996; and $17,803 in fiscal 1995; Mr. Fowler, $9,000 in fiscal 1997; Mr. Smith, $9,000 in fiscal 1997; Mr. Huber, $6,750 and Mr. Van Patten, $3,167; (iii) reimbursement by the Company for estate planning expenditures of $7,400 and $1,425 incurred by Mr. Bueche and Mr. Smith, respectively; (iv) income attributable to Mr. Van Patten's use of a vehicle owned by the Company; (v) $21,146 of premiums paid by the Company for additional insurance for Mr. Bueche and (vi) $30,000 paid to Mr. Smith upon commencement of his employment. Company for additional insurance for Mr. Bueche and (vi) $30,000 paid to Mr. Smith upon commencement of his employment.
OPTION GRANTS IN THE LAST FISCAL YEAR The following table sets forth information with respect to all options to purchase common stock granted in fiscal 1997 to each of the Named Executive Officers. There were no grants of stock appreciation rights in fiscal 1997. The Company normally grants options to its executive officers once each fiscal year. Due to the Vigoro merger and the decision of the Board of Directors to change the fiscal year of the Company from June 30 to December 31, the Company made two grants of options during fiscal 1997. The Company did not grant any options to the Named Executive Officers during August 1997.
Individual Grants Grant Date Value ---------------------------------------------------------- - ---------------- Number of % of Total Securities Options Grant Date Underlying Granted to Exercise Present Options Employees in Price Expiration Value Name Granted(#)(1) Fiscal Year ($/Share)(2) Date ($)(3) - ----------- ------------- ----------- ------- - ----- ----------- W. F. Bueche 89,000 10.67 40.875 8/14/06 14.84 R. E. Fowler, Jr.53,000 6.35 40.875 8/14/06 14.84 105,000 9.93 37.625 6/23/07 12.56 B. J. Smith 29,000 3.48 40.875 8/14/06 14.84 45,000 4.25 37.625 6/23/07 12.56 J. U. Huber 21,000 2.52 40.875 8/14/06 14.84 43,000 4.07 37.625 6/23/07 12.56 R. M. Van Patten19,000 2.28 40.875 8/14/06 14.84 35,000 3.31 37.625 6/23/07 12.56 - ----------------------------------------------------------------------- - ------ (1) Except for options granted to Mr. Bueche, all options granted and reported in this table have the following terms: each option vests over a three-year period, with one-third of the options becoming exercisable at the end of each of the first three years following the date of grant and with the entire option becoming exercisable at the end of the third year, unless the vesting schedule is accelerated in the event of a change of control of the Company in accordance with the Company's 1988 Stock Option and Award Plan, as amended and restated. Each option granted to Mr. Bueche during fiscal 1997 vests over a two-year period, with one-half of the options becoming exercisable at the end of each fiscal year. (2) Exercise price is the fair market value of the common stock on the date of grant, determined by calculating the average of the high and low prices at which the common stock is traded on such date, as reflected on the consolidated tape of the New York Stock Exchange. (3) The Black-Scholes Option Pricing Model was used to determine the grant date present value of the options to purchase common stock granted in fiscal 1997 by the Company. The material assumptions and adjustments incorporated in the model in estimating the value of the options which have an expiration date of (i) August 2006 and (ii) June 2007, respectively, include the following: (a) option exercise prices of $40.875 and $37.625, respectively, equal to the fair market value of the underlying stock on the date of grant; (b) an option term of ten years; (c) interest rates of 6.64 percent and 6.49 percent, respectively, representing the interest rate on a U. S. Treasury security on the date of grant with a maturity date corresponding to that of the option term; (d) volatilities of 35.09 percent and 30.31 percent, respectively, calculated using daily stock prices for the one-year period prior to the date of grant; (e) dividends at the rate of $0.32 per share, representing the annualized dividends paid with respect to a share of common stock at the date of grant and (f) reductions of approximately 33 percent and 34 percent, respectively, to reflect the probability of forfeiture due to termination prior to vesting and the probability of a shortened option term due to termination of employment prior to the option exercise date. The ultimate value of the options will depend on the future market price of the common stock, which cannot be forecast with reasonable accuracy. The actual value, if any, an optionee will realize upon exercise of an option will depend on the excess of the market value of the common stock over the exercise price on the date the option is exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth information with respect to all exercises of options to purchase common stock in fiscal 1997 by each of the Named Executive Officers and all outstanding options to purchase common stock held by such individuals at June 30, 1997.
Number of Securities Underlying Unexercised Value of Unexercised Options at Fiscal In-the-Money Options Year-End (#) at Fiscal Year-End ($)(1) Shares Acquired Value ------------------------- ------ - --------------------- Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable - ------------- -------------- ----------- ----------- --------- - ---- ----------- ------------- W. F. Bueche _ _ 228,000 114,000 3,620,603 0 R. E. Fowler, Jr. _ _ 395,763 312,427 4,974,851 1,714,598 B. J. Smith _ _ 12,500 86,500 0 0 J. U. Huber 5,000 122,969 57,137 89,891 894,594 176,180 R. M. Van Patten17,338 458,373 24,751 76,168 162,053 165,154 - ----------------------------------------------------------------------- (1) The value is based on a stock price of $35.625, which is the average of the high and low prices at which the common stock was traded on June 30, 1997 as reflected on the consolidated tape of the New York Stock Exchange, less the relevant exercise price(s).
Pension Plans Qualified Pension Plan The Company maintains a non-contributory qualified pension plan which covers all United States salaried employees, including the Named Executive Officers (except for Messrs. Huber and Van Patten). The annual pension to which a participant is entitled at normal retirement age (65) is an amount based on the highest final average annual remuneration for the five consecutive highest paid years out of the ten years immediately preceding retirement and years of credited service up to 35 years. The plan is integrated with benefits payable under Old Age Survivors and Disability Insurance. Remuneration for these purposes includes salary and 50 percent of bonus as shown in the Summary Compensation Table. The Internal Revenue Code of 1986, as amended (the Code), requires certain limitations on benefits provided under a qualified retirement plan. To the extent pension benefits otherwise payable under the qualified pension plan's formula exceed the Code's limitations, the Board of Directors has approved a non-qualified plan, the Supplemental Executive Retirement Plan, which provides for payment of amounts in excess of the Code's limitations from the Company's operating funds to its participants. The following table shows the estimated annual pension benefits which would be payable to the Named Executive Officers for life at normal retirement under the qualified pension plan. (If elected, an optional form of pension would, on an actuarial basis, reduce benefits to the participant but provide benefits to a surviving beneficiary or permit a one-time lump sum present value payment.)
Annual Average of Highest Five Years Annual Benefits for Years Covered Remuneration of Service Indicated for Pension Purposes ------------------------------------- - ------------------------ in Ten Years Preceding 35 Years Normal Retirement Date 10 Years 15 Years 20 Years 25 Years 30 Years or More - ----------------- ------ ------ ------- ------- ------- ------- $100,000 $ 16,700 $ 25,000$ 33,300 $ 41,600 $ 48,100 $54,700 200,000 34,500 51,700 68,900 86,100 99,800 113,500 300,000 52,300 78,400 104,500 130,600 151,400 172,300 400,000 70,100 105,100 140,100 175,100 203,100 231,100 500,000 87,900 131,800 175,700 219,600 254,700 289,900 600,000 105,700 158,500 211,300 264,100 306,400 348,700 700,000 123,500 185,200 246,900 308,600 358,000 407,500 800,000 141,300 211,900 282,500 353,100 409,700 466,300 900,000 159,100 238,600 318,100 397,600 461,300 525,100 - ----------------------------------------------------------------------
Credited service under the pension plan for the Named Executive Officers as of June 30, 1996 is as follows: Mr. Bueche, 4 years, 5 months; Mr. Fowler, 1 year, 4 months; Mr. Smith, 1 year, 5 months; Mr. Huber, 1 year, 4 months; and Mr. Van Patten, 1 year, 4 months. Supplemental Executive Retirement Plan The Supplemental Executive Retirement Plan, which is a non-contributory, non-qualified plan, provides an additional pension benefit for Company executive officers (including the Named Executive Officers) and certain other key executives based on the participant's final average annual remuneration for pension purposes. The plan takes into account 100 percent of bonus and years of credited service up to a maximum of 20 years, payable to the extent that such benefits exceed those payable under the above-described pension plan. There are no other offsets under this plan. The following table shows the additional annual retirement benefits payable under the Supplemental Executive Retirement Plan to the Named Executive Officers and covered key employees for life beginning at age 65 based upon ten, 15 and 20 years of service.
Annual Average of Net Additional Highest Five Years Annual Benefits Covered Remuneration for Years of for Pension Purposes Service Indicated in Ten Years Preceding --------------------------------- Normal Retirement Date 10 Years 15 Years 20 Years - ---------------------- -------- -------- -------- $100,000 $ 13,300 $ 20,000 $ 26,700 200,000 25,500 38,300 51,100 300,000 37,700 56,600 75,500 400,000 49,900 74,900 120,000 500,000 62,100 105,000 180,000 600,000 74,300 150,000 240,000 700,000 90,000 195,000 300,000 800,000 120,000 240,000 360,000 900,000 150,000 285,000 420,000 - ------------------------------------------------------------------
Compensation of Directors Non-Employee Directors Each non-employee director receives an annual retainer of $24,000, attendance fees of $1,000 for each Board meeting attended and an additional $1,000 for attendance at each meeting of a Board committee to which he is assigned. Each non-employee director receives an additional annual retainer of $3,000 for service as chairperson of a Board committee. Pursuant to the 1994 Stock Option Plan for Non-Employee Directors, each non-employee director annually receives options to purchase 2,000 shares of common stock. Options are granted at 100 percent of the fair market value of the stock at the time of grant. Options granted are immediately exercisable and may be exercised at any time while the director remains in office and for 24 months thereafter. However, common stock issuable upon exercise of options may not be sold within the six-month period following the date of grant without the consent of the Compensation Committee nor may options be exercised more than ten years after the date of the grant. Pursuant to the Directors' Retirement Service Plan, a non-employee director who has served at least six years as a director, has agreed to remain available to provide consultation services to the Company management and does not work for a competitor will, upon attainment of age 70 and after retirement from the Board, receive an annual pension for a period of ten years (subject to earlier termination upon death). Such pension will be equal to 60 percent to 100 percent of the annual retainer in effect at retirement, depending upon the length of the director's service (60 percent if six years, 70 percent if seven, 80 percent if eight, 90 percent if nine, and 100 percent if ten years or more). Mr. MacKay received approximately $4,700 during fiscal 1997 for serving on the Canadian Advisory Board of the Company. Employee Directors Employee directors (currently Messrs. Bueche and Fowler) receive no fees or other remuneration for service on the Board or any committee of the Board. Termination of Employment Agreements Agreements with Messrs. Bueche, Fowler and Smith, to become effective in the event of a change in control of the Company, are intended to assure the Company of the continued services of these executives. In general, each of the agreements provides that, in the event there is a change in control of the Company (as defined in the agreement), the executive shall remain employed by the Company in his then current position at the then current base and incentive compensation and benefit levels for a period of three years, subject to earlier expiration because of voluntary resignation, mandatory retirement, disability, or termination for cause, as defined in the agreements. If the Company breaches the agreement, the Company is obligated to provide the executive certain severance benefits, including three years' base salary plus three times the average of the prior three years' bonuses. In addition, the Company would become obligated to continue the executive's participation in various compensation and benefit plans in which the executive was participating when the agreement became effective. These agreements are in addition to the other agreements and arrangements described in this Annual Report on Form 10-K. These agreements were amended in August 1995 to update the definition of change in control and to increase the severance and bonus payment from two years to three years. Certain provisions of the federal tax law impose a 20 percent surcharge upon an executive of a corporation and deny federal income tax deductibility to the corporation as to a significant portion of the severance payments made to an executive because of a change in control, if such payments as a whole exceed three times his or her average annual base and incentive compensation for the most recent five years. The amounts estimated to be payable under the aforesaid agreements, if those agreements become effective, could be large enough to subject the executives to the surcharge and to deprive the Company of a deduction. The Company has agreed with each of the executives that, if a surcharge were assessed upon payment of the aforementioned severance benefits, it will provide "grossed up" reimbursement to the executive, including any tax payable on such additional amounts paid to him. If a change in control were to occur and the contingent employment agreements were to be breached by the Company within three years thereafter, the amount of cash that would be payable in respect of these amended agreements is estimated (as of July 1, 1997 based on fiscal 1997 salary and bonus and excluding any gross-up reimbursements for taxes) to be approximately: Mr. Bueche, $3.1 million; Mr. Fowler, $2.3 million and Mr. Smith, $1.6 million. The merger of FTX into the Company does not constitute a change of control under these agreements. Mr. Smith's resignation from the Company will not result in any payment pursuant to the agreement between Mr. Smith and the Company. Employment and Other Agreements On March 4, 1996, the Company and Mr. Bueche entered into an agreement which amended his employment agreement and which amended his agreement to provide consulting services to the Company following his retirement as Chairman of the Company. Pursuant to the employment agreement, as amended, Mr. Bueche is to serve as Chairman of the Company from July 1, 1997 through June 30, 1998 at a salary of $250,020 per annum. In addition, Mr. Bueche will be retained as a consultant for one year from the date of his retirement as Chairman for a total fee of $250,020. Mr. Smith and the Company entered into a letter agreement effective as of March 1, 1996 which provides that if Mr. Smith is terminated prior to February 28, 1999, he will be entitled to receive the sum of: two times his annualized salary as of the termination date and two times the highest annual bonus (annualized if he is employed for less than a complete bonus year) earned by him for one of the two consecutive complete bonus years ending immediately preceding the termination. "Termination" is defined generally in the letter agreement as the termination prior to February 28, 1999 of employment with the Company for any reason other than death, disability, cause or voluntary resignation. Certain of the Company's directors and executive officers entered into severance and other similar agreements in connection with the Vigoro merger. (See "Severance Plans" and "Non-Competition Agreements," in Part III, Item 11, "Executive Compensation," of this Annual Report on Form 10-K for further detail.) Management Compensation and Benefit Assurance Program The Board adopted a Management Compensation and Benefit Assurance Program (the Program) in October 1988 and amended this Program in August 1995. The purpose of the Program is to ensure that officers and key management personnel receive the compensation and benefits that have been committed to, and are reasonably expected by, them under the terms of certain benefit plans, including severance and benefits in the event of termination of employment after a change in control. Under the Program, trusts have been established with the Wachovia Bank of North Carolina, N.A. of Winston-Salem, North Carolina to ensure appropriate payment when due of commitments, awards and benefits under the Management Incentive Compensation Plan (including any deferred bonuses), the Supplemental Executive Retirement Plan, the 1988 Stock Option and Award Plan, the contingent employment agreements and gross-up arrangements referred to under the caption "Termination of Employment Arrangements." These trusts are minimally funded with operating funds of the Company, subject to full funding in the event that the Trustee is notified that a change in control has occurred or is about to occur. Assuming a change in control were to occur, distributions by the Trustee would be made only if an officer were involuntarily terminated without cause within three years after a change in control and/or only to the extent the Company were to fail to honor its commitments and subject to the claims of the Company's creditors and to the terms of the benefit plan involved. The annual cost to the Company to maintain the trusts is estimated to be $21,000. Full funding under the arrangements that could be required would depend on the Company's outstanding commitments subject to the Program from time to time. "Change in control" of the Company is defined to occur as of the first day that any one or more of the following conditions shall have been satisfied: (1) the acquisition by any individual entity or group (a Person), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15 percent or more of either (i) the then outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company; (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; and (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; (2) individuals who, as of the date hereof, constitute the Board of Directors (the Incumbent Board) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (3) approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a Corporate Transaction); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60 percent of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25 percent or more of the Outstanding Company Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25 percent or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the Board of Directors of the corporation resulting from such Corporate Transaction; or (4) approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. The merger of FTX into the Company does not constitute a change in control under the Program. Severance Plans In connection with the March 1996 merger of Vigoro into a wholly-owned subsidiary of the Company (the Vigoro Merger), the Vigoro Board adopted and the Company assumed a Severance Plan (the Vigoro Severance Plan) applicable to 28 employees of Vigoro, including Mr. Fowler, the current President and Chief Executive Officer of the Company, and Messrs. Huber and Van Patten, each of whom is currently a Senior Vice President of the Company. The Vigoro Severance Plan provides that a covered employee will receive "Severance Benefits" if the employee is terminated in circumstances that constitute a "Severance Event" and such employee executes a release of claims. Severance Benefits consist of an amount equal to the employee's then annualized base salary or, if greater, annualized base salary as of November 13, 1995 (Base Salary), plus an amount generally equal to the employee's highest annual bonus and other incentive payments received for any of the prior three years (Bonus Base), paid in 12 equal monthly installments plus unpaid salary and pro-rated bonus and earned but unused vacation. Eligible employees will also be entitled to continuation of benefits for the lesser of one year or until the employee finds new employment providing comparable benefits. A Severance Event occurs if within three years of November 13, 1995, an eligible employee's employment is terminated: (i) by the employer other than because such employee engaged in willful and intentional conduct which has caused demonstrable and serious injury to the Company, was convicted of or entered a plea of nolo contendere to any felony, was convicted of a criminal offense or entered a plea of nolo contendere to any offense involving dishonesty, breach of trust or moral turpitude, committed a breach of fiduciary duty involving personal profit or willfully refused to perform or was grossly negligent in the performance of his or her duties or responsibilities (unless significantly changed without the consent of the employee) (collectively, Cause); (ii) by such employee within 90 days after such employee has or should have knowledge that his or her Base Salary was not maintained in accordance with prior levels, he or she is not included on a comparable basis with similar employees in bonus plans or stock option or similar plans or he or she is not included on a comparable basis with similar employees in benefit plans or vacation or other perquisite plans (collectively, Good Reason); or (iii) by such employee on or after the date such employee has reached the age of 60. A covered employee is not entitled to Severance Benefits if the employee terminates his or her employment other than in circumstances constituting a Severance Event or the employee's employment is terminated as a result of the death or disability of the employee. Other than as described above, no Named Executive Officer is eligible to receive Severance Benefits under the Vigoro Severance Plan. Non-Competition Agreements Upon consummation of the Vigoro merger, the Company entered into Non-Competition Agreements (the Non-Competition Agreements) with a total of 14 officers and key employees of Vigoro, including Messrs. Fowler, Huber and Van Patten, and with nine key employees of the Company which provide that such employees will not compete with the Company or any of its affiliates for specified periods following the termination of their employment with Vigoro or its subsidiaries because of a Severance Event (as defined under the caption "Severance Plans") and will receive scheduled payments in equal monthly installments during the period of non-competition. Employees entering into Non-Competition Agreements will agree not to compete (i) for a period of three years if a Severance Event occurs on or before the first anniversary of the Effective Time; (ii) for two years if a Severance Event occurs after the first anniversary and on or before the second anniversary of the Effective Time; and (iii) for one year if a Severance Event occurs after the second anniversary and on or before the third anniversary of the Effective Time (the Non-Competition Periods). During the Non-Competition Periods, certain employees of the Company will be prohibited from rendering employment or consulting services to any business enterprise in North America in a capacity in which such employee will directly supervise a business which is directly competitive with the business which the employee supervised during the one-year period preceding the Severance Event. The maximum aggregate payments under the Non-Competition Agreements payable to Messrs. Fowler, Huber and Van Patten are $1,580,000, $920,000 and $772,000, respectively. Other than as described above, no Named Executive Officer is a party to a Non-Competition Agreement. Compensation Committee Interlocks and Insider Participation Robert E. Fowler, Jr., the President and Chief Executive Officer of the Company, is the Chairman of the Compensation Committee of the Board of Directors of Anixter International, Inc. Rod F. Dammeyer is the Chief Executive Officer of Anixter International, Inc. and is on the Compensation Committee of the Board of Directors of the Company. Item 12. Security Ownership of Certain Beneficial Owners and Management. BENEFICIAL OWNERSHIP OF COMMON STOCK Ownership of Common Stock by Directors and Executive Officers The following table shows the number of shares of the common stock that are owned beneficially, as of August 29, 1997, by (i) each director, (ii) each executive officer named in the Summary Compensation Table and (iii) the directors, all such executive officers and all other executive officers as a group (18 persons), with sole voting and investment power unless otherwise indicated.
Number of Shares Owned Beneficially Name as of 8/29/97(1)(2) - ---------------------------------------------------------------------- Wendell F. Bueche 331,980(3)(4) Raymond F. Bentele 9,000(5) Rod F. Dammeyer 17,000(5)(6) James M. Davidson 8,000(5) Robert E. Fowler, Jr. 587,328(3)(6) Harold H. MacKay 21,600(5)(6) David B. Mathis 8,000(5) Thomas H. Roberts, Jr. 25,000(5) Joseph P. Sullivan 698,675(5)(6) Richard L. Thomas 6,000(5) Billie B. Turner 61,906(5) Brian J. Smith 48,239(3) John U. Huber 236,691(3)(6)(7) Robert M. Van Patten 296,850(3)(6)(8) Directors and all executive officers as a group 2,568,262(3)(5)(6) - --------------------------------------------------------------------- (1) Beneficial ownership of the common stock is based on information furnished or confirmed by each director or executive officer described above. (2) No individual director or executive officer is a beneficial owner of more than one percent of the outstanding shares of common stock. Directors and the executive officers described above as a group beneficially own an aggregate of approximately 2.8 percent of the outstanding shares of common stock. (3) Includes shares of common stock currently purchasable or purchasable within 60 days of August 29, 1997 through the exercise of options granted under the 1988 Stock Option and Award Plan, as amended and restated, as follows: Mr. Bueche, 272,500 shares; Mr. Fowler, 17,666 shares; Mr. Smith, 22,166 shares; Mr. Huber, 7,000 shares; Mr. Van Patten, 6,333 shares; and directors and all executive officers as a group, 496,971 shares. (4) Includes 1,600 shares of common stock held by the Nancy Bird Jacobson Trust dated March 27, 1974 (the Trust). Mr. Bueche disclaims beneficial ownership of the 1,600 shares of common stock held by the Trust. (5) Includes shares of common stock purchasable within 60 days of August 29, 1997 through the exercise of options granted to non-employee directors under the 1994 Stock Option Plan for Non-Employee Directors, as follows: Mr. Bentele, 8,000 shares; Mr. Dammeyer, 4,000 shares; Dr. Davidson, 6,000 shares; Mr. MacKay, 4,000 shares; Mr. Mathis, 6,000 shares; Mr. Roberts, 8,000 shares; Mr. Sullivan, 4,000 shares; Mr. Thomas, 4,000 shares; and Mr. Turner, 8,000 shares. (6) Includes shares of common stock currently purchasable or purchasable within 60 days of August 29, 1997 through the exercise of options granted under The Vigoro Corporation 1991 Stock Option Plan, as amended, as follows: Mr. Dammeyer, 8,000 shares; Mr. Fowler, 550,190 shares; Mr. Huber, 64,104 shares; Mr. MacKay, 16,000 shares; Mr. Sullivan, 261,000 shares; Mr. Van Patten, 40,517 shares; and directors and the executive officers described above as a group, 939,811 shares. (7) Includes 155,000 shares held by the John and Janice Huber Family Limited Partnership, an Illinois limited partnership (the Huber Partnership). Mr. Huber and his wife are the sole general partners of the Huber Partnership. Mr. Huber disclaims beneficial ownership of any of the 155,000 shares of common stock owned by the Huber Partnership except to the extent of his ownership interest in the Huber Partnership. (8) Includes 250,000 shares held by the Robert and Susan Van Patten Family Limited Partnership, an Illinois limited partnership (the Van Patten Partnership). Mr. Van Patten and his wife are the sole general partners of the Van Patten Partnership. Mr. Van Patten disclaims beneficial ownership of any of the 250,000 shares of common stock owned by the Van Patten Partnership except to the extent of his ownership interest in the Van Patten Partnership.
Ownership of Common Stock by Others The Company believes that, as of August 29, 1997, based on filings with the Securities and Exchange Commission (the SEC), only the following named institutions are the beneficial owners of more than five percent of the outstanding common stock.
Percent Shares of Name and Address of Beneficial Owner Beneficially Outstanding Owned Common Stock Wellington Management Company, L.L.P. (1) 10,102,025 10.97% 75 State Street Boston, Massachusetts 02109 Neuberger & Berman, L.L.C. (2) 6,678,834 7.25% 605 Third Avenue New York, New York 10158-3698 Eagle-GVI One L.L.C. (3) 6,510,286 7.07% Two North Riverside Plaza, Suite 1100 Chicago, Illinois 60606 MacKay Shields Financial Corporation (4) 5,041,640 5.47% 9 West 57th Street New York, New York 10019 (1) Wellington Management Company, L.L.P. is a parent holding company which files one Schedule 13G to report beneficial ownership of common stock by all of its affiliates. Includes shares as to which Wellington Management Company, L.L.P. has or shares investment and voting power as follows: shared voting power, 2,640,100 shares and shared investment power, 10,102,025 shares. (2) Neuberger & Berman, L.L.C. is an investment adviser registered under the Investment Advisers Act of 1940 (the Advisers Act) and has or shares investment and voting power as follows: sole voting power, 1,706,136 shares; shared voting power, 3,870,400 shares and shared investment power, 6,678,834 shares. (3) Eagle-One GVI L.L.C. has sole investment and voting power with respect to the common stock reported. (4) MacKay-Shields Financial Corporation is an investment adviser registered under Section 203 of the Advisers Act and has or shares investment and voting power as follows: shared voting power, 5,041,640 shares and shared investment power, 5,041,640 shares.
The Company knows of no contractual arrangements which may, at a subsequent date, result in a change in control of the Company. Item 13. Certain Relationships and Related Transactions. TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS The Company, Great American Management and Investment, Inc. (GAMI) and certain former stockholders of Vigoro (including Rod F. Dammeyer, a Director) entered into a Registration Rights Agreement (the Registration Rights Agreement) in connection with the Vigoro merger. On May 8, 1996, pursuant to such Registration Rights Agreement, GAMI requested that the Company register the shares of common stock held by GVI Holdings, Inc., a wholly owned subsidiary of GAMI. On July 2, 1996, the Company effected such registration. The Registration Rights Agreement provides that GAMI will cause any affiliate or associate of GAMI to resign as a director of the Company if GAMI's direct or indirect ownership of common stock is reduced below 3.5 percent of the outstanding shares of common stock. Certain of the Company's directors and executive officers entered into severance and other similar agreements in connection with the Vigoro merger. (See "Severance Plans" and "Non-Competition Agreements," in Part III, Item 11, "Executive Compensation," of this Annual Report on Form 10-K for further detail.) PART IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8- K. (a) (1) Consolidated financial statements filed as part of this report are listed under Part II, Item 8 of this Annual Report on Form 10-K. (a) (2) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (a) (3) The exhibits listed in the following index have previously been filed with the Securities and Exchange Commission or are being filed as part of this report. Filed with Exhibit Incorporated Herein Electronic No. Description By Reference to Submission 3.1 Restated Certificate of Company's Report on Incorporation, as amended Form 8-K dated November 1, 1994 3.2 Certificate of Amendment to X Restated Certificate of Incorporation, dated October 20, 1994 3.3 Certificate of Amendment to Exhibit 3.2 to the Restated Certificate of Company's Incorporation, dated October Registration 23, 1995 Statement on Form 8- A/A-1 dated January 12, 1996 3.4 Certificate of Amendment to X Restated Certificate of Incorporation, dated March 1, 1996 3.5 By-Laws, amended as of March Exhibit 4.4 to the 4, 1996, and as currently in Company's Post- effect Effective Amendment No. 1 on Form S-8 to Form S-4, (No. 333-0439) 3.6 Rights Agreement dated June Company's Report on 21, 1989, amended as of Form 8-A/A dated August 17, 1995, with The September 7, 1995. First National Bank of Chicago (including the Shareholder Rights Plan). 4.1 Indenture dated as of Exhibit 4.4 to the December 1, 1991 between the Company's Form SE Registrant and The Bank of filed on December New York, as Trustee, 3, 1991 relating to $100,000,000 aggregate principal amount of 9.45% Senior Debentures due 2011 4.2 Indenture, dated as of June Exhibit 4.7 to the 15, 1993, between IMC Global Company's Inc. and NationsBank of Registration Georgia, National Statement on Form S- Association, as Trustee 4, (No. 33-49795) relating to the issuance of 10 1/8% Senior Notes due 2001 and 10 1/8% Series B Senior Notes due 2001 and 10 3/4% Senior Notes Due 2003 and 10 3/4% Series B Senior Notes Due 2003 4.3 First Supplemental Exhibit 4.9 to the Indenture, dated as of 1996 Annual Report September 5, 1996, between on Form 10-K IMC Global Inc. and The Bank Of New York, as successor trustee to NationsBank of Georgia, which amends and supplements the Indenture dated as of June 15, 1993, between IMC Global Inc. and the trustee relating to the issuance of 10 1/8% Senior Notes due 2001 and 10 1/8 % Series B Senior Notes due 2001 4.4 Second Supplemental X Indenture, dated as of May 8, 1997, between IMC Global Inc. and The Bank of New York, as successor trustee to NationsBank of Georgia, which amends and supplements the Indenture dated as of June 15, 1993, between IMC Global Inc. and the trustee relating to the issuance of 10 3/4% Senior Notes due 2003 and 10 3/4% Series B Senior Notes due 2003 4.5 Indenture dated as of Exhibit 4.1 to the October 1, 1993, between IMC Company's Report on Global Inc. and The Bank of Form 8-K dated New York, as successor October 12, 1993 trustee to NationsBank of Georgia, relating to the issuance of a series of Senior Debt Securities known as the 9 1/4% Senior Notes due 2000 4.6 First Supplemental Exhibit 4.1 to the Indenture, dated as of Company's Report on October 1, 1993, between IMC Form 8-K dated Global Inc. and NationsBank October 12, 1993 of Georgia, National Association, as Trustee relating to the issuance of a series of Senior Debt Securities known as the 9 1/4% Senior Notes due 2000 4.7 Second Supplemental Exhibit 4.10 to the Indenture, dated as of 1996 Annual Report September 3, 1996, between on Form 10-K IMC Global Inc. and The Bank Of New York, as successor trustee to NationsBank of Georgia, which amends and supplements the Indenture dated as of October 1, 1993, between IMC Global Inc. and the trustee and the Supplemental Indenture dated as of October 1, 1993 between IMC Global Inc. and the trustee, relating to the issuance of a series of Senior Debt Securities known as the 9 1/4% Senior Notes due 2000. 4.8 Indenture, dated as of July Exhibit 4.1 to the 17, 1997, between IMC Global Company's Report on Inc. and The Bank of New Form 8-K dated July York, relating to the 23, 1997 issuance of 6 7/8% Senior Notes due 2007 10.1 Intercorporate Agreement Exhibit 10.1 to the dated as of July 1, 1987, by Company's and between Mallinckrodt and Registration IMC Global Operations Inc. Statement on Form S- with Exhibits 1, (Amendment No. 2), (No. 33-17091) 10.2 Supply agreements (Included Exhibit 10.1 to the in Exhibit 10.1) Company's Registration Statement on Form S- 1, (No. 33-17091) 10.3 Agreement dated June 27, Exhibit 10.6 to the 1985, supplementing, Company's amending and continuing Registration Potash Resource Payment Statement on Form S- Agreement dated October 15, 1, (Amendment No. 1979, between Mallinckrodt 2), and the Province of (No. 33-22914) Saskatchewan 10.4 Mining and Processing Exhibit 10.7 to the Agreement dated January 31, Company's 1978, between Potash Registration Corporation of Saskatchewan Statement on Form S- Inc. and International 1, (No. 33-17091) Minerals & Chemical (Canada) Global Limited 10.5* Management Incentive Exhibit 10.17 to Compensation Program, as the Company's amended through July 1, 1996 Registration Statement on Form S- 1, (No. 33-17091) 10.6 * Amendment to Management X Incentive Compensation Program 10.7* 1996 Long-Term Performance Exhibit 10.77 to Incentive Plan the Company's September 30, 1996 Form 10-Q 10.8* 1988 Stock Option & Award X Plan, as amended and restated 10.9* 1994 Stock Option Plan for Exhibit 4(a) to the Non-Employee Directors Company's Registration Statement on Form S- 8, (No. 33-56911) 10.10* Retirement Plan for Salaried Exhibit 10.9 to the Employees, as amended 1995 Annual Report through November 1, 1994, on Form 10-K and as currently in effect 10.11* Supplemental Benefit Plan Exhibit 10.12 to the Company's Registration Statement on Form S- 1, (No. 33-17091) 10.12* Supplemental Executive Exhibit 10.7 to the Retirement Plan, as amended Company's through June 30, 1992, and Registration as currently in effect Statement on Form S- 1, (No. 33-17091) 10.13* Investment Plan for Salaried Exhibit 10.12 to Employees, as amended the 1995 Annual through July 1, 1994, and as Report on Form 10-K currently in effect 10.14* Management Compensation and X Benefit Assurance Program, as amended through August 17, 1995 10.15* Form of Trust Agreement with Exhibit 10.33 to Wachovia Bank & Trust Co., the 1992 Annual N.A., as amended through Report on Form 10-K August 15, 1991 10.16* Form of Contingent Exhibit 10.18 to Employment Agreement dated the 1995 Annual September 1, 1995, with Report on Form 10-K Officers of Corporation 10.17* Form of "Gross Up" Exhibit 10.20 to Agreement dated September 1, the 1995 Annual 1995, with Officers of Report on Form 10-K Corporation, as amended 10.18* Directors' Retirement Exhibit 10.54 to Service Plan Effective July the 1992 Annual 1, 1989 Report on Form 10-K 10.19* Amendment Number 2 to Exhibit 10.44 to Investment Plan for Salaried the Company's Employees effective March 1, Registration 1988 and restated effective Statement on Form S- January 1, 1992 4, (No. 33-49795) 10.20* First Amendment, dated July Exhibit 10.45 to 2, 1991, to form of the Company's Contingent Employment Registration Agreement with Officers of Statement on Form S- Corporation 4, (No. 33-49795) 10.21* Amendment, dated July 2, Exhibit 10.46 to 1991, to Form of "Gross Up" the Company's Agreement with Officers of Registration Corporation Statement on Form S- 4, (No. 33-49795) 10.22* Consulting Agreement, dated Exhibit 10.48 to July 19, 1993, between the Company's Wendell F. Bueche and IMC Registration Global Inc. Statement on Form S- 4, (No. 33-49795) 10.23* Amendment and Extension Exhibit 10.49 to Agreement, dated as of June the 1995 Annual 15, 1995, to Employment Report on Form 10-K Agreement dated as of April 15, 1993 and Consulting Agreement dated as of July 19, 1993, between Wendell F. Bueche and IMC Global Inc. 10.24* Non-competition Agreement Exhibit 10.71 to dated as of March 1, 1996 the 1996 Annual between IMC Global Inc., IMC Report on Form 10-K Global Operations Inc. and C. Steven Hoffman 10.25* Non-competition Agreement Exhibit 10.72 to dated as of February 29, the 1996 Annual 1996 between IMC Global Inc. Report on Form 10-K and Robert E. Fowler, Jr. 10.26* Non-competition Agreement X dated as of March 1, 1996 between IMC Global Inc. and John U. Huber 10.27* Non-competition Agreement X dated as of March 1, 1996 between IMC Global Inc. and Robert M. Van Patten 10.28* Transition Bonus Agreement Exhibit 10.73 to dated as of March 1, 1996 the 1996 Annual between IMC Global Inc., IMC Report on Form 10-K Global Operations Inc. and Marschall I. Smith 10.29* The Vigoro Corporation Exhibit 10.74 to Severance Plan, as amended the 1996 Annual Report on Form 10-K 10.30* The IMC Global Inc. Exhibit 10.75 to Severance Plan the 1996 Annual Report on Form 10-K 10.31* Letter Agreement dated March Exhibit 10.76 to 5, 1996, between the Company the 1996 Annual and Brian J. Smith Report on Form 10-K 10.32 Suspension Agreement Exhibit 10.17 to concerning Potassium the Company's Chloride from Canada among Registration the U.S. Department of Statement on Form S- Commerce and the signatory 1, (No. 33-17091) purchasers/exporters of potassium chloride from Canada dated January 7, 1988 10.33 Settlement Agreement dated Exhibit 10.18 to as of November 3, 1987, by the Company's and among the Board of Registration Trustees of the Internal Statement on Form S- Improvement Trust Fund of 1, (No. 33-17091) the State of Florida, the Department of Natural Resources of the State of Florida and Mallinckrodt 10.34 Sulphur Joint Operating Exhibit 10.40 to Agreement dated as of May 1, the 1990 Annual 1988, among Freeport-McMoRan Report on Form 10-K Resource Partners, IMC Global Operations Inc. and Felmont Oil Corporation 10.35 Oil/Gas Operating Agreement Exhibit 10.41 to dated as of June 5, 1990, the 1990 Annual among Freeport-McMoRan Report on Form 10-K Resource Partners, IMC Global Operations Inc. and Felmont Oil Corporation 10.36 Agreement in Principle dated Exhibit 10.43 to September 7, 1990, with the 1990 Annual Mallinckrodt Report on Form 10-K 10.37 Agreement dated as of Exhibit 10.44 to September 12, 1990, with the 1990 Annual Mallinckrodt Report on Form 10-K 10.38 Memorandum of Agreement as Exhibit 10.51 to of December 21, 1990, the 1991 Annual amending Mining and Report on Form 10-K Processing Agreement of January 31, 1978, between Potash Corporation of Saskatchewan Inc. and International Minerals & Chemical (Canada) Global Limited 10.39 Division of Proceeds Exhibit 10.52 to Agreement dated December 21, the 1991 Annual 1990, between Potash Report on Form 10-K Corporation of Saskatchewan Inc. and International Minerals & Chemical (Canada) Global Limited 10.40 Contribution Agreement dated Exhibit 10.55 to April 5, 1993 between the Company's March Freeport-McMoRan Resource 31, 1993 Form 10- Partners, Limited Q/A (Amendment No. Partnership and IMC Global 1) filed on May 19, Operations Inc. 1993 10.41 Form of Partnership Exhibit 10.29 to Agreement, dated as of July the 1995 Annual 1, 1993, as further amended Report on Form 10-K and restated as of May 26, 1995, between IMC-Agrico GP Company, Agrico Limited Partnership and IMC-Agrico MP Inc., including definitions 10.42 Form of Parent Agreement, Exhibit 10.30 to dated as of July 1, 1993, as the 1995 Annual further amended and restated Report on Form 10-K as of May 26, 1995, between IMC Global Operations Inc., Freeport-McMoRan Resource Partners, Limited Partnership, Freeport- McMoRan Inc. and IMC-Agrico Company 10.43 Amendment, Waiver and Exhibit 10.31 to Consent, dated May 26, 1995, the 1995 Annual among IMC Global Inc.; IMC Report on Form 10-K Global Operations Inc.; IMC- Agrico GP Company; IMC- Agrico MP, Inc.; IMC-Agrico Company; Freeport-McMoRan Inc.; Freeport-McMoRan Resource Partners, Limited Partnership; and Agrico, Limited Partnership 10.44 Agreement and Plan of Exhibit 10.32 to Complete Liquidation and the 1995 Annual Dissolution, dated May 26, Report on Form 10-K 1995, among IMC Global Operations Inc., IMC-Agrico GP Company, and IMC-Agrico MP, Inc. 10.45 Sterlington Settlement Exhibit 10.58 to Agreement between IMC Global the Company's March Inc., ANGUS Chemical Company 31, 1993 Form 10- and Industrial Risk Insurers Q/A (Amendment No. dated April 1, 1993 1) filed on May 19, 1993 10.46 First Amendment to Exhibit 10.59 to Contribution Agreement, the Company's dated as of July 1, 1993, Report on Form 8-K between Freeport-McMoRan dated July 16, 1993 Resource Partners, Limited Partnership and IMC Global Operations Inc. 10.47 Loan Agreement, dated as of Exhibit 10.64 to December 1, 1991, between the Company's IMC Global Operations Inc. Registration and the Polk County Statement on Form S- Industrial Development 4, (No. 33-49795) Authority (Florida) 10.48 Amended and Restated Exhibit 10.65 to Unconditional Guaranty, the Company's dated as of December 1, 1991 Registration of IMC Global Inc. with Statement on Form S- respect to Polk County 4, (No. 33-49795) Industrial Development Authority (Florida) Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A 10.49 Supplemental Loan Agreement, Exhibit 10.66 to dated as of January 1, 1992, the Company's between IMC Global Registration Operations Inc. and the Polk Statement on Form S- County Industrial 4, (No. 33-49795) Development Authority (Florida) 10.50 Second Supplemental Loan Exhibit 10.67 to Agreement, dated as of June the Company's 30, 1993, between IMC Global Registration Operations Inc. and the Polk Statement on Form S- County Industrial 4, (No. 33-49795) Development Authority (Florida) 10.51 Amendment to Guaranty, dated Exhibit 10.68 to June 30, 1993, with respect the Company's to Polk County Industrial Registration Development Authority Statement on Form S- (Florida) Industrial 4, (No. 33-49795) Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A 10.52 Indenture of Trust, dated as Exhibit 10.69 to of December 1, 1991, between the Company's Polk County Industrial Registration Development Authority (the Statement on Form S- "Authority") and The Bank of 4, (No. 33-49795) New York, as Trustee (the "IRB Trustee") relating to the Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A (the "Series 1991 Bonds") 10.53 Supplemental Indenture of Exhibit 10.70 to Trust, dated as of January the Company's 1, 1992, between the Registration Authority and the IRB Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1992 Tax-Exempt Series A (the "Series 1992 Bonds") 10.54 Second Supplemental Exhibit 10.71 to Indenture of Trust, dated as the Company's of June 30, 1993, between Registration the Authority and the IRB Statement on Form S- Trustee, relating to the 4, (No. 33-49795) Series 1991 Bonds and the Series 1992 Bonds 10.55 Amendment No. 1, dated as of Exhibit 10.53 to June 24, 1994 to Credit the 1995 Annual Agreement, dated as of Report on Form 10-K February 9, 1994 between IMC-Agrico Company, NationsBank of Georgia and the Banks Listed Therein 10.56 Amendment No. 2, dated as of Exhibit 10.54 to February 25, 1995 to Credit the 1995 Annual Agreement, dated as of Report on Form 10-K February 9, 1994 between IMC-Agrico Company, NationsBank of Georgia and the Banks Listed Therein 10.57 Credit Agreement, dated as Exhibit 99.1 to the of February 9, 1994, between Company's IMC-Agrico Company, Registration NationsBank of Georgia, and Statement on Form the Banks Listed Therein S-3, (Amendment No. 1) (No. 33-52377) 10.58 Letter Agreement, dated as X of October 30, 1996, relating to Credit Agreement, dated as of February 9, 1994, between IMC-Agrico Company, NationsBank of Georgia, and the Banks Listed Therein 10.59 Agreement Under the Parent Exhibit 10.63 to Agreement, dated as of the Company's January 23, 1996, among IMC December 31, 1995 Global Inc.; IMC Global Form 10-Q Operations Inc.; Freeport- McMoRan Resource Partners, Limited Partnership; Freeport-McMoRan Inc.; and IMC-Agrico Company, a Delaware general partnership 10.60 Amendment and Agreement Exhibit 10.64 to Under the Partnership the Company's Agreement, dated as of December 31, 1995 January 23, 1996, by and Form 10-Q among IMC-Agrico GP Company; Agrico, Limited Partnership; IMC-Agrico MP, Inc.; IMC Global Operations Inc. and IMC-Agrico Company 10.61 Credit Agreement, dated as Exhibit 10.65 to of February 28, 1996, among the Company's IMC Global Inc., IMC Global Report on Form 8-K Operations Inc., dated March 15, International Minerals & 1996 Chemical (Canada) Global Limited, Kalium Canada Ltd., Central Canada Potash, Inc. and the Banks Listed Therein 10.62 Amendment No. 1 to Credit X Agreement, dated as of February 28, 1996, among IMC Global Inc., IMC Global Operations Inc., International Minerals & Chemical (Canada) Global Limited, Kalium Canada Ltd., Central Canada Potash, Inc. and the Banks Listed Therein 10.63 Second Amended and Restated Exhibit 10.66 to Note Purchase Agreement, the Company's dated as of February 28, Report on Form 8-K 1996, to the Amended and dated March 15, Restated Note Purchase and 1996 Private Shelf Agreement dated as of December 22, 1994, among IMC Global Inc., The Vigoro Corporation and The Prudential Insurance Company of America 10.64 Amendment No. 1, dated X September 30, 1996, to Second Amended and Restated Note Purchase Agreement, dated as of February 28, 1996, to the Amended and Restated Note Purchase and Private Shelf Agreement dated as of December 22, 1994, among IMC Global Inc., The Vigoro Corporation and The Prudential Insurance Company of America 10.65 Second Amended and Restated Exhibit 10.67 to Note Purchase Agreement, the Company's dated as of February 28, Report on Form 8-K 1996, to the Amended and dated March 15, Restated Note Purchase and 1996 Private Shelf Agreement dated as of December 22, 1994, between Kalium Canada, Ltd. and The Prudential Insurance Company of America 10.66 Amended and Restated Credit X Agreement, dated as of October 23, 1996 between IMC-Agrico Company as Borrower and NationsBank, N.A. as Lender U.S. $50,000,000 10.67 Second Amended and Restated X Party Guaranty, dated as of February 28, 1996 by IMC Global Inc. and The Vigoro Corporation, a Delaware corporation, in favor of The Prudential Insurance Company of America 10.68 Third Amendment dated as of X August 1, 1995 to the Credit Agreement, by and among IMC-Agrico Company, a Delaware general partnership, the Banks identified therein, and NationsBank, N.A. (successor in interest to NationsBank of North Carolina, N.A., as Agent) 10.69 Fourth Amendment and Waiver X Agreement dated as of May 14, 1996 to the Credit Agreement, by and among IMC-Agrico Company, a Delaware general partnership, the Banks identified therein, and NationsBank, N.A. (successor in interest to NationsBank, N.A. and NationsBank of North Carolina, N.A., as Agent) 10.70 Fifth Amendment dated as of X February 4, 1997 to the Credit Agreement, by and among IMC-Agrico Company, a Delaware general partnership, the Banks identified therein, and NationsBank, N.A. (successor in interest to NationsBank, N.A. and NationsBank of North Carolina, N.A., as Agent) 10.71 Sixth Amendment, Consent and X Waiver dated as of May, 1997 to the Credit Agreement, by and among IMC-Agrico Company, a Delaware general partnership, the Banks identified therein, and NationsBank, N.A. (successor in interest to NationsBank, N.A. and NationsBank of North Carolina, N.A., as Agent) 10.72 Transfer and Administration X Agreement, dated as of June 27, 1997, among IMC-Agrico Receivables Company L.L.C., IMC-Agrico Company and Enterprise Funding Corporation, a Delaware corporation 10.73 Receivables Purchase X Agreement between IMC-Agrico Company as Seller and IMC-Agrico Receivables Company L.L.C. as Purchaser, dated as of June 27, 1997 10.74 Registration Rights Exhibit 99.6 to the Agreement dated as of March Company's March 1, 1996 among IMC Global 31,1996 Form 10-Q Inc. and certain former stockholders of The Vigoro Corporation 11.1 Fully diluted earnings per share for the years ended X June 30, 1997, 1996 and 1995 12 Ratio of Earnings to Fixed X Charges 13.1 Report of Arthur Andersen X LLP 21.1 Subsidiaries of the X Registrant 23.1 Consent of Ernst & Young LLP X 23.2 Consent of Arthur Andersen X LLP 24 Power of Attorney X 27.1 Financial Data Schedule X * Denotes management contract or compensatory plan. (b) REPORTS ON FORM 8-K During the fourth quarter and through the date of this filing, the following reports were filed: A report under Item 8 Dated June 24, 1997 A report under Item 5 Dated July 17, 1997 A report under Item 5 Dated July 28, 1997 A report under Item 5 Dated August 28, 1997 (c) EXHIBITS See exhibit index listed at Item 14(a)(3) hereof. (d) Financial statements and schedules and summarized financial information of 50 percent or less owned persons are omitted as none of such persons are individually or in the aggregate significant under the tests specified in Regulation S-X under Article 3.09 of general instructions to the financial statements. INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES Page References Consolidated Balance Sheet at June 30, 1997 and 1996 33 For the years ended June 30, 1997, 1996, and 1995: Consolidated Statement of Earnings 32 Consolidated Statement of Cash Flows 34 Consolidated Statement of Changes in Stockholders' Equity 35 Notes to Consolidated Financial Statements 36-54 Supplementary Financial Information - Quarterly Results (Unaudited) 55 - -------------------- Financial statements and schedules and summarized financial information of 50 percent or less owned persons are omitted as none of such persons are individually or in the aggregate significant under the tests specified in Regulation S-X under Article 3.09 of general instructions to the financial statements. SIGNATURES Pursuant to the requirements of 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMC GLOBAL INC. (Registrant) ------------------------------------ Robert E. Fowler, Jr. Chief Executive Officer and President Date: September 24,1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date - ---------------------------------------------------------------------- - -------------------- Chief Executive Officer September 24, 1997 Robert E. Fowler, Jr. (principal executive officer), President (principal operating officer) and Director - -------------------- Chief Financial Officer September 24, 1997 Brian J. Smith (principal financial officer), - -------------------- Controller (principal September 24, 1997 Anne M. Scavone accounting officer) * Chairman and Director September 24, 1997 - -------------------- Wendell F. Bueche * Director September 24, 1997 - -------------------- Raymond F. Bentele * Director September 24, 1997 - -------------------- Rod F. Dammeyer * Director September 24, 1997 - -------------------- Dr. James M. Davidson * Director September 24, 1997 - -------------------- Harold H. MacKay * Director September 24, 1997 - -------------------- David B. Mathis * Director September 24, 1997 - -------------------- Thomas H. Roberts, Jr. * Director September 24, 1997 - -------------------- Joseph P. Sullivan * Director September 24, 1997 - -------------------- Richard L. Thomas * Director September 24, 1997 - -------------------- Billie B. Turner * By: ---------------------------------- Marschall I. Smith Attorney in fact EX-3.2 2 CERTIFICATE OF AMENDMENT-IMC FERTILIZER GROUP, INC. EXHIBIT 3.2 CERTIFICATE OF AMENDMENT of RESTATED CERTIFICATE OF INCORPORATION of IMC FERTILIZER GROUP, INC. __________________________ Pursuant to Section 242 of the Delaware General Corporation Law _________________________ IMC Fertilizer Group, Inc., a corporation organized and existing under and by virtue of the Delaware General Corporation Law, DOES HEREBY CERTIFY: FIRST: The Restated Certificate of Incorporation of IMC Fertilizer Group, Inc. is amended by deleting Article First thereof in its entirety and replacing it with the following new Article First: "ARTICLE FIRST The name of the Corporation is IMC Global Inc." SECOND: The Board of Directors of IMC Fertilizer Group, Inc., at a meeting duly held, adopted a resolution proposing and declaring advisable the above described amendment to the Restated Certificate of Incorporation of IMC Fertilizer Group, Inc. THIRD: An annual meeting of stockholders of IMC Fertilizer Group, Inc. was duly called and held on October 20, 1994, upon notice in accordance with Section 222 of the Delaware General Corporation Law, and at such meeting the number of shares required by statute were voted in favor of the above described amendment. FOURTH: The above described amendment was duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law. FIFTH: The capital of IMC Fertilizer Group, Inc. shall not be reduced under or by reason of the above described amendment. SIXTH: The above described amendment is effective on October 21, 1994 at 6:01 p.m. Eastern Daylight Savings Time. IN WITNESS WHEREOF, IMC Fertilizer Group, Inc. has caused this Certificate to be executed and attested this 20th day of October 1994. Attest: /s/ Linda J. Wood By: /s/ Marschall I. Smith Title: Assistant Secretary Title: Senior Vice President EX-3.4 3 CERTIFICATE OF AMENDMENT-IMC GLOBAL INC. EXHIBIT 3.4 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF IMC GLOBAL INC. PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE IMC Global Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware ("DGCL"), DOES HEREBY CERTIFY THAT: FIRST: At a meeting of the Board of Directors of the Corporation duly called and held on November 12, 1995 resolutions were duly adopted setting forth the following proposed amendments to the Restated Certificate of Incorporation of the Corporation, declaring said amendments to be advisable and directing such amendments be submitted to stockholders of the Corporation for approval at a special meeting of the stockholders of said Corporation. Such resolutions recommended that the Restated Certificate of Incorporation of the Corporation be amended as set forth below: (i) the first paragraph of ARTICLE FOURTH of the Restated Certificate of Incorporation of the Corporation be amended to read as follows: "The aggregate number of shares which the Corporation shall have authority to issue is 262,000,000 divided into 12,000,000 shares of Series Preferred Stock, $1.00 par value per share (hereafter called "Series Preferred Stock"), and 250,000,000 shares of Common Stock, $1.00 par value per share (hereafter called "Common Stock"). All of such shares shall be issued as fully-paid and non-assessable shares, and the holders thereof shall not be liable for any further payments in respect thereto."; and (ii) the first sentence of ARTICLE NINTH of the Restated Certificate of Incorporation of the Corporation be amended to read as follows: (a) The number of directors of the Corporation, exclusive of directors, if any, to be elected by the holders of one or more series of Series Preferred Stock, shall be not less than five nor more than fifteen. SECOND: pursuant to a resolution of its Board of Directors, a special meeting of the stockholders of the Corporation was duly called and held on March 1, 1996, upon notice in accordance with Section 222 of the DGCL, at which meeting the necessary number of the outstanding shares of common stock of the Corporation entitled to vote on such amendments by the DGCL and Restated Certificate of Incorporation were voted in favor of such amendments. THIRD: That such amendments were duly adopted in accordance with the provisions of Section 242 of the DGCL. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by Marschall I. Smith, Senior Vice President, Secretary and General Counsel of the Corporation, as of this 1st day of March, 1996. IMC GLOBAL INC. By:_______________________________ Marschall I. Smith Senior Vice President, Secretary and General Counsel EX-4.4 4 SECOND SUPPLEMENTAL INDENTURE EXHIBIT 4.4 THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 8, 1997, between IMC GLOBAL INC., formerly known as IMC Fertilizer Group, Inc., a Delaware corporation (hereinafter called the "Company"), having its principal executive offices at 2100 Sanders Road, Northbrook, IL 60062, and THE BANK OF NEW YORK, a New York banking corporation, as successor trustee to NationsBank of Georgia, National Association, (the "Trustee"), amends and supplements the Indenture providing for the issuance of Senior Debt Securities in series, dated as of June 15, 1993, between the Company and the Trustee (the "Original Indenture") and to the extent inconsistent therewith, supersedes the Original Indenture. RECITALS WHEREAS, the Company and the Trustee entered into the Original Indenture to provide for the issuance of 10_% Senior Notes due 2001 and 10_% Series B Senior Notes Due 2001 (collectively, the "10_% Notes"); and WHEREAS, holders of more than a majority of the outstanding principal amount of each of the 10_% Notes have consented to the execution by the Company and the Trustee of this Second Supplemental Indenture pursuant to which certain covenants in the Original Indenture shall be deleted and certain other provisions shall be amended; and WHEREAS, Section 9.2 of the Original Indenture provides that the Company and the Trustee may enter into one or more Supplemental Indentures to amend the Original Indenture with the written consent of the holders of a majority of the principal amount of the then outstanding securities of such series. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS: SECTION 1. Definitions, References. Unless otherwise specifically defined herein, each term used herein which is defined in the Original Indenture shall have the meaning assigned to such term in the Original Indenture. Except as amended and supplemented hereby, all of the terms of the Original Indenture shall remain in full force and effect and are hereby confirmed in all respects. Each reference to "hereof," "hereunder," "herein," and "hereby" and each other similar reference, and each reference to "this Agreement" and each other similar reference, contained in the Original Indenture shall from and after the date hereof refer to the Original Indenture as amended by this Second Supplemental Indenture. SECTION 2. Amendment to Article Four of the Original Indenture. Sections 4.3, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17 and 4.18 of the Original Indenture are hereby deleted in their entirety. SECTION 3. Amendment to Article Five of the Original Indenture. Section 5.1 of the Original Indenture is hereby deleted in its entirety. SECTION 4. Amendment to Article Six of the Original Indenture. Section 6.1 of the Original Indenture is hereby amended by deleting paragraphs (c), (d), (e), and (f) in their entirety. Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are hereby redesignated paragraphs (c) and (d). SECTION 5. Ratification of Provisions of Original Indenture. All provisions of the Original Indenture not specifically herein supplemented or modified are hereby ratified and reaffirmed by the Company and the Trustee. SECTION 6. Applicability of Second Supplemental Indenture. The covenants and agreements set forth in this Second Supplemental Indenture shall, unless otherwise determined by the Company and set forth in an amendment to the Original Indenture, be applicable solely to the 10_% Notes. SECTION 7. Counterparts. This Second Supplemental Indenture may be executed in counterparts by the parties hereto. SECTION 8. Section Headings. The Section headings in this Second Supplement Indenture are inserted for convenience only and shall not be part of this instrument. SECTION 9. Governing Law. This Second Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. SECTION 10. Entire Agreement. This Second Supplement Indenture and the Original Indenture as amended hereby constitute the entire agreement and understanding between the parties hereto and supersede any and all prior agreements and understandings relating to the subject matter hereof. * * * * * IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all of the day and year first above written. IMC GLOBAL INC. By:____________________________ Title: Senior Vice President Attest:_______________________ Title: Secretary THE BANK OF NEW YORK By:_____________________________ Title: Assistant Vice President Attest:_______________________ Title: Assistant Treasurer EX-10.6 5 AMEND. TO MANAGEMENT INCENTIVE COMPENSATION PROG. EXHIBIT 10.6 FIRST AMENDMENT TO THE MANAGEMENT INCENTIVE COMPENSATION PROGRAM OF IMC GLOBAL INC. WHEREAS, IMC Global Inc. (the "Company") has adopted and currently maintains the Management Incentive Compensation Program, effective July 1, 1988, as amended through July 2, 1991 and July 3, 1995, respectively (the "MICP"); and WHEREAS, the Company desires to amend the MICP in certain respects and as set forth below. NOW, THEREFORE, pursuant to the power of amendment contained in Section 15.1 of the MICP, the MICP is hereby amended as follows, effective July 1, 1996: 1. Section 5.1 is deleted in its entirety and replaced with a new Section 5.1 as follows: "5.1 Not later than the end of the third month of the fiscal year, the Committee, after consultation with the Chief Executive Officer, shall determine the Performance Objective for each "Business Unit" of the Company and for the Company as a whole for that fiscal year. Each such Performance Objective shall be expressed in terms of the economic performance of the Business Unit or of the Company as a whole. For purposes of the Program, Business Unit shall mean a subsidiary, division, joint venture or other unit of the Company's business which is designated as such by the Committee." 2. Section 5.2 is deleted in its entirety. 3. Section 5.3 is deleted in its entirety and replaced with a new Section 5.3 as follows: "5.3 Not more than 120 days after the beginning of a fiscal year the Chief Executive Officer shall cause each participant who is an officer to be notified in writing of the Performance Objective applicable to such participant for that fiscal year. At his discretion, the Chief Executive Officer may cause such notices to be sent to other participants. After such notices shall have been sent, such Performance Objective shall not be changed." 4. Section 7.5 is deleted in its entirety and replaced with a new Section 7.5 as follows: "7.5 If a Performance Percentage for a fiscal year shall exceed 100%, the Award Pool shall be determined by (i) taking a fraction, the numerator of which shall be the number of percentage points by which the Performance Percentage exceeds 100%, up to the Maximum Percentage, and the denominator of which shall be the percentage point spread between 100% and the Maximum Percentage; (ii) multiplying such fraction by an amount which shall be equal to the Target Pool multiplied by a percentage which shall not be more than 200% and which shall be determined by the Committee (except that the Board of Directors may set a different percentage); and (iii) adding the resulting amount to the Target Pool." 5. Section 8.1(b) is deleted in its entirety and replaced with a new Section 8.1(b) as follows: "(b) The Chief Executive Officer shall designate the amount, if any, of the Actual Incentive Award to be made to each participant in the Plan who is not an officer, in respect of that year, within the limits of the Award Pool for the Company and subject to the maximum award for any participant of not in excess of 200% of his Target Award." 6. Section 9 is deleted in its entirety and replaced with a new Section 9 as follows: "9. Special Pool. If in respect of any fiscal year there shall be no Award Pool for the Company, the Committee may establish a Special Pool which shall not be in excess of 40% of the Target Pool and within the limitations of that Special Pool and subject to the 200% limitation set forth in Section 8.1(b), Incentive Awards may be made to participants in accordance with the procedures set forth in Sections 8.1(b) and (c), and 8.2, 8.3 and 8.4." IN WITNESS WHEREOF, IMC Global Inc. has caused this amendment to be executed by its officers this ____ day of __________, 1996. IMC GLOBAL INC. By: (corporate seal) ATTEST: By: EX-10.8 6 1988 STOCK OPTION & AWARD PLAN EXHIBIT 10.8 IMC GLOBAL INC. 1988 Stock Option and Award Plan As Amended and Restated Effective October 19, 1995 I. Purpose The purpose of this plan is to further the growth and success of the Company and its subsidiaries by providing key employees with additional incentive to contribute to such growth and success and by aiding the Company in attracting and retaining such key employees. II. Administration of the Plan The Board of Directors of the Company shall appoint a committee (the "Committee") of not less than three of its members to administer the Plan. A majority of the members of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the members of the Committee, shall be the acts of the Committee. Each member of the Committee shall be (a) a "disinterested person" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (b) shall qualify as an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee shall have the power to grant options, stock appreciation rights and awards of Restricted Stock ("Restricted Stock Awards") under the Plan, to interpret the Plan and options, stock appreciation rights and Restricted Stock Awards granted under it, to make regulations and to formulate administrative provisions for carrying out the Plan, and to make all other determinations in connection with the granting of options, stock appreciation rights and Restricted Stock Awards and administration of the Plan. The Committee may delegate some or all of its power and authority hereunder to the President and Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority with regard to (i) the grant of an award under this Plan to any person who is a "covered employee" within the meaning of Section 162(m) of the Code and the regulations thereunder who, in the Committee's judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding or (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer or other person. III. Stock Subject to the Plan (a) The stock to be offered for sale by the Company pursuant to exercise of options or which may be delivered upon the exercise of stock appreciation rights or which may be delivered pursuant to Restricted Stock Awards granted under the Plan shall be shares of the authorized Common Stock, par value $1.00 per share, of the Company (hereafter sometimes call the "Stock") and may consist of either unissued shares or shares reacquired by the Company, or a combination of both as the Board of Directors or the Committee may from time to time determine. Subject to the provisions of subsection (b) of this Section 3, the aggregate number of shares of Stock which may be delivered under the Plan shall not exceed 3,000,000 shares, reduced by the sum of the aggregate number of shares of Common Stock (i) that are issued upon the grant of Restricted Stock Awards and (ii) which become subject to outstanding options. To the extent that shares of Common Stock subject to an outstanding option (except to the extent shares of Common Stock are issued or delivered by the Company in connection with the exercise of a stock appreciation right) or Restricted Stock Award are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or by reason of the delivery or withholding of shares of Common Stock to pay all or a portion of the exercise price of an award, if any, or to satisfy all or a portion of the tax withholding obligations relating to an award, then such shares of Common Stock shall again be available under this Plan. To the extent required by Section 162(m) of the Code and the rules and regulations thereunder, the maximum number of shares of Common Stock with respect to which options may be granted during any calendar year to any person shall be 500,000, subject to adjustment as provided in Section 3(b). Except as set forth in this Section 3, any securities resulting from any stock dividend, stock split, stock distribution or other recapitalization or any substituted securities in the event of any substitution referred to in the this Section 3, shall be subject to the shares covered by the related option, stock appreciation right or Restricted Stock Award pursuant to the Plan including, in the case of a Restricted Stock Award, escrow of such shares or other securities. (b)(i) In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities available under this Plan, the number and class of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding stock appreciation right, and the number and class of securities subject to each outstanding Restricted Stock Award shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options without an increase in the aggregate purchase price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (1) available under this Plan, such fractional security shall be disregarded, or (2) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the first vesting or exercise of such award, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (x) the fraction of such security (rounded to the nearest hundredth) by (y) the excess, if any, of (A) the fair market value (determined in accordance with Section 6) on the vesting or exercise date over (B) the exercise price, if any, of such award. (ii) Notwithstanding any provision in this Plan or any agreement, in the event of a Change in Control in connection with which the holders of Common Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, (1) all outstanding options shall immediately become exercisable in full, (2) the restrictions applicable to any outstanding Restricted Stock Award shall lapse and (3) there shall be substituted for each share of Common Stock available under this Plan, whether or not then subject to an outstanding award, the number and class of shares into which each outstanding share of Common Stock shall be converted pursuant to such Change in Control. In the event of any such substitution, the purchase price per share in the case of an option shall be appropriately adjusted by the Committee, such adjustments to be made without an increase in the aggregate purchase price. (iii) Notwithstanding any provision in this Plan or any agreement, in the event of a Change in Control (other than a Change in Control in connection with which the holders of Common Stock receive consideration other than shares of common stock that are registered under Section 12 of the Exchange Act), each outstanding award shall be surrendered to the Company by the holder thereof, and each such award shall immediately be canceled by the Company, and the holder shall receive within ten days of the occurrence of such Change in Control, a cash payment from the Company in an amount equal to (1) in the case of an option, the number of shares of Common Stock then subject to such option, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in Control, over the purchase price per share of Common Stock subject to the option and (2) in the case of a Restricted Stock Award, the number of shares of Common Stock then subject to such award, multiplied by the greater of (A) the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in Control. In the event of a Change in Control, each stock appreciation right shall be surrendered by the holder thereof and shall be canceled simultaneously with the cancellation of the related option. The Company may, but is not required to, cooperate with any person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 and the rules and regulations thereunder. IV. Eligibility Any regular salaried employee of the Company or any of its subsidiary companies shall be eligible to receive options, stock appreciation rights and Restricted Stock Awards under the Plan. Members of the Board of Directors of the Company who are not employed in any other capacity as regular salaried employees of the Company or of any subsidiary are not eligible to receive options, stock appreciation rights and Restricted Stock Awards under the Plan. V. Offering to Designated Employees Subject to the terms of the Plan, the Committee shall have the authority to select the persons to whom options are to be granted under the Plan (it being understood that more than one option may be granted to the same person), the number of shares to be subject to each such option, the option price of such shares, the time or times when each option may be exercised within the limits stated in this Plan, and other terms of the option. An option, or a portion thereof, may be an "incentive stock option" within the meaning of Section 422 of the Code (an "ISO") or an option that is not an ISO (a "Non-Statutory Stock Option"), provided that no ISO may be granted more than ten years after the date on which the stockholders of the Company approve this amendment and restatement of the Plan providing for the grant of ISOs hereunder. The Committee shall also have the authority, subject to the terms of the Plan, to determine (a) whether stock appreciation rights are to be granted in conjunction with an option and (b) which employees shall receive Restricted Stock Awards, the number of shares to be subject to each such Award and the terms and conditions of such Awards. Each option, stock appreciation right and Restricted Stock Award issued under the Plan may in the discretion of the Committee be covered by an agreement executed on behalf of the Company and the Grantee. Each such Agreement shall be in form approved by the Committee and shall contain such restrictions, terms and conditions as the Committee may require and as are not inconsistent with the provisions of the Plan. Each option and stock appreciation right shall be deemed to have been granted and shall take effect on the date that the Committee approves the granting of the option or stock appreciation right, or the date the Grantee enters the employ of the Company or a subsidiary, whichever is later, regardless of when the agreement or other document evidencing the option or stock appreciation right is executed and delivered. Each such agreement or other document shall be dated as of the date the option, stock appreciation right or Restricted Stock Award evidenced thereby is granted. VI. Price The option price shall not be less than 100% of the fair market value of the Stock at the time the option is granted; provided, however, that if an ISO shall be granted to any person who, at the time such ISO is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary) (a "Ten Percent Holder"), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an ISO. The fair market value at the time the option is granted shall, for purposes of the Plan, be the mean between the highest and lowest prices at which the Stock is traded on the day on which the option is granted, as reflected on the consolidated tape of New York Stock Exchange issues, or if such date is not a trading day, on the first trading day preceding such date. If there are no such sales of Stock on the date the option is granted (or on the first trading day preceding such date, if applicable) the mean between the bid and the asked prices as reflected on the consolidated tape of New York Stock Exchange issues at the close of the market on such day shall be deemed to be the fair market value of the Stock. VII. Exercise of Options (a) The period during which an option may be exercised shall be determined by the Committee at the time the option is granted, except (but subject to Section 3) that (i) an employee must continue in the employ of the Company and/or one or more of its subsidiaries for a period of not less than one year after the date of grant of the option before he may exercise such option; (ii) not more than 50% of the total number of shares subject to his option may be purchased by an employee during the one-year period beginning on the first anniversary of the date of grant of the option; (iii) except as otherwise provided in Section 11, no option shall be exercisable after the Grantee ceases to be an employee of the Company; and (iv) no option shall be exercisable more than ten years after its date of grant, provided, that if an ISO shall be granted to a Ten Percent Holder, such ISO shall not be exercisable more than five years after its date of grant. For purposes of the foregoing and Section 11, any Grantee who shall retire from employment with the Company and/or one or more of its subsidiaries prior to the first of the month following his 65th birthday, and who at the time of such retirement shall be committed to render consulting services to the Company and/or one or more of its subsidiaries pursuant to a contract which is approved by the Board of Directors and which in the judgment of the Committee requires that during the period of such contract he be obligated to devote a substantial portion of his time to rendering such services, shall, if the Committee so determines, be deemed for purposes of the Plan to continue in the employment of the Company and/or its subsidiaries so long as his obligation to render consulting services under such contract shall continue in effect, but not beyond three years from the date of his retirement or ten years from the date of grant whichever shall first occur. Subject to the foregoing and Section 11, options may be exercised from time to time in whole or in part. Each exercise of an option shall be accomplished by giving written notice of such exercise to the Treasurer of the Company, specifying the number of shares to be purchased and accompanied by payment in full of the purchase price therefor (or arrangement made for such payment to the satisfaction of the Company). An employee to whom an option is granted shall be under no obligation whatsoever to exercise it, and he may exercise the option or not in his discretion. (b) Payment for the options exercised shall be either in (i) cash, or check, bank draft or money order (collectively referred to as "cash") to the order of IMC Global Inc. for an amount in United States dollars equal to the total option price for the number of shares upon which options are being exercised, or (ii) shares of Common Stock of the Company (which shall be valued, for this purpose, at a price per share which is the mean between the highest and lowest prices at which the Stock is traded on the exercise date (or, if such date is not a trading day, on the first trading day preceding the exercise date), as reflected on the consolidated tape of New York Stock Exchange issues, or if there are no such sales of Stock on the exercise date (or on the first trading day preceding such date, if applicable), the mean between the bid and the asked prices as reflected on the consolidated tape of New York Stock Exchange issues at the close of the market on such date) with a value equal to or less than the total option price, plus cash for an amount in United States dollars equal to the amount, if any, by which the total option price exceeds the value (determined as aforesaid) of such shares of Company stock. Payment of the option exercise price in cash may be made by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise. Payment of the option exercise price by shares of Common Stock shall be either (1) by delivery of previously owned whole shares of Common Stock (which the optionee has held for at least six months prior to delivery of such shares and for which the optionee has good title, free and clear of all liens), (2) by authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered upon exercise of the option or (3) a combination of (1) and (2), in each case to the extent set forth in the agreement relating to the option. The Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (1)-(3) and in the case of an optionee who is subject to Section 16 of the Exchange Act, the Company may require that the method of making such payment be in compliance with Section 16 and the rules and regulations thereunder. The exercise date as used herein shall mean the business day on which an optionee delivers written notice to the Treasurer of the Company specifying the number of shares the optionee then desires to purchase under options held by such optionee. Payment for shares exercised for Stock and/or cash shall be delivered to the Treasurer of the Company not later than the end of the third business day after the exercise date. In the case of payment by delivery of previously owned shares of Stock, such payment shall be made by delivery of the necessary share certificates, with executed stock powers attached, to the Treasurer of the Company or, if such certificates have not yet been delivered to the optionee by written notice to the Treasurer of the Company requesting that the shares represented by such certificates be applied toward payment as hereinabove provided. (c) At the request of a participant, the Company may satisfy any of its tax withholding obligations arising upon the exercise of an option under Federal, State or other tax laws by withholding from the number of shares otherwise to be delivered to the Grantee that number of shares equal to the amount of such tax to be withheld. Shares to be withheld under this Section 7(c) shall be valued in accordance with the provisions of Section 7(b)(ii) above. In the alternative, the Grantee may deliver to the Company in whole or partial satisfaction of the Company's tax withholding requirements, previously owned whole shares of Common Stock (which the optionee has held for at least six months prior to delivery of such shares and for which the optionee has good title, free and clear of all liens), which shares shall be valued for such purpose in accordance with the provisions of Section 7(b)(ii) above. The Committee shall have sole discretion to disapprove of an election or request to withhold or deliver shares of Stock in order to satisfy tax withholding obligations and in the case of an optionee who is subject to Section 16 of the Exchange Act, the Company may require that the method of satisfying such obligations be in compliance with Section 16 and the rules and regulations thereunder. VIII. Stock Appreciation Rights (a) Stock appreciation rights may be granted in conjunction with all or part of any option granted under this Plan, either at the time of the grant of such option or at any subsequent time during the term of the option; provided, however, that any stock appreciation right related to an ISO shall be granted at the same time that such ISO is granted. A "stock appreciation right" is a right to receive, without payment to the Company, a number of shares of Common Stock of the Company and/or cash, as provided in this Section 8, in lieu of the purchase of shares under a related option. A stock appreciation right shall terminate and no longer be exercisable upon the termination of the related option. Stock appreciation rights may be exercised, in accordance with subsection (b) of this Section 8, by a Grantee by surrendering the related option or applicable portion thereof. Upon such exercise and surrender, the Grantee shall be entitled to receive an amount determined in the manner prescribed in subsection (b) of this Section 8. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the related stock appreciation rights have been exercised. (b) Stock appreciation rights shall be subject to such terms and conditions not inconsistent with other provisions of the Plan as shall be determined from time to time by the Committee, which shall include the following: (i) Stock appreciation rights shall be exercisable at such time or times and only to the extent that the option to which they relate shall be exercisable in accordance with the provisions of Section 7 and this Section 8 of this Plan. (ii) Upon the exercise of a stock appreciation right, an optionee shall be entitled to receive an amount equal to the excess of the fair market value of one share of Common Stock over the option price per share specified in the related option multiplied by the number of shares in respect of which the stock appreciation right shall have been exercised. If shares of Common Stock are to be delivered for such excess amount, the number of whole shares shall be determined by dividing such excess amount by the fair market value of one share of Common Stock on the date of exercise of the stock appreciation right. No fractional shares shall be issued upon exercise of the stock appreciation right and no cash shall be paid for such fractional shares. The fair market value of Common Stock on the date of exercise of stock appreciation rights shall be determined in the same manner as the fair market value of Common Stock on the date of grant of an option is determined pursuant to Section 6 hereof. (iii) The Committee shall have the sole discretion to determine the form in which payment of the amount described in paragraph (ii) of this subsection (b) will be made (i.e., cash, Common Stock, or any combination thereof). (iv) The obligation to make payments with respect to stock appreciation rights shall not be funded or secured in any manner. (c) Upon the exercise of a stock appreciation right, the option or part thereof to which such stock appreciation right is related shall be deemed to have been exercised for the purpose of the limitation of the number of shares of Common Stock to be issued under the Plan as set forth in Section 3 hereof. IX. Restricted Stock Awards (a) Restricted Stock Awards are awards of restricted shares of Common Stock which are subject to the terms, conditions and restrictions contained in this Plan and in the Award relating to such shares. Upon the grant of any Restricted Stock Award, the awarded shares shall be registered in the name of the Grantee as soon as reasonably practicable after the award is made, but not until the Grantee has executed an award agreement and any other documents which the Committee in its absolute discretion may require. The awarded shares shall be retained by the Treasurer of the Company, an escrow holder, and the Grantee shall not be required to make any payment of cash consideration for such Award. All such Awards shall be contingent and the rights of the Grantee with respect thereto prior to vesting or forfeiture as provided in this Plan shall be only as set forth in this Plan. (b) Unless and until the shares awarded to a Grantee shall have vested as provided in this Section 9, but subject to the provisions of Section 3 where applicable, such shares shall not be sold, transferred or otherwise disposed of or pledged, but the Grantee, after delivery of the shares to the escrow holder, shall have the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. (c) Each Restricted Stock Award shall be granted by the Committee, in its absolute discretion, subject to the provisions of the Plan, and shall contain such terms and conditions as the Committee shall determine consistent with the Plan, but in no event (except as provided in Section 3 hereto) may any portion of a Restricted Stock Award vest prior to one year after the date of grant. (d) Upon the forfeiture of any share of Restricted Stock in accordance with the provisions of the Plan, or the terms and conditions of the Award, such share shall automatically be transferred to and reacquired by the Company at no cost to the Company. (e) Vested Restricted Stock Awards shall be paid by delivery to the Grantee of certificates for the appropriate number of shares of Common Stock of the Company, registered in his name, free of any restriction or condition other than such restrictions on the resale of such Stock as the Committee, on advice of counsel, may require, which restrictions may be expressed, at the option of the Committee, in a legend on the stock certificate, with appropriate instructions given to the Company's transfer stock agent. X. Necessary Approvals Each option and stock appreciation right and Restricted Stock Award shall be subject to the requirement that if at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of the shares subject to such option or stock appreciation right or Restricted Stock Award upon any securities exchange or under any state or federal law, or that the consent or approval of any governmental authority, is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares under such option or upon exercise of such stock appreciation right or the award, vesting or delivery of shares covered by a Restricted Stock Award, such option or stock appreciation right may not be exercised in whole or in part, and such Restricted Stock Award shall not be made or vest, and shares thereunder may not be delivered, as the case may be, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. Any option or stock appreciation right may be exercised only in accordance with the provisions of all applicable law. XI. Termination of Employment (a) If an employee ceases to be employed for any reason, whether by his own volition or otherwise, except where termination is due to death, total disability or retirement (as defined in Section 11(c) of this Plan) of the employee, all options and stock appreciation rights held by the employee under this Plan shall be automatically canceled at the time of termination of employment except that any such option and stock appreciation right may be exercised by him within three months after such termination (but not after the expiration of ten years from the date of grant or after the expiration of any other period for exercise made applicable by the Committee at the time of grant) to the extent exercisable by him at the time of such termination; provided, however, that in the case of an ISO, the period of time after such termination of employment shall not be greater than three months. If such an employee dies within such three month period, any such right of exercise of his option or stock appreciation right, respectively, possessed by him on the date of his death shall be transferred and may be exercised as provided in subsection (b) of this Section, unless the option or stock appreciation right by its terms shall provide otherwise. (b) If an employee dies while in the employ of the Company or any of its subsidiary companies, any option and stock appreciation right held by him at the time of his death shall be transferred as provided in his will or as determined by the laws of descent and distribution, and may be exercised, to the extent exercisable by him at the time or from time to time within twelve months after the date of death (but not after the expiration of ten years from the date of grant or after the expiration of any other period for exercise made applicable by the Committee at the time of grant) unless the option or stock appreciation right by its terms shall provide a shorter period of time during which the option or stock appreciation right may be exercised after death. (c) An employee whose employment terminates because of total disability or retirement (as defined in this subsection) may exercise his option and stock appreciation right, to the extent exercisable by him at the time of such termination, at any time or from time to time within three years after the termination of his employment (but not after the expiration of ten years from the date of grant or after the expiration of any other period for exercise made applicable by the Committee at the time of grant). If such a former employee dies, any such right of exercise of his option or stock appreciation right possessed by him on the date of his death shall be transferred and may be exercised as provided in subsection (b) of this Section unless the option or stock appreciation right by its terms shall provide otherwise. "Retirement," for purposes of this Plan, shall include termination of employment at a time when the Grantee is entitled to an early or normal retirement pension under any retirement plan of the Company. (d) If the employment of a Grantee terminates before a Restricted Stock Award is vested in accordance with the Plan, he shall automatically forfeit all shares of Stock then subject to Restricted Stock Awards under the Plan, except to the extent otherwise determined by the Committee in its sole discretion before or after such termination. XII. Miscellaneous (a) While an option or stock appreciation right is unexercised, an employee shall have no voting rights or other rights of stockholders with respect to shares which are subject to his option or which he may receive upon exercise of his stock appreciation right. Furthermore, no cash dividends shall accrue or be payable with respect to any such shares. However, an employee shall have full voting and other rights upon the date on which the Committee determines that Stock will be issued to him in connection with the exercise of the stock appreciation right. (b) Stock which is subject to options but has not yet been purchased or which may be issued upon exercise of a stock appreciation right has no subscription rights. (c) No fractional shares of Stock shall be issued upon exercise of an option or a stock appreciation right and in case a fractional share shall become subject to an option or stock appreciation right by reason of a stock dividend or otherwise, the employee holding such option or stock appreciation right shall not be entitled to exercise it with respect to such fractional share. (d) The rights granted to any employee pursuant hereto shall be exercisable, during his lifetime, only by him or by his guardian or legal representative and none of such rights shall be subject to sale, hypothecation, assignment or pledge or be transferable otherwise than by will or intestacy. (e) No Grantee of an option, stock appreciation right or Restricted Stock Award shall have any right to be retained in the employ of the Company or a subsidiary thereof by virtue of his participation in the Plan. (f) This Plan, each option, stock appreciation right and Restricted Stock Award hereunder and the related agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. XIII. Amendments Subject to any requirement of stockholder approval required by applicable law, rule or regulation including Rule 16b-3 under the Exchange Act and Section 162(m) of the Code, the Board of Directors shall have the power (a) to make such changes in the Plan and in any option, stock appreciation right or Restricted Stock Award previously granted under the Plan as in the opinion of counsel to the Company may be necessary or appropriate from time to time so that options granted under the Plan will continue to be ISOs or Non-Statutory Stock Options, as the case may be, under the Code as in existence from time to time, and (b) to make such other changes in the Plan and in any option or stock appreciation right previously granted under the Plan as from time to time the Board deems proper and in the best interests of the Company; provided, however, that no amendment shall be made without stockholder approval if such amendment would (i) increase the maximum number of shares of Common Stock available under this Plan (subject to Section 3), (ii) reduce the minimum purchase price in the case of an option or the base price in the case of a stock appreciation right, (iii) effect any change inconsistent with Section 422 of the Code or (iv) extend the term of this Plan. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder. XIV. Effective Date and Termination (a) The Plan or any amendment hereto shall become operative and in effect as of the date the Plan or any such amendment is approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the 1995 annual meeting of stockholders. (b) The Plan shall remain in effect until termination by action of the Board. Termination of this Plan shall not affect the rights of employees under the options theretofore granted to purchase Common Stock under the Plan, or the rights of employees pursuant to stock appreciation rights and Restricted Stock Awards theretofore granted under the Plan, and all such options, stock appreciation rights and Restricted Stock Awards shall continue in force and in operation after termination of the Plan, except as they may be terminated through death or other termination of employment in accordance with the terms of the Plan. XV. Definitions of Certain Terms Referenced Hereto in the Plan (a) Change in Control: The term "Change in Control" of the Company when used in this Plan, shall mean, and be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied. (i) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (1) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this definition; (ii) individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (iii) approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (1) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporation Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Company Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or (iv) approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. (b) "Non-Statutory Stock Option" shall mean a stock option which is not an ISO. (c) "Permanent and Total Disability" shall have the meaning set forth in Section 22(e)(3) of the Code or any successor thereto. (d) "Termination of Employment" shall mean the termination of employment by IMC Global Inc. or the Company or its successor company of an employee who is a participant in the Plan, that occurs after a Change in Control (as herein defined) has occurred and is not due to cause and is not voluntary. Termination shall not be deemed to be voluntary if the employee elects to resign because his or her position, responsibility, benefits or compensation have been adversely changed or diminished. This definition is applicable to "termination of employment" when used in the Plan only when the reference to Section 16 appears along with it. IN WITNESS WHEREOF, IMC Global Inc. has caused this instrument as amended to be executed, effective as of July ___, 1995. IMC GLOBAL INC. By: Its: (corporate seal) ATTEST: By: Its: EX-10.14 7 MANAGE. COMP. & BENEFIT ASSURANCE PROGRAM EXHIBIT 10.14 5-2-96 IMC GLOBAL INC. MANAGEMENT COMPENSATION AND BENEFIT ASSURANCE PROGRAM FOR EMPLOYEES OF IMC GLOBAL INC. AND ITS SUBSIDIARIES Amended through August 17, 1995 I. INTRODUCTION There are a number of plans from which officers and other managers of the Company receive compensation and benefits. The majority of these come in the form of monthly payments or benefit coverage. However, there are some that are in the form of commitments to pay or provide coverage at some future date. These are stock options, restricted stock, deferred compensation payments, executive retirement supplements, and other similar arrangements, many of which may be regarded as already having been earned in the normal course of employment. All of these commitments are unsecured and unfunded promises to pay and as such are likely to generate employee concerns as to whether a successor Corporation or persons would honor the commitments in the event of a change in control of the Company. In recognition that concerns about job security, in the context of a change in control, may adversely affect motivation and attention to job duties, and consequently hinder productivity and performance, and to ensure that officers and key management personnel receive the compensation and benefits which have been committed to them and that all such personnel receive the appropriate severance arrangements and benefits in the event of a termination (as defined below) after a change in control, management has prepared and presented this Management Compensation and Benefit Assurance Program to the Compensation Committee. The Program was adopted in 1988, amended in 1992 and was amended again as of August 17, 1995. II. Definition Of A Change In Control In implementing such a program, which creates rights and obligations consequent upon a change in control of the Company, it is necessary to have a definition of what constitutes a change in control of the Company. "Change in Control" shall mean, and be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied. (1) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13 (d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or, (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; (2) individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (3) approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporation Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Company Common Stock or the Outstanding Company Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the Board of Directors of the corporation resulting from such Corporate Transaction; or (4) approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. III. DEFINITION OF TERMINATION OF EMPLOYMENT AND PARTICIPANT This Program's benefits are intended only to apply to management personnel who are qualified participants and who are terminated from employment involuntarily and without cause after a change in control has occurred. Therefore, for purposes of the Program, termination means the termination of employment by Global or the Corporation or its successor company of an employee who is a qualified participant (as hereinafter defined) in the Program, that occurs after a change in control (as herein defined) has occurred and is not due to cause and is not voluntary. Termination shall not be deemed to be voluntary if the employee elects to resign because his or her position, responsibility, benefits, or compensation have been adversely changed or diminished. Qualified participants for any particular part of the Program shall be limited to those persons who now are or hereafter become participants under the plan that is involved in that part of the Program. For example, qualified participants under the Program are those who hold or hereafter hold unvested Restricted Stock Awards and/or Continent Stock Units under the Plan there described. The fact that a participant who is terminated later becomes eligible to retire under any pension program or plan of the Corporation shall not in any way affect his or her benefits or entitlements under the Program. IV. LIMITATIONS ON PROGRAM Nothing in the above definitions or otherwise in this Program is intended to change any contingent employment to modify any qualified plan of the Company. Nothing in this Program shall create, or entitle any employee to, a right of employment or continued employment by the Company. The officers who have contingent employment contracts are included in this Program only to the extent they are not entitled to receive the payments, incentives, or benefits involved, or their equivalent, pursuant to their Employment Contracts. V. THE PROGRAM The Program includes special Trusts, special placements, and other documentation and policies described below designed to assure that the various commitments made to participants are kept and the job security concerns are minimized, notwithstanding a change in control of the Corporation. It encompasses the following: A. RABBI TRUSTS Background The Rabbi Trust is one of the key elements in the Program. A Rabbi Trust is established by one party to ensure that a future commitment made to another individual is kept. The first such trust of this kind was approved by the IRS for a Rabbi to fund promises made to him by his congregation; thus the name, Rabbi Trust. The trust is funded and the trustee makes the future payment in accord with the particular agreement. Once the trust is funded, the trustee is obliged to pay benefits. Another individual, or in the case of a takeover, the new management or the Company under new management has no access to the funds in the trust and cannot block payment. Only in the case of insolvency can the protection afforded by the Trust be penetrated. Implementation: The Rabbit Trusts are minimally funded until such time as a change in control is imminent to assure that the benefits available under the following plans are paid: Deferred Management Incentive Awards Contingent Employment Agreements Supplemental Exec. Retirement Plan Gross-Up of Excess Compensation Management Incentive Compensation Plan Cost of Action The annual cost of maintaining the Trusts has averaged _______________, in excess of those required to pay benefits shall be returned to the Company. B. RESTRICTED STOCK AND CONTINGENT STOCK UNITS Stock Option Awards Background Restricted Stock and Contingent Stock Units (that have the same value as common stock) were issued as part of the __________ Long-Term Incentive Plan beginning in 1992. In total, __________ shares of Restricted Stock and __________ Contingent Stock units have been issued under the Plan. Twenty percent of the restricted shares vest based on service. The remainder vests based on attainment of performance objectives. Restrictions on all shares and units lapse on the date they are vested. In the case of contingent stock units, they will be paid in stock, or converted to cash, at the Committee's discretion, at the closing price on the vesting date of the Company's Common Stock on the principal exchange upon which such Common Stock is then traded. As of today, there are still ______________ shares of Restricted Stock and _____________ Contingent Stock Units that may be paid to 26 executives. In the event of a Change in Control, the Plan provides for cancellation and surrender of the Awards to the Company and payment of the cash equivalent, based on the current Stock price, to the participant. The Stock Option and Award Plan has been amended to provide for surrender of awards within ten days of occurrence of a change in control, and payment of the cash equivalent based on he number of shares subject to the award multiplied by the spread if any, between the grant price and the highest share price during the Change in Control transaction. There are currently ______________ employees who hold options to purchase ___________ shares of Global's common stock. These are under the 1988 non-qualified stock option plan. _____________ are currently exercisable. ______________% will become exercisable on __________________ ____% on ___________ and __________% on ______________. Employees subject to 16(b) short-term profit restrictions hold options to purchase ____________ shares. Cost of Action The cost would be the full difference between the option/restricted share price and the Change in Control price. For example, based on all options outstanding today, assuming a spread of $15 per share the cost would be $_____________. Likewise based on all restricted shares granted as of _____________________ ____________________, the cost based on a spread of $15 per share would be $______________________. C. MANAGEMENT INCENTIVE COMPENSATION PROGRAM ("MICP") Background The MICP has been amended to provide proportionate payment of awards earned under the plan in the event of a change in control. Currently, there are __________ participants in the plan which has an annual target award this year for all participants of $_________________. The MICP also allows participants to defer receipt of awards which they receive under the plan until a later date. Currently there are _________ managers who had deferred incentive payments in the amount of $_____________. These accounts earn interest at the prime rate and will be paid out over the next 15 years. This is carried on the books but is an unsecured promise by the Company to pay in the future. Even though the funds have all been earned by the incentive plan participants, there is no protection to ensure the deferred amounts will be paid at a future date if there is a change in control of the Company. Cost of Action The cost of proration would be same percentage of the dollar figure noted above. The cost of deferral payout may or may not cost the corporation any more than what would normally be paid. Payouts earlier than the end of the plan year could result in a cost related to the item value of money. Actual amounts paid will depend on the performance of the Company in the particular year in which the change in control occurs. This action will not create any "excess compensation" or trigger any excise taxes. D. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Background The Supplemental Executive Retirement Plan provides retirement benefits to officers and key managers in excess of that provided by the qualified Retirement Plan that covers all salaried employees. The Plan provides a benefit equal to three (3) percent times the participant's years of service (up to 20) times the average of the five highest earnings (salary plus bonus). The average age of the group covered is ________ years and the average service is ________ years. The Plan provides that if a participant terminates prior to attaining age 55, he or she is not entitled to a pension under this plan. This means that any officer who is less than age 55 and who is terminated for any reason, including as a result of a change in control, would get nothing from the SERP. Also, the plan has a provision which allows it to be terminated at any time. Under, and subject to, the contingent employment agreements, officers and key managers who have contingent employment agreements will be given three years of credited service under the SERP for purpose of pension benefit accrual if they are actually or constructively discharged other than for cause after a change in control. The plan was amended to provide that participants who are terminated as defined, after a change in control, are entitled to the value of the benefits they have accrued to the date of their termination (plus credited service by virtue of their contingent employment agreements, if applicable). This is calculated using a 4% reduction factor from age 62 to the age at termination. The participant may request that the Committee, in its sole discretion, authorize the payment of benefits in a lump sum; benefits are otherwise payable monthly. The plan also provides so that it cannot be terminated after a change in control without all participants receiving the benefits to which they are entitled above. Cost of Action The additional three years service as provided in the contingent agreements may result in additional benefits up to _______________ in the aggregate to certain officers, which may also create "excess parachute payments" if they are terminated (as defined) after a change in control, but this would result only if the new owner decided to terminate them or force their termination without cause. Though the participant is less than age 55, may result in additional benefits up to $_____________ in the aggregate to offices and key managers. E. GROSS-UP OF COMPENSATION TO COVER TAXES Background Currently there are contingent employment agreements with ________ officers and key managers. Payments made to these executives resulting from a change in control of the Company come under IRS regulations that were passed with the Deficit Reduction Act. If the company makes a payment to such an individual in an amount which exceeds three times the executive's average annual compensation income from the Company for the five tax years preceding the tax year in which a change in control of the Company occurs, there will be an "excess parachute payment". An excess parachute payment may not be deducted by the Company and would result in the imposition of a 20% excise tax on the recipient, in respect of, generally speaking, the entire payment except for one times the executive's average annual compensation income and any other portion of the payment that has been earned. The acceleration of certain compensation and benefits may create excess parachute payments that would trigger 20% excise tax for the executive and nondeductibility for the Company. Whether there are, in fact, any "excess payments" will be dependent on the timing of the event. If most of the compensation is earned at the time of a change in control, there would be very little, if any, excise taxes. Conversely, if a change in control occurred July 1, 1996, and there is a significant acceleration of receipt of compensation that is not yet earned, there would be additional taxes. The gross-up agreements also provide that the executive must cooperate with the Corporation in resisting or minimizing any excise tax or loss of deduction, but that any disputes with the IRS regarding a loss of deduction are the responsibility of the Corporation and are at its expense. The executive will, however, be required to return any part of the gross-up that is not needed for that purpose (net after any tax imposed on the executive on account of the unneeded amount). Cost of Action 1. Assumed total severance payments for these individuals are shown in Exhibit I which has been prepared to show the worst, including the assumptions (which we believe unwarranted) that all personnel will be terminated involuntarily and without cause immediately upon a change in control and that the 1995 contracts and other payments will become subject to the parachute laws. The estimated cost of grossing-up reimbursements to cover the excise tax for individuals with excess payments on this "worst-case" basis is about $_________________ as shown in Exhibit ___________. 2. Additionally, there will be an estimated cost of $_____________ to the Company due to the loss of a tax deduction of $______________. The total estimated "worse-case" to the Company, assuming a change of control 7/l/96, is $______________. Cost of gross-up and lost deductions are itemized in the attached Exhibit ________. 3. These costs will change as the base earnings change (average of last five-year W-2 earnings) and as incentive awards are granted and become vested. F. CONTINGENT EMPLOYMENT AGREEMENT Background There are currently ____________ contingent employment agreements, an example of which appears in the attached Exhibit _______, with certain officers. These contracts provide that if the executive is terminated as defined in the contract (similar to termination as defined in this Program) within the three-year period following a change in control of the Corporation as defined in the contract (similar to change in control as defined therein), severance will be paid in the amount of three times annual average salary and bonus. The contracts do not become effective until a change of control has occurred, at which point they become unsecured promises to pay by the Corporation in the above event. The CEO's contract provides a month long window at the close of the twelve month period following a change in control. During this window period he may opt to activate his Contingent Employment Agreement and leave. Performance of these contracts is assured by the Rabbi Trust. The Trust pays the intended benefits and compensation to the executive in the event he is terminated as provided in his or her contract. The funding of the Trust for this purpose is triggered by action of the Compensation Committee. Cost of Action Maximum severance payments under the contracts would total $4,448,000 if all _________ became entitled thereto upon immediate termination after a change in control (See Exhibit _____). Since these contracts have already been signed by the executives, there would be no increase in cost. The only cost associated with these contracts would be those associated with the establishment of the Rabbi Trust. G. PENSIONS Background The qualified Retirement Plan for Salaried Employees is funded to provide benefits for all salaried employees. In the event of a change in control and participants are terminated, they will be entitled to the benefits to which they are entitled under the plan provided they are vested (5 years of service). Vested employees less than age 55 become deferred vested participants. Upon leaving the Corporation, they can take their accrued benefits in a lump sum or leave them in the plan until age 55. Employees who leave the Corporation after age 55 can begin drawing their pensions in monthly amounts or take a lump sum. Employees who leave when younger than age 55 with less than ten years of service would not be entitled to a benefit. In the event of a change in control, employees who are terminated (as defined) but are not yet vested at that time will become vested and will be credited for service for a maximum twenty-four month severance period. Cost of Action There is some cost associated with the vesting of employees with less than five years of service. In addition, there would only be real cost in the event an employee is terminated (as defined), and this, of course, would be the new owner's responsibility. It is very difficult to estimate how many employees would be terminated after a change in control. VII. AMENDMENT AND DURATION OF THE PROGRAM It is necessary to define the time during which this proposal will be in effect. As times change and conditions change, the contents of the Program will have to be reviewed. Having a fixed duration means that the program will automatically have to be reviewed and reevaluated at the end of the term. This Program originated with a five (5) year period automatically renewing for subsequent annual periods unless the Board of Directors of the Company, by resolution duly adopted at least six (6) months prior to the end of the five (5) year period or of any subsequent annual period, indicates that the Plan shall not be renewed. Further, if a Change in Control occurs during the term of the Program, the Program shall continue until the Company shall have fully performed all of its obligations thereunder with respect to all Participants, with no future performance being possible. The Board of Directors reserves the right to amend all or any part of this Program prior to a change in control if, in the opinion of counsel, amendment is warranted due to changes in applicable law or interpretations thereof. This Program may not be amended after a change in control so as to reduce the benefits of any person who is a qualified participant in any part of the Program the time of the change in control. EX-10.26 8 NON-COMPETITION AGREEMENT EXHIBIT 10.26 NON-COMPETITION AGREEMENT This Agreement made as of the 1st day of March, 1996, between IMC GLOBAL INC., a Delaware corporation ("Company"), KALIUM CHEMICALS, LTD., a Delaware corporation and John U. Huber ("Employee"). WHEREAS, the Company and The Vigoro Corporation, a Delaware corporation, ("Vigoro") on the date stated above, have completed a transaction whereby Vigoro has become a wholly-owned subsidiary of the Company; and WHEREAS, the Company desires to have the use of and access to and to protect valuable confidential information relating to the businesses of the Controlled Group in Employee's possession and other confidential information which Employee may acquire during employment by any Employer; and WHEREAS, the Company has concluded that it is therefore in the best interest of the Company to provide incentives for Employee to continue to be employed in the Controlled Group and to secure Employee's agreement to limitations on Employee's future business activities in order to protect the Controlled Group from injury that would occur if the confidential information became available to and could be used by a competitor of any member of the Controlled Group; NOW, THEREFORE, for valuable consideration which the parties acknowledge and in consideration of the mutual covenants and agreements contained herein, the Employee and the Company agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement, unless the context requires otherwise. "Vigoro" means Vigoro and its Subsidiaries, as they may exist from time to time, during Employee's employment with Vigoro or with the Company or its affiliates in the Controlled Group. "Cause" means (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties: provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b),(c),(m) and (o) of the Internal Revenue Code of 1986, as amended. "Effective Date" means the date first set forth above. "Employer" means the Company and any Subsidiary or other member of the Controlled Group which employs Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary sponsored group or executive medical, dental, life, disability, retirement, profit- sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its Subsidiaries to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries to employees with comparable duties; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 9; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder, or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that reasonably necessary for the performance of such duties. "Non-Competition Period" shall commence on the date Employee's employment is terminated and continue for a period of (a) Three years, if a Severance Event occurs on or before the first anniversary of the Effective Date; (b) Two years, if a Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary thereof; and (c) One year, if a Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary thereof or if Employee's employment is terminated for a reason other than a Severance Event. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, termination of Employee's employment with the Company occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; or (b) Employee-initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists. "Severance Period" means a period of three (3) years from and after the Effective Date. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. 2. Proprietary Rights. (a) Employee acknowledges that each Employer and other members of the Controlled Group has exclusive ownership of all information useful in its business (including its dealings with suppliers, customers and other third parties, whether or not a true "trade secret"), which at the time or times concerned is not generally known to persons outside of the Controlled Group engaged in businesses similar to those conducted by such entities, and which has been or is from time to time disclosed to, discovered by, or otherwise known by Employee as a consequence of his employment by the Employer (including information conceived, discovered or developed by Employee during his employment) (collectively, "Confidential Information"). Confidential Information includes, but is not limited to the following especially sensitive types of information: (i) The identity, purchase and payment patterns of, and special relations with, customers; (ii) The identity, net prices and credit terms of, and special relations with, the suppliers: (iii) Inventory selection and management techniques; (iv) Product development and marketing plans; and (v) Finances except to the extent publicly disclosed. (b) The term "Proprietary Materials" shall mean all business records, documents, drawings, writings, software, programs and other tangible things which were or are created or received by or for the Employer and other members of the Controlled Group in furtherance of its business, including, but not limited to, those which contain Confidential Information. For example, Proprietary Materials include, but are not limited to, the following especially sensitive types of materials: applications software, the data bases of Confidential Information maintained in connection with such software, and printouts generated from such data bases; market studies and strategic plans; customer, supplier and employee lists; contracts and correspondence with customers and suppliers; documents evidencing transactions with customers and suppliers, sales calls reports, appointment books, calendars, expense statements and the like, reflecting conversations with any company, customer or supplier; architectural and engineering plans; and purchasing, sales and policy manuals. Proprietary Materials also include, but are not limited to, any such things which are created by Employee or with Employee's assistance and all notes, memoranda and the like prepared using the Proprietary Materials and/or Confidential Information. (c) While some of the information contained in Proprietary Materials may have been known to Employee prior to employment with an Employer, or may now or in the future be in the public domain, Employee acknowledges that the compilation of that information contained in the Proprietary Materials has or will cost the Employer and other members of the Controlled Group a great effort and expense, and affords persons to whom Proprietary Materials are disclosed, including Employee, a competitive, advantage over persons who do not know the information or have the compilation of the Proprietary Materials. Employee further acknowledges that Confidential Information and Proprietary Materials include commercially valuable trade secrets and automatically become the Company's exclusive property when they are conceived, created or received. 3. Confidentiality Duties. Employee shall, except as may be required by law, while an employee of the Company and thereafter for the longest time permitted by applicable law. (a) Comply with all instructions of the Company and the Employer (whether oral or written) for preserving the confidentiality of Confidential Information and Proprietary Materials. (b) Use Confidential Information and Proprietary Materials only at places designated by the Company or the Employer, in furtherance of businesses of the Employer and other members of the Controlled Group, and pursuant to directions of the Company or the Employer. (c) Exercise appropriate care to advise other employees of the Company and the Employer (and, as appropriate, subcontractors) of the sensitive nature of Confidential Information and Proprietary Materials prior to their disclosure, and to disclose the same only on a need-to-know basis. (d) Not copy all or any part of Proprietary Materials, except as the Company or the Employer directs. (e) Not sell, give, loan or otherwise transfer any copy of all or any part of Proprietary Materials to any person who is not an employee of or otherwise engaged to provide services to the Company or the Employer, except as the Company directs. (f) Not publish, lecture on or otherwise disclose to any person who is not an employee of the Company, except as the Company or the Employer directs, all or any part of Confidential Information or Proprietary Materials. (g) Not use all or any part of any Confidential Information or Proprietary Materials for the benefit of any third party without the Company's written consent. Upon the termination of employment for whatever reason, Employee (or in the event of death, Employee's personal representative) shall promptly surrender to the Company the original and all copies of Proprietary Materials (including all notes, memoranda and the like concerning or derived therefrom), whether prepared by Employee or others, which are then in Employee's possession or control. Records of payments made by the Company or any Employer to or for the benefit of Employee, Employee's copy of this Agreement and other such things, lawfully possessed by Employee which relate solely to taxes payable by Employee, employee benefits due to Employee or the terms of Employee's employment with the Company or any Employer, shall not be deemed Proprietary Materials for purposes of this Section 3. 4. Non-Competition. (a) During Employee's employment with the Company, or any other members of the Controlled Group, Employee shall not, in any way, directly or indirectly, manage, operate, control (or participate in any of the foregoing), accept employment or a consulting position with or otherwise advise or assist or be connected with or directly or indirectly own or have any other interest in or right with respect to (other than through ownership of not more than 5 % of the outstanding shares of a corporation's stock which is listed on a national securities exchange) any enterprise (other than for the Company or any other member of the Controlled Group) which competes with Company or its affiliates in the Controlled Group. (b) During the Non-competition Period, Employee shall not render employment or consulting services to any business enterprise in North America (except to the Company or any member of its Controlled Group) in a capacity in which Employee will directly supervise a business which is directly competitive with the business which Employee supervised during the one year period preceding the Severance Event. (c) Employee recognizes that the foregoing limitations are reasonable and properly required for the adequate protection of the business of the Company, the Employers and the members of the Controlled Group. If any such limitations are deemed to be unreasonable by a court having jurisdiction of the matter and parties, Employee hereby agrees and submits to the reduction of any such limitations to such territory or time as to such court shall appear reasonable. (d) Employee agrees that the remedy at law for any breach of the provisions of Sections 2 or 3 or this Section 4 shall be inadequate and that the Company and any Employer shall be entitled to injunctive relief in addition to any other remedies it may have. 5. Payments (a) If Employee's employment is terminated because of a Severance Event, the Employer shall pay the Employee: (i) If the Severance Event occurs on or before the first anniversary of the Effective Date, $1,380,000, in thirty-six (36) monthly installments; (ii) If the Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary, $920,000, in twenty-four (24) monthly installments; and (iii) If the Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary, $460,000, in twelve (12) monthly installments. In each case the first installment shall be due on the first day of the month following the month in which the Severance Event occurs and subsequent installments shall be due on the first day of each succeeding month until all installments have been paid. (b) The Company has assessed the reasonableness of the payments provided for herein and believes that the amounts provided are both reasonable in the light of the benefits secured for the Company by this Agreement and related to the business of the Company. 6. Obligation of Employer. The Company agrees to cause Employee's Employer at the time of the Severance Event to make all payments required hereunder to be made to Employee, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer, provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Company. 7. Enforcement. In the event the Company or the Employer shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiaries shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 8. Non-assignment. Except as may be required by applicable law, the payments which may become due to Employee shall not at any time be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by Employee; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 9. Assumption. This Agreement shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's obligations or such Employer's obligations under this Agreement. 10. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of the provision or any part of the Agreement is decided invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of the provisions or parts of the Agreement and the applicability thereof shall not be affected. 11. Amendment. This Agreement may not be amended or modified at any time except by written instrument executed by the Company and the Employee. 12. Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 13. Governing Law; Arbitration. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Illinois. Any dispute arising out of this Agreement shall be determined by arbitration under the commercial arbitration rules of the American Arbitration Association then in effect and judgment upon any award pursuant to such arbitration may be enforced in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Severance Event or in the nearest state or provincial capital if it is closer to such place of employment than is such city. 14. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Employer to IMC Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention Marshall I. Smith, Senior Vice President and General Counsel, or if to the Employee, at the address set forth below the Employee's signature line of this Agreement, or to such other address as to the party to be notified shall have given to the other. 15. No waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provision or condition at the same time or any prior or subsequent time. 16. Certain Rules of Construction. No party shall be considered as being responsible for the draft of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. The headings in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties have executed this agreement as the day and year first written above. KALIUM CHEMICALS, LTD. IMC GLOBAL INC. By: _____________________ By: ______________________ Name: Name: Title: Title: Attest: ___________________ Attn: ____________________ Name: Name: Title: Title: ___________________________ John U. Huber 23360 Redwing Place Barrington, IL 60010 EX-10.27 9 NON-COMPETITION AGREEMENT EXHIBIT 10.27 NON-COMPETITION AGREEMENT This Agreement made as of the 1st day of March, 1996, between IMC GLOBAL INC., a Delaware corporation ("Company"), KALIUM CHEMICALS, LTD., a Delaware corporation and Robert M. VanPatten ("Employee"). WHEREAS, the Company and The Vigoro Corporation, a Delaware corporation, ("Vigoro") on the date stated above, have completed a transaction whereby Vigoro has become a wholly-owned subsidiary of the Company; and WHEREAS, the Company desires to have the use of and access to and to protect valuable confidential information relating to the businesses of the Controlled Group in Employee's possession and other confidential information which Employee may acquire during employment by any Employer; and WHEREAS, the Company has concluded that it is therefore in the best interest of the Company to provide incentives for Employee to continue to be employed in the Controlled Group and to secure Employee's agreement to limitations on Employee's future business activities in order to protect the Controlled Group from injury that would occur if the confidential information became available to and could be used by a competitor of any member of the Controlled Group; NOW, THEREFORE, for valuable consideration which the parties acknowledge and in consideration of the mutual covenants and agreements contained herein, the Employee and the Company agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement, unless the context requires otherwise. "Vigoro" means Vigoro and its Subsidiaries, as they may exist from time to time, during Employee's employment with Vigoro or with the Company or its affiliates in the Controlled Group. "Cause" means (i) the engaging by the Employee in willful and intentional conduct which has caused demonstrable and serious injury to the Company, monetary or otherwise; (ii) conviction of, or plea of nolo contendere by, the Employee for any felony; (iii) criminal conviction of, or plea of nolo contendere by, the Employee for any other offense involving dishonesty, breach of trust or moral turpitude; (iv) a breach of fiduciary duty by the Employee involving personal profit; or (v) willful refusal by the Employee to perform his duties or responsibilities (unless significantly changed without the Employee's consent), or gross negligence by the Employee in the performance of such duties: provided, however, that the Employee shall have 30 days, or such longer period as the Company may determine to be appropriate, after written notice by the Company, to cure any conduct or act, if curable, alleged in such notice to provide grounds for termination of the Employee's employment for Cause. "Controlled Group" means the Company and all affiliates of the Company determined under Sections 414(b),(c),(m) and (o) of the Internal Revenue Code of 1986, as amended. "Effective Date" means the date first set forth above. "Employer" means the Company and any Subsidiary or other member of the Controlled Group which employs Employee on or after the Effective Date. "Good Reason" for termination of employment by an Employee shall mean any of the following: (a) the failure by the Employer to (i) maintain the Employee's Base Salary at an annual rate equal to the rate in effect immediately prior to the Effective Date, or as may be increased from time to time by the Employer in accordance with regular practices of the Company thereafter with respect to employees with comparable duties; provided, however, that Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to all senior corporate officers and other key employees of all members of the Controlled Group on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Employee in an annual bonus plan maintained by the Company or its Subsidiaries in which employees with comparable duties participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company or its Subsidiaries or any other member of the Controlled Group from time to time in which employees with comparable duties participate; (iv) provide for participation in all Company or Subsidiary sponsored group or executive medical, dental, life, disability, retirement, profit- sharing, thrift, nonqualified and deferred compensation, and other plans maintained by the Company or its Subsidiaries to the same extent as employees with comparable duties participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company or Subsidiaries to employees with comparable duties; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 9; or (b) any Employer changes the Employee's primary employment location to a location that is more than 50 miles from the primary location of such Employee's employment as in effect immediately prior to the Effective Date; provided, however, that the relocation of Employee on a nondiscriminatory basis for bona fide business reasons shall not constitute Good Reason hereunder; or (c) a significant adverse change, without the Employee's written consent, in working conditions or status, including but not limited to (i) a significant adverse change in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it is a subsidiary of another entity and directly results in changes in the nature or scope of the Employee's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder, or (ii) a reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that reasonably necessary for the performance of such duties. "Non-Competition Period" shall commence on the date Employee's employment is terminated and continue for a period of (a) Three years, if a Severance Event occurs on or before the first anniversary of the Effective Date; (b) Two years, if a Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary thereof; and (c) One year, if a Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary thereof or if Employee's employment is terminated for a reason other than a Severance Event. "Severance Event" shall be deemed to have occurred if, and only if, as of or after the Effective Date, but prior to the expiration of the Severance Period, termination of Employee's employment with the Company occurs, and such termination is: (a) Employer-initiated for reasons other than Cause; or (b) Employee-initiated within ninety (90) days after the Employee first has or should have knowledge that Good Reason exists. "Severance Period" means a period of three (3) years from and after the Effective Date. "Subsidiary" means any corporation of which the securities having a majority of the ordinary voting power in electing the board of directors are, at the time of such determination, owned by the Company or another Subsidiary. 2. Proprietary Rights. (a) Employee acknowledges that each Employer and other members of the Controlled Group has exclusive ownership of all information useful in its business (including its dealings with suppliers, customers and other third parties, whether or not a true "trade secret"), which at the time or times concerned is not generally known to persons outside of the Controlled Group engaged in businesses similar to those conducted by such entities, and which has been or is from time to time disclosed to, discovered by, or otherwise known by Employee as a consequence of his employment by the Employer (including information conceived, discovered or developed by Employee during his employment) (collectively, "Confidential Information"). Confidential Information includes, but is not limited to the following especially sensitive types of information: (i) The identity, purchase and payment patterns of, and special relations with, customers; (ii) The identity, net prices and credit terms of, and special relations with, the suppliers: (iii) Inventory selection and management techniques; (iv) Product development and marketing plans; and (v) Finances except to the extent publicly disclosed. (b) The term "Proprietary Materials" shall mean all business records, documents, drawings, writings, software, programs and other tangible things which were or are created or received by or for the Employer and other members of the Controlled Group in furtherance of its business, including, but not limited to, those which contain Confidential Information. For example, Proprietary Materials include, but are not limited to, the following especially sensitive types of materials: applications software, the data bases of Confidential Information maintained in connection with such software, and printouts generated from such data bases; market studies and strategic plans; customer, supplier and employee lists; contracts and correspondence with customers and suppliers; documents evidencing transactions with customers and suppliers, sales calls reports, appointment books, calendars, expense statements and the like, reflecting conversations with any company, customer or supplier; architectural and engineering plans; and purchasing, sales and policy manuals. Proprietary Materials also include, but are not limited to, any such things which are created by Employee or with Employee's assistance and all notes, memoranda and the like prepared using the Proprietary Materials and/or Confidential Information. (c) While some of the information contained in Proprietary Materials may have been known to Employee prior to employment with an Employer, or may now or in the future be in the public domain, Employee acknowledges that the compilation of that information contained in the Proprietary Materials has or will cost the Employer and other members of the Controlled Group a great effort and expense, and affords persons to whom Proprietary Materials are disclosed, including Employee, a competitive, advantage over persons who do not know the information or have the compilation of the Proprietary Materials. Employee further acknowledges that Confidential Information and Proprietary Materials include commercially valuable trade secrets and automatically become the Company's exclusive property when they are conceived, created or received. 3. Confidentiality Duties. Employee shall, except as may be required by law, while an employee of the Company and thereafter for the longest time permitted by applicable law. (a) Comply with all instructions of the Company and the Employer (whether oral or written) for preserving the confidentiality of Confidential Information and Proprietary Materials. (b) Use Confidential Information and Proprietary Materials only at places designated by the Company or the Employer, in furtherance of businesses of the Employer and other members of the Controlled Group, and pursuant to directions of the Company or the Employer. (c) Exercise appropriate care to advise other employees of the Company and the Employer (and, as appropriate, subcontractors) of the sensitive nature of Confidential Information and Proprietary Materials prior to their disclosure, and to disclose the same only on a need-to-know basis. (d) Not copy all or any part of Proprietary Materials, except as the Company or the Employer directs. (e) Not sell, give, loan or otherwise transfer any copy of all or any part of Proprietary Materials to any person who is not an employee of or otherwise engaged to provide services to the Company or the Employer, except as the Company directs. (f) Not publish, lecture on or otherwise disclose to any person who is not an employee of the Company, except as the Company or the Employer directs, all or any part of Confidential Information or Proprietary Materials. (g) Not use all or any part of any Confidential Information or Proprietary Materials for the benefit of any third party without the Company's written consent. Upon the termination of employment for whatever reason, Employee (or in the event of death, Employee's personal representative) shall promptly surrender to the Company the original and all copies of Proprietary Materials (including all notes, memoranda and the like concerning or derived therefrom), whether prepared by Employee or others, which are then in Employee's possession or control. Records of payments made by the Company or any Employer to or for the benefit of Employee, Employee's copy of this Agreement and other such things, lawfully possessed by Employee which relate solely to taxes payable by Employee, employee benefits due to Employee or the terms of Employee's employment with the Company or any Employer, shall not be deemed Proprietary Materials for purposes of this Section 3. 4. Non-Competition. (a) During Employee's employment with the Company, or any other members of the Controlled Group, Employee shall not, in any way, directly or indirectly, manage, operate, control (or participate in any of the foregoing), accept employment or a consulting position with or otherwise advise or assist or be connected with or directly or indirectly own or have any other interest in or right with respect to (other than through ownership of not more than 5 % of the outstanding shares of a corporation's stock which is listed on a national securities exchange) any enterprise (other than for the Company or any other member of the Controlled Group) which competes with Company or its affiliates in the Controlled Group. (b) During the Non-competition Period, Employee shall not render employment or consulting services to any business enterprise in North America (except to the Company or any member of its Controlled Group) in a capacity in which Employee will directly supervise a business which is directly competitive with the business which Employee supervised during the one year period preceding the Severance Event. (c) Employee recognizes that the foregoing limitations are reasonable and properly required for the adequate protection of the business of the Company, the Employers and the members of the Controlled Group. If any such limitations are deemed to be unreasonable by a court having jurisdiction of the matter and parties, Employee hereby agrees and submits to the reduction of any such limitations to such territory or time as to such court shall appear reasonable. (d) Employee agrees that the remedy at law for any breach of the provisions of Sections 2 or 3 or this Section 4 shall be inadequate and that the Company and any Employer shall be entitled to injunctive relief in addition to any other remedies it may have. 5. Payments (a) If Employee's employment is terminated because of a Severance Event, the Employer shall pay the Employee: (i) If the Severance Event occurs on or before the first anniversary of the Effective Date, $1,158,000, in thirty-six (36) monthly installments; (ii) If the Severance Event occurs after the first anniversary of the Effective Date and on or before the second anniversary, $772,000, in twenty-four (24) monthly installments; and (iii) If the Severance Event occurs after the second anniversary of the Effective Date and on or before the third anniversary, $386,000, in twelve (12) monthly installments. In each case the first installment shall be due on the first day of the month following the month in which the Severance Event occurs and subsequent installments shall be due on the first day of each succeeding month until all installments have been paid. (b) The Company has assessed the reasonableness of the payments provided for herein and believes that the amounts provided are both reasonable in the light of the benefits secured for the Company by this Agreement and related to the business of the Company. 6. Obligation of Employer. The Company agrees to cause Employee's Employer at the time of the Severance Event to make all payments required hereunder to be made to Employee, and agrees that the liability for making such payments and providing such benefits shall be the sole and exclusive obligation of such Employer, provided, however, that the foregoing notwithstanding, in the event that such benefits are not so paid by the Employer, then such benefits shall be paid or caused to be paid by the Company. 7. Enforcement. In the event the Company or the Employer shall fail to pay to an Employee or successor any amounts due under this Plan or under any of the plans, programs or arrangements referred to herein as they come due, the Company and the Subsidiaries shall pay interest on such amounts at the prime rate of interest as from time to time published in The Wall Street Journal (Midwest Edition) until paid. 8. Non-assignment. Except as may be required by applicable law, the payments which may become due to Employee shall not at any time be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by Employee; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. 9. Assumption. This Agreement shall inure to the benefit of, and be binding upon, the successors and assignees of the Company and each Employer. The Company and each Employer shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company or any Employer, expressly and unconditionally to assume and agree to perform the Company's obligations or such Employer's obligations under this Agreement. 10. Enforcement. The provisions of this Agreement shall be regarded as divisible, and if any of the provision or any part of the Agreement is decided invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of the provisions or parts of the Agreement and the applicability thereof shall not be affected. 11. Amendment. This Agreement may not be amended or modified at any time except by written instrument executed by the Company and the Employee. 12. Withholding. The Employer shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise. 13. Governing Law; Arbitration. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Illinois. Any dispute arising out of this Agreement shall be determined by arbitration under the commercial arbitration rules of the American Arbitration Association then in effect and judgment upon any award pursuant to such arbitration may be enforced in any court having jurisdiction thereof. The place of arbitration shall be in the city with population of 100,000 or more nearest to the Employee's place of employment immediately prior to the Severance Event or in the nearest state or provincial capital if it is closer to such place of employment than is such city. 14. Notice. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received and if mailed, shall be mailed by registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Employer to IMC Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention Marshall I. Smith, Senior Vice President and General Counsel, or if to the Employee, at the address set forth below the Employee's signature line of this Agreement, or to such other address as to the party to be notified shall have given to the other. 15. No waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provision or condition at the same time or any prior or subsequent time. 16. Certain Rules of Construction. No party shall be considered as being responsible for the draft of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. The headings in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties have executed this agreement as the day and year first written above. KALIUM CHEMICALS, LTD. IMC GLOBAL INC. By: /s/ James J. Patterson By: /s/ Marschall I. Smith Name: James J. Patterson Name: Marschall I. Smith Title: Vice President Title: Senior Vice President Attest: /s/ Rose Marie Williams Attest: /s/ Lila Fredenburg Name: Rose Marie Williams Name: Lila Fredenburg Title: Secretary Title: Asst. Secretary /s/ Robert M. van Patten Robert M. van Patten 3003 Sunset Hills Boulevard, S. Edwardsville, IL 62025 EX-10.58 10 LETTER AGREEMENT EXHIBIT 10.58 October 30, 1996 Via Telecopy Via Telecopy NationsBank, N.A. NationsBank, N.A. NationsBank Plaza Sears Tower 6th Floor 233 South Wacker Drive NC1-002-06-19 Suite 2800 Charlotte, North Carolina 28255 Chicago, Illinois 60606-6308 Attn: Tracy Crotts Attn: Christopher B. Torie Telecopy: 704/386-9923 Telecopy: 312/234-5601 Dear Tracy and Chris: Reference is hereby made to that certain Credit Agreement, dated as of February 9, 1994, among IMC-Agrico Company, a Delaware general partnership (the "Borrower"), the financial institutions party thereto (the "Banks") and NationsBank, N.A. (successor in interest to NationsBank, N.A. (Carolinas) and NationsBank of North Carolina, N.A.), as Agent (the "Agent"), as amended by that certain First Amendment to Credit Agreement, that certain Second Amendment to Credit Agreement, that certain Third Amendment to Credit Agreement, and that certain Fourth Amendment and Waiver Agreement, dated as of June 15, 1994, February 24, 1995, August 1, 1995 and May 14, 1996, respectively (as amended, the "Credit Agreement"). Terms used but not otherwise defined herein shall have the meanings assigned in the Credit Agreement. Pursuant to the terms of Section 2.09 of the Credit Agreement, the Borrower hereby notifies you, as Agent, that the Borrower is permanently terminating the Revolving Committed Amount in part effective Wednesday, October 30, 1996, such that as of October 30, 1996 the aggregate Revolving Committed Amount shall be $45,000,000 and the Revolving Committed Amount of each Bank to make Revolving Loans shall be as follows: Bank Revolving Committed Amount NationsBank, N.A. 12,750,000 Citibank, N.A. 12,750,000 Cooperatieve Centrale Raiffeisen- 15,000,000 Boerenleenbank, B.A. Arab Banking Corporation 4,500,000 Please acknowledge your receipt of this letter by executing this letter in the space provided below and returning the executed copy to the Borrower at your earliest convenience (by facsimile with hard copy to follow by mail). Very truly yours, IMC-AGRICO COMPANY By: IMC-AGRICO MP, INC., its Managing Partner By:____________________ Name: Title: cc: Mike Zehfuss Senior Vice President NationsBank, N.A. Sears Tower 233 S. Wacker Drive, Suite 2800 Chicago, IL 60606-6308 Receipt acknowledged as of this ___th day of October, 1996: NATIONSBANK, N.A. By:____________________ Name: Title: IMC GLOBAL INC. 1996 LONG-TERM INCENTIVE PLAN I. Introduction 1.1 Purpose. The 1996 Long-Term Incentive Plan (the "Plan") of IMC Global Inc. (the "Company") is intended to operate in conjunction with the IMC Global Inc. 1988 Stock Option and Award Plan to provide long- term incentives to officers and other key employees of the Company and its subsidiaries and thereby advance the interests of the Company by attracting and retaining officers and other key employees and motivating such persons to act in the long-term best interests of the Company's stockholders. 1.2 Certain Definitions. "Board" shall mean the Board of Directors of the Company. "Business Unit" shall mean a subsidiary, division, joint venture or other unit of the Company's business which is designated as such by the Committee. "Change in Control" shall have the meaning set forth in Section 3.6(b). "Code" shall mean the Internal Revenue Code of 1986, as amended. "Committee" shall mean the Committee designated by the Board, consisting of two or more members of the Board, each of whom shall be (i) a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act and (ii) an "outside director" within the meaning of Section 162(m) of the Code, subject to any transition rules applicable to the definition of outside director. "Common Stock" shall mean the common stock, $1.00 par value, of the Company. "Company" has the meaning specified in Section 1.1. "Economic Profit" shall have the meaning specified in Section 2.2(b). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the mean between the highest and lowest prices at which the Common Stock is traded on the date on which such value is being determined, as reflected on the consolidated tape of New York Stock Exchange issues, or if such date is not a trading day, on the first trading day preceding such date. If there are no such sales of Common Stock on the date on which such value is being determined (or on the first trading day preceding such date, if applicable) the mean between the bid and the asked prices as reflected on the consolidated tape of New York Stock Exchange issues at the close of the market on such date shall be deemed to be the fair market value of the Common Stock. "Incumbent Board" shall have the meaning set forth in Section 3.6(b)(2) hereof. "Performance Award" shall mean a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive payment in cash or in shares of Common Stock of a specified amount. "Performance Measures" shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met during the applicable Performance Period as a condition to the holder's receipt of the payment with respect to a Performance Award. Such criteria and objectives shall be based on the Economic Profit of a Business Unit and/or of the Company as a whole. If the Committee desires that compensation payable pursuant to any award subject to Performance Measures be "qualified performance-based compensation" within the meaning of Section 162(m) of the Code, the Performance Measures (i) shall be established by the Committee no later than 90 days after the beginning of the Performance Period (or such other time designated by the Internal Revenue Service) and (ii) shall satisfy all other applicable requirements imposed under Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such Performance Measures be stated in terms of an objective formula or standard. "Performance Period" shall mean the period determined under Section 2.2(c)during which the Performance Measures applicable to a Performance Award shall be measured. "Subsidiary" shall have the meaning set forth in Section 1.4. "Tax Date" shall have the meaning set forth in Section 3.4. 1.3 Administration. This Plan shall be administered by the Committee. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons, the time and conditions of payment of the award and all other terms and conditions of the award. The Committee may, in its sole discretion and for any reason at any time, subject to the requirements imposed under Section 162(m) of the Code and regulations promulgated thereunder in the case of an award intended to be qualified performance-based compensation, take action such that all or a portion of the Performance Period applicable to any outstanding Performance Award shall lapse, and the Performance Measures applicable to any outstanding Performance Award shall be deemed to be satisfied at the maximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive. The Committee may delegate some or all of its power and authority hereunder to the Chief Executive Officer (the "CEO") or such other executive officer of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority with regard to (i) the grant of an award to any person who is a "covered employee" within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding or (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing or amount of an award to such an officer or other person. A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting. 1.4 Eligibility. Participants in this Plan shall consist of such officers and other key employees of the Company, and its subsidiaries (individually a "Subsidiary" and collectively the "Subsidiaries"), including IMC-Agrico MP, Inc., as the Committee in its sole discretion may select from time to time. For purposes of this Plan, references to employment by the Company shall also mean employment by a Subsidiary. The Committee's selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. II. Performance Awards 2.1 Performance Awards. The Committee may, in its discretion, grant Performance Awards to such eligible persons as may be selected by the Committee. 2.2 Terms of Performance Awards. Performance Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. (a) Amount of Performance Award. The amount of a Performance Award shall be determined by the Committee; provided, however, that the maximum amount that may be paid to any individual under any Performance Award for any Performance Period shall not exceed $3,000,000, adjusted for increases in the Consumer Price Index between July 1, 1996 and the beginning of the Performance Period. (b) Performance Measures. The Performance Measures applicable to a Performance Award shall be determined by the Committee based upon the achievement during the applicable Performance Period of the Economic Profit goals established by the Committee for the Business Unit in which the holder of the Performance Award is employed and/or for the Company as a whole. Economic Profit means "After-Tax Cash Flow" (defined below) divided by "Capital Employed" (defined below). "After-Tax Cash Flow" means earnings before interest, taxes, depreciation, depletion and amortization ("EBITDA") less cash taxes (i.e. provision for income taxes excluding deferred taxes). "Capital Employed" means working capital (excluding cash, current and deferred tax assets and liabilities and short-term debt) plus gross fixed assets (before accumulated depreciation and depletion and excluding joint venture step-up) and other assets (before accumulated amortization of goodwill). Capital Employed will be calculated based on beginning of month (or quarter) balances resulting in a 12-month (or 4-quarter) average for the year. (c) Performance Periods. In general, a Performance Period shall be a period consisting of three consecutive fiscal years of the Company. The first and second Performance Periods, however, shall consist of one and two fiscal years of the Company, respectively, beginning with the fiscal year of the Company beginning July 1, 1996. (d) Settlement of Performance Awards. A Performance Award may be settled in shares of Common Stock by means of a restricted stock award under the terms of the IMC Global Inc. 1988 Stock Option and Award Plan or cash or a combination thereof, as determined by the Committee. Prior to the settlement of a Performance Award in shares of Common Stock, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award and shall have rights as a stockholder of the Company in accordance with Section 3.8. 2.3 Termination of Employment or Service. All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Award, or any cancellation or forfeiture of such Performance Award upon a termination of employment with the Company of the holder of such Performance Award, whether by reason of disability, retirement, death or other termination, shall be determined by the Committee and communicated to the recipient of a Performance Award at the time the Performance Award is granted. III. General 3.1 Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for approval and, if approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the 1996 annual meeting of stockholders of the Company, shall become effective on the date of such approval. This Plan shall terminate ten years after its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. 3.2 Amendments. The Board may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) and Section 422 of the Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would extend the term of this Plan. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder. 3.3 Non-Transferability of Awards. No award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. Each award may be settled during the holder's lifetime only by the holder or the holder's legal representative or similar person. No award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void. 3.4 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. The Committee may determine that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the "Tax Date"), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (C) any combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the award; provided, however, that the Company shall have sole discretion to disapprove of an election pursuant to any of clauses (B) and (C) and that in the case of a holder who is subject to Section 16 of the Exchange Act, the Company may require that the method of satisfying such an obligation be in compliance with Section 16 and the rules and regulations thereunder. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder. 3.5 Adjustment. In the event of any recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities available for the payment of Performance Awards under this Plan shall be appropriately adjusted by the Committee. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being available under this Plan, such fractional security shall be disregarded. 3.6 Change in Control. (a) (1) Notwithstanding any provision in this Plan, in the event of a Change in Control, the Committee may, but shall not be required to, make such adjustments to outstanding awards hereunder as it deems appropriate, including, without limitation, causing the Performance Period applicable to any outstanding Performance Award to lapse, causing the Performance Measures applicable to any outstanding Performance Award to be deemed to be satisfied at the minimum, target or maximum level, or electing that each outstanding award shall be surrendered to the Company by the holder thereof, and that each such award shall immediately be canceled by the Company, and that the holder shall receive, within a specified period of time from the occurrence of the Change in Control, a cash payment from the Company in an amount equal to the amount payable with respect to such Performance Award if the applicable Performance Measures were satisfied at the maximum level. (b) "Change in Control" shall mean: (1) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 3.6(b); (2) individuals who, as of the date this Plan is approved by the Board of Directors constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board of Directors whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (3) approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or (4) the consummation of a plan of complete liquidation or dissolution of the Company. 3.7 No Right of Participation or Employment. No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder. 3.8 Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. 3.9 Governing Law. This Plan, each award hereunder, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. 3.10 Foreign Employees. Without amending this Plan, the Committee may grant awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Subsidiaries operates or has employees. EX-10.62 11 AMENDMENT NO. 1 TO CREDIT AGREEMENT Exhibit 10.62 AMENDMENT NO. 1 TO CREDIT AGREEMENT THIS AMENDMENT No. 1 ("Amendment") dated as of September 30, 1996 by and among IMC GLOBAL INC., a Delaware corporation ("Global"), IMC GLOBAL OPERATIONS INC. ("Global Operations"), a Delaware corporation, INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED, a corporation organized under the federal laws of Canada ("IMC Canada"), KALIUM CANADA, LTD., a corporation organized under the federal laws of Canada ("Kalium"), and CENTRAL CANADA POTASH, INC., a Delaware corporation ("CCP"; and, together with Global, Global Operations, IMC Canada and Kalium, the "Borrowers"), GLOBAL and the Subsidiary Guarantors (the "Guarantors"), the banks and financial institutions (the "Lenders") listed on the signature pages hereof, CITIBANK, N.A. ("Citibank"), as U.S. administrative agent (the "U.S. Administrative Agent") and documentation agent (the "Documentation Agent"), CITIBANK CANADA ("Citibank Canada"), as Canadian administrative agent (the "Canadian Administrative Agent"), NATIONSBANC CAPITAL MARKETS, INC., as syndication agent (the "Syndication Agent", and together with the U.S. Administrative Agent, the Documentation Agent and the Canadian Administrative Agent, the "Agents") and CITICORP SECURITIES, INC. and NATIONSBANC CAPITAL MARKETS, INC., as Arrangers. Capitalized terms used in this Amendment which are not otherwise defined herein, shall have the meanings given such terms in the Credit Agreement. WITNESSETH: WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agents are parties to that certain Credit Agreement dated as of February 28, 1996 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"); WHEREAS, the Borrowers have requested that the Lenders and the Agents amend the Credit Agreement on the terms and conditions set forth herein in order to remove Global Operations as a Borrower, modify certain covenants contained therein and make certain other correlative changes resulting therefrom; WHEREAS, the Agents and the Lenders have agreed to enter into this Amendment on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Lenders and the Agents hereby agree as follows. 1. Amendments to the Credit Agreement. Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows: 1.1. Section 1.04 of the Credit Agreement is hereby amended by striking the phrase "after the Release Date" now contained in the first sentence therein. 1.2. Section 5.02(b)(ii)(G) of the Credit Agreement is hereby amended to delete the terms contained therein in their entirety and to substitute the following therefor: "(G) Debt (other than intercompany Debt listed on Schedule 5.02(b)) owing to Global," 1.3. Section 5.03(c)(ii) of the Credit Agreement is hereby amended to delete the terms contained therein in their entirety and to substitute the following therefor: "(ii) (x) for fiscal year 1996, a Consolidated unaudited balance sheet of Global Operations, KCL Holdings, IMC Global Potash Holdings and the Joint Venture Company and its Subsidiaries as of the end of such fiscal year and Consolidated unaudited statements of income of such Borrower and its Subsidiaries and of the Joint Venture Company for such fiscal year and (y) for each fiscal year thereafter, a Consolidated unaudited statement of income, balance sheet and cash flow of the Joint Venture Company and its Subsidiaries as of the end of such fiscal year, together with (A) a certificate of such accounting firm to the Lenders stating that in the course of the regular audit of the business of Global and its Subsidiaries, which audit was conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Default has occurred and is continuing, a statement as to the nature thereof, (B) a schedule in form satisfactory to the Agents of the computations used by such accountants in determining, as of the end of such fiscal year, compliance with the covenants contained in Section 5.04 and (C) a certificate of the treasurer or chief financial officer of Global stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a statement as to the nature thereof and the action that Global has taken and proposes to take with respect thereto." 1.4. Section 5.03(f) of the Credit Agreement is hereby amended to delete the terms contained therein in their entirety and to substitute the following therefor: "[INTENTIONALLY OMITTED]." 1.5. Section 5.03(h) of the Credit Agreement is hereby amended to insert immediately after the phrase "from that described in Exhibit B to the Disclosure Letter" now occurring therein, the following: "that could reasonably be expected to have a Material Adverse Effect". 1.6. Section 5.04(b) of the Credit Agreement is hereby amended to delete the phase "interest payable" now occurring therein and to substitute the following therefor: "interest charges". 2. Conditions of Effectiveness of this Amendment. This Amendment shall become effective and be deemed effective as of the date hereof (the "Effective Date"), if, and only if the Documentation Agent shall have received duly executed originals of this Amendment from the Borrowers, the Guarantors and the Required Lenders. 3. Representations and Warranties of the Borrowers and the Guarantors. The Borrowers and the Guarantors hereby represent and warrant as follows: (a) This Amendment and the Credit Agreement as previously executed and as amended hereby, constitute legal, valid and binding obligations of the Borrowers and the Guarantors and are enforceable against the Borrowers and the Guarantors in accordance with their terms. (b) Upon the effectiveness of this Amendment, the Borrowers and the Guarantors hereby reaffirm all covenants, representations and warranties made in the Credit Agreement to the extent the same are not amended hereby, agree that all such covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. 4. Reference to the Effect on the Credit Agreement. (a) Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Credit Agreement to "this Credit Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith. 5. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 6. Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7. Entire Agreement. This Amendment, taken together with the Credit Agreement and all of the other Loan Documents, embodies the entire agreement and understanding of the parties hereto and supersedes all prior agreements and understandings, written and oral, relating to the subject matter hereof. 8. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (without regard to the conflict of laws provisions) of the State of New York. 9. No Course of Dealing. The Agents and the Lenders have entered into this Amendment on the express understanding with the Borrowers that in entering into this Amendment the Agents and the Lenders are not establishing any course of dealing with the Borrowers. The Agents' and the Lenders' rights to require strict performance with all the terms and conditions of the Credit Agreement as amended by this Amendment and the other Loan Documents shall not in any way be impaired by the execution of this Amendment. IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. IMC GLOBAL INC., as Borrower and Guarantor IMC GLOBAL OPERATIONS, INC., as Borrower and Guarantor INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED, as Borrower By: Name: Title: IMC KALIUM CANADA LTD. (formerly known as Kalium Canada, Ltd.), as Borrower and Guarantor IMC CENTRAL CANADA POTASH INC. (formerly known as Central Canada Potash, Inc.), as Borrower and Guarantor THE VIGORO CORPORATION, as Guarantor VNH, INC., as Guarantor IMC AGRIBUSINESS INC. (formerly known as Vigoro Industries, Inc.), as Guarantor KCL HOLDINGS, INC., as Guarantor IMC KALIUM LTD. (formerly known as Kalium Chemicals, Ltd.), as Guarantor IMC NITROGEN COMPANY (formerly known as Phoenix Chemical Company), as Guarantor By: Name: Title: IMC KALIUM INTANGIBLE HOLDING COMPANY, as Guarantor IMC KALIUM CARLSBAD POTASH COMPANY, as Guarantor By: Name: Title: CITIBANK, N.A., as U.S. Administrative Agent and Documentation Agent By: Name: Title: CITIBANK CANADA, as Canadian Administrative Agent By: Name: Title: NATIONSBANC CAPITAL MARKETS, INC., as Syndication Agent By: Name: Title: Lenders CITIBANK, N.A. By: Name: Title: CITIBANK CANADA By: Name: Title: NATIONSBANK, N.A. By: Name: Title: ABN AMRO NORTH AMERICA, INC., as Agent for ABN AMRO BANK N.V. By: Name: Title: By: Name: Title: ABN AMRO BANK CANADA By: Name: Title: By: Name: Title: BANK OF MONTREAL By: Name: Title: CAISSE NATIONALE DE CREDIT AGRICOLE By: Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By: Name: Title: CREDIT LYONNAIS CANADA By: Name: Title: CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: Name: Title: HARRIS TRUST AND SAVINGS BANK By: Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: Name: Title: THE NORTHERN TRUST COMPANY By: Name: Title: PNC BANK, NATIONAL ASSOCIATION By: Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN - BOERENLEENBANK, B.A."RABOBANK NEDERLAND", NEW YORK BRANCH By: Name: Title: ROYAL BANK OF CANADA By: Name: Title: THE FUJI BANK, LIMITED By: Name: Title: EX-10.64 12 AMEND. NO.1 TO 2ND AMENDED AND RESTATED PURCH. AGREE. Exhibit 10.64 AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT AND SECOND AMENDED AND RESTATED RELATED PARTY GUARANTY THIS AMENDMENT No. 1 ("Amendment") dated as of September 30, 1996 by and among IMC GLOBAL INC., a Delaware corporation ("Global"), THE VIGORO CORPORATION, a Delaware corporation ("Vigoro"), the PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential") and PRUCO LIFE INSURANCE COMPANY ("Pruco"). Capitalized terms used in this Amendment which are not otherwise defined herein, shall have the meanings given such terms in each of the "Purchase Agreement" and the "Guaranty" (as defined below), as applicable. WITNESSETH: WHEREAS, Global, Vigoro, Prudential and Pruco are parties to that certain Second Amended and Restated Note Purchase Agreement dated as of February 28, 1996 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Purchase Agreement"); WHEREAS, Global, Vigoro and Prudential are parties to that certain Second Amended and Restated Related Party Guaranty dated as of February 28, 1996 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Guaranty") in connection with that certain Second Amended and Restated Note Purchase Agreement dated as of February 28, 1996 among Kalium Canada, Ltd. and Prudential; WHEREAS, Global has requested that Prudential and Pruco amend the Purchase Agreement and the Guaranty on the terms and conditions set forth herein in order to modify certain covenants contained therein and make certain other correlative changes resulting therefrom; WHEREAS, Prudential and Pruco have agreed to enter into this Amendment on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Global, Vigoro, Prudential and Pruco hereby agree as follows. 1. Amendments to the Purchase Agreement. Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Purchase Agreement is hereby amended as follows: 1.1. Section 5A(ii)(b) of the Purchase Agreement is hereby amended to delete the terms contained therein in their entirety and to substitute the following therefor: "(b) for fiscal year 1996 only, a Consolidated unaudited balance sheet of each Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated unaudited statements of income of such Borrower and its Subsidiaries for such fiscal year" 1.2. Section 5A(iv) of the Purchase Agreement is hereby amended to delete the phase "6B(2)(ii)(M)" now occurring therein and to substitute the following therefor: "6B(2)(ii)(L)"; and to delete the term "6B(2)(iii)(G)" now occurring therein. 1.3. Section 5K(b) of the Purchase Agreement is hereby amended to delete the phrase "interest payable" now occurring therein and to substitute the following therefor: "interest charges". 1.4. Section 6B(2)(ii)(G) of the Purchase Agreement is hereby amended to delete the phrase ", which, prior to the Release Date, shall not exceed, in the aggregate, $300,000,000 at any time outstanding" now occurring therein. 2. Amendments to the Guaranty. Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Guaranty is hereby amended as follows: 2.1. Section 5A(ii)(b) of the Guaranty is hereby amended to delete the terms contained therein in their entirety and to substitute the following therefor: "(b) for fiscal year 1996 only, a Consolidated unaudited balance sheet of each Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated unaudited statements of income of such Borrower and its Subsidiaries for such fiscal year" 2.2. Section 5A(iv) of the Guaranty is hereby amended to delete the phrase "6B(2)(ii)(M)" now occurring therein and to substitute the following therefor: "6B(2)(ii)(L)"; and to delete the term "6B(2)(iii)(G)" now occurring therein. 2.3. Section 5J(b) of the Guaranty is hereby amended to delete the phrase "interest payable" now occurring therein and to substitute the following therefor: "interest charges". 2.4. Section 6B(2)(ii)(G) of the Guaranty is hereby amended to delete the phrase ", which, prior to the Release Date, shall not exceed, in the aggregate, $300,000,000 at any time outstanding" now occurring therein. 3. Conditions of Effectiveness of this Amendment. This Amendment shall become effective and be deemed effective as of the date hereof (the "Effective Date"), if, and only if Prudential shall have received duly executed originals of this Amendment from Global, Vigoro, Prudential and Pruco. 4. Representations and Warranties of Global and Vigoro. Global and Vigoro hereby represent and warrant as follows: (a) This Amendment, the Purchase Agreement and the Guaranty as previously executed and as amended hereby, constitute legal, valid and binding obligations of Global and Vigoro and are enforceable against Global and Vigoro in accordance with their terms. (b) Upon the effectiveness of this Amendment, Global and Vigoro hereby reaffirm all covenants, representations and warranties made in each of the Purchase Agreement and the Guaranty to the extent the same are not amended hereby, agree that all such covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. 5. Reference to the Effect on the Purchase Agreement. (a) Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Purchase Agreement to "this Purchase Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Purchase Agreement as amended hereby. (b) Except as specifically amended above, the Purchase Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Prudential or Pruco, nor constitute a waiver of any provision of the Purchase Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith. 6. Reference to the Effect on the Guaranty. (a) Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Guaranty to "this Guaranty," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Guaranty as amended hereby. (b) Except as specifically amended above, the Guaranty and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Prudential, nor constitute a waiver of any provision of the Guaranty or any other documents, instruments and agreements executed and/or delivered in connection therewith. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 9. Entire Agreement. This Amendment, taken together with the Purchase Agreement, the Guaranty and all of the other Transaction Documents, embodies the entire agreement and understanding of the parties hereto and supersedes all prior agreements and understandings, written and oral, relating to the subject matter hereof. 10. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (without regard to the conflict of laws provisions) of the State of Illinois. 11. No Course of Dealing. Prudential and Pruco have entered into this Amendment on the express understanding with Global and Vigoro that in entering into this Amendment Prudential and Pruco are not establishing any course of dealing with Global and Vigoro. Prudential's and Pruco's rights to require strict performance with all the terms and conditions of the Purchase Agreement and the Guaranty as amended by this Amendment and the other Transaction Documents shall not in any way be impaired by the execution of this Amendment. IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. IMC GLOBAL INC. By: Name: Title: THE VIGORO CORPORATION By: Name: Title: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: Name: Title: PRUCO LIFE INSURANCE COMPANY By: Name: Title: EX-10.66 13 AMENDED AND RESTATED CREDIT AGREEMENT Exhibit 10.66 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of October 23, 1996 Between IMC-AGRICO COMPANY as Borrower and NATIONSBANK, N.A. as Lender U.S.$50,000,000 TABLE OF CONTENTS This Table of Contents is not part of the Agreement to which it is attached but is for convenience of reference only. ARTICLE I DEFINITIONS SECTION 1.01. Basic Definitions 1 SECTION 1.02. Additional Definitions 1 SECTION 1.03. Amendment and Restatement of Earlier Credit Agreement 6 ARTICLE II LOANS SECTION 2.01. Committed Loans 7 SECTION 2.02. Money Market Loans 7 SECTION 2.03. Note 7 SECTION 2.04. Repayment of Loans 7 SECTION 2.05. Interest 7 SECTION 2.06. Borrowing Procedure 8 SECTION 2.07. Prepayments, Conversions, and Continuations of Loans 8 SECTION 2.08. Minimum Amounts 8 SECTION 2.09. Certain Notices 8 SECTION 2.10. Use of Proceeds 9 SECTION 2.11. Fees 9 SECTION 2.12. Computations 9 SECTION 2.13. Reduction or Termination of Commitment 10 SECTION 2.14. Payments 10 SECTION 2.15. Mandatory Prepayment 10 SECTION 2.16. Letter of Credit Subfacility 10 ARTICLE III CHANGE IN CIRCUMSTANCES SECTION 3.01. Increased Cost and Reduced Return 13 SECTION 3.02. Limitation on Types of Loans 14 SECTION 3.03. Illegality 14 SECTION 3.04. Compensation 14 SECTION 3.05 Taxes 14 ARTICLE IV CONDITIONS SECTION 4.01. Effectiveness of this Agreement 15 SECTION 4.02. Each Loan and Letter of Credit 15 ARTICLE V REPRESENTATIONS AND WARRANTIES SECTION 5.01. Existence 16 SECTION 5.02. Financial Statements 16 SECTION 5.03. Authorization; No Breach 16 SECTION 5.04. Litigation 16 SECTION 5.05. Enforceability 17 SECTION 5.06. Approvals 17 SECTION 5.07. Disclosure 17 ARTICLE VI COVENANTS SECTION 6.01. Information 17 SECTION 6.02. Obligations 18 ARTICLE VII DEFAULT SECTION 7.01. Events of Default 18 SECTION 7.02. Remedies 20 ARTICLE VIII MISCELLANEOUS SECTION 8.01. Expenses 20 SECTION 8.02. Indemnification 21 SECTION 8.03. Right of Set-off. 21 SECTION 8.04. No Waiver; Cumulative Remedies 21 SECTION 8.05. Successors and Assigns 21 SECTION 8.06. Amendments 21 SECTION 8.07. Notices 22 SECTION 8.08. Counterparts 22 SECTION 8.09. Severability 22 SECTION 8.10. Controlling Agreement 22 SECTION 8.11. Survival 22 SECTION 8.12. Governing Law 22 SECTION 8.13. WAIVER OF JURY TRIAL 23 SECTION 8.14. ENTIRE AGREEMENT 23 Schedule 1.02 - Existing Letters of Credit Exhibit A - Note AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") dated as of October 23, 1996, between IMC-AGRICO COMPANY, a Delaware general partnership (the "Borrower"), and NATIONSBANK, N.A., a national banking association (the "Bank"). The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Basic Definitions. As used in this Agreement, the following terms have the following meanings: "Applicable Margin" means: (i) with respect to Base Rate Loans, zero percent (0%); and (ii) with respect to Eurodollar Loans, one-half of one percent (0.5%). "Commitment" means the obligation of the Bank to make Committed Loans and to issue Letters of Credit in an aggregate principal amount at any time outstanding up to but not exceeding $50,000,000, as the same may be reduced or terminated pursuant to this Agreement. "Commitment Fee" means a commitment fee on the daily average unused amount of the Commitment from and including the date of this Agreement to but excluding the Termination Date, at the rate of one-eighth of one percent (0.125%) per annum, payable on each Quarterly Date. For purposes of this definition, outstanding Money Market Loans and Letters of Credit shall constitute a utilization of the Commitment. "Fees" means the Commitment Fee and the Letter of Credit Fee. "Letter of Credit Fee" means a fee on the average daily maximum amount available to be drawn under each Letter of Credit from the date of issuance to the date of expiration, at the rate of one-half of one percent (0.5%) per annum, payable on each Quarterly Date. "Principal Office" means the office of the Bank located at 100 North Tryon Street, Charlotte, NC 28255. "Termination Date" means February 28, 1997. SECTION 1.02. Additional Definitions. As used in this Agreement, the following terms have the following meanings: "Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Bank to be equal to the quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan for such Interest Period by (b) 1 minus the Reserve Requirement for such Eurodollar Loan for such Interest Period. "Base Rate" means, for any day, the rate per annum equal to the higher of (a) the Federal Funds Rate for such day plus one- half of one percent (0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate. "Base Rate Loans" means Loans that bear interest at rates based upon the Base Rate. "Business Day" means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized by law or other governmental action to close in Charlotte, North Carolina or New York, New York; except that in the case of Eurodollar Loans, such day is also a day on which dealings between banks are carried on in U.S. dollar deposits in the London interbank market. "Committed Loans" has the meaning specified in Section 2.01. "Continue", "Continuation", and "Continued" shall refer to a continuation pursuant to Section 2.07 of a Fixed Rate Loan as a Loan of the same Type from one Interest Period to the next Interest Period. "Convert", "Conversion", and "Converted" shall refer to the conversion pursuant to Section 2.07 or Article III of one Type of Loan into another Type of Loan. "Debtor Relief Laws" means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar debtor relief laws from time to time in effect affecting the rights of creditors generally. "Default" means an Event of Default or the occurrence of an event or condition that with notice or lapse of time or both would become an Event of Default. "Default Rate" means, with respect to any principal of any Loan, any reimbursement obligation in respect of any Letter of Credit, or any other amount payable by the Borrower under this Agreement or any other Loan Document that is not paid when due (whether at stated maturity, by acceleration, or otherwise), a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to two percent (2%) plus the Base Rate as in effect from time to time plus the Applicable Margin for Base Rate Loans (provided that, if the amount in default is principal of a Fixed Rate Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Default Rate" for such principal shall be, for the period from and including the due date and to but excluding the last day of the Interest Period therefor, two percent (2%) plus the interest rate for such Loan as provided in Section 2.05(b) or (c), as the case may be, and, thereafter, the rate provided for above in this definition). "Dollars" and "$" mean lawful money of the United States of America. "Earlier Credit Agreement" has the meaning assigned to that term in Section 1.03. "Effective Date" means October 23, 1996. "Eurodollar Loans" means Loans that bear interest at rates based upon the Adjusted Eurodollar Rate. "Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period therefor, the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest Period therefor, the rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. "Event of Default" has the meaning specified in Section 7.01. "Existing Letters of Credit" means those standby letters of credit issued by the Bank (formerly known as NationsBank, N.A. (Carolinas)) for the account of the Borrower and outstanding on the date hereof, as more particularly identified on Schedule 1.02 hereof, as such letters of credit have been or may hereafter be amended, modified, extended, renewed or replaced from time to time. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Bank. "Financial Statements" means the financial statements of the Borrower and the Subsidiaries dated as of June 30, 1995, and for the fiscal year then ended, furnished to the Bank prior to the date of this Agreement. "Fixed Rate Loans" means Eurodollar Loans and Money Market Loans. "Governmental Authority" means any nation or government, any state or political subdivision thereof, any central bank (or similar monetary or regulatory authority), and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government. "Interest Period" means: (i) with respect to any Eurodollar Loan, each period commencing on the date such Loan is made or Converted from a Loan of another Type or the last day of the next preceding Interest Period with respect to such Loan, and ending on the numerically corresponding day in the first, second, third, or sixth calendar month thereafter, as the Borrower may select as provided in Section 2.09, except that each such Interest Period which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; and (ii) with respect to any Money Market Loan, each period commencing on the date such Loan is made or Converted from a Loan of another Type or the last day of the preceding Interest Period with respect to such Loan, and ending on the number of days thereafter (but not less than 1 or more than 180 days) as may be agreed to by the Borrower and the Bank pursuant to Section 2.02. Notwithstanding the foregoing: (a) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (or, in the case of an Interest Period for Eurodollar Loans, if such succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day); (b) any Interest Period which would otherwise extend beyond the Termination Date shall end on the Termination Date; (c) no more than 10 Interest Periods for each Type of Fixed Rate Loan shall be in effect at the same time; and (d) no Interest Period for any Fixed Rate Loan shall have a duration of less than 1 month (in the case of Eurodollar Loans) or 1 day (in the case of Money Market Loans) and, if the Interest Period for any Fixed Rate Loan would otherwise be a shorter period, such Loan shall not be available hereunder. "Letter of Credit" means an Existing Letter of Credit or a standby letter of credit issued pursuant to the provisions of Section 2.16, as the same may be amended, modified, extended, renewed or replaced from time to time. "Loan Documents" means this Agreement, the Note, the LOC Documents, and all other documents, instruments, and agreements executed or delivered pursuant to or in connection with this Agreement, as the same may be amended, modified, renewed, extended, or supplemented. "Loan Party" means the Borrower or any Person that guaranties or secures any or all of the Borrower's obligations under the Loan Documents. "Loans" means Committed Loans and Money Market Loans. "LOC Documents" means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations. "LOC Obligations" means, at any time, the sum of (i) the maximum face amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate face amount of all drawings under Letters of Credit honored by the Bank but not theretofore reimbursed (whether by payment in cash or through a Loan), minus (iii) all cash collateral provided with respect to any Letter of Credit. "Material Adverse Effect" means a material adverse effect on (a) the operations or financial condition of the Borrower, (b) the ability of the Borrower to perform its obligations under this Agreement, or (c) the validity or enforceability of any Loan Document or the rights and remedies of the Bank thereunder. "Money Market Loan" has the meaning specified in Section 2.02. "Money Market Rate" has the meaning specified in Section 2.02. "Note" has the meaning specified in Section 2.03. "Person" means any individual, corporation, company, joint venture, association, partnership, trust, unincorporated organization, Governmental Authority, or other entity. "Prime Rate" means the per annum rate of interest established from time to time by the Bank as its prime rate, which rate may not be the lowest rate of interest charged by the Bank to its customers. "Quarterly Date" means the last day of each March, June, September, and December of each year, the first of which shall be the first such day after the date of this Agreement. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Reserve Requirement" means, at any time, the maximum rate at which reserves (including any marginal, special, supplemental, or emergency reserves) are required to be maintained under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement. "Subsidiary" means, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by the Borrower. "Type" means any type of Loan (i.e., Base Rate Loan, Eurodollar Loan, or Money Market Loan). SECTION 1.03. Amendment and Restatement of Earlier Credit Agreement. (a) This Agreement amends and restates in its entirety that certain Credit Agreement dated as of May 14, 1996 between the Borrower and the Bank (the "Earlier Credit Agreement"). The Borrower and the Bank agree that, upon (i) the execution and delivery by each of the parties hereto of this Agreement and (ii) satisfaction of the conditions precedent set forth in Section 4.01, the terms and provisions of the Earlier Credit Agreement shall, effective as of the Effective Date, be amended, restated and superseded in their entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation. All Loans and other obligations under the Earlier Credit Agreement which are outstanding on the Effective Date shall continue as Loans and obligations under (and shall be governed by the terms of) this Agreement. The Note executed and delivered by the Borrower to the Bank in connection with the Earlier Credit Agreement shall remain in full force and effect and shall continue to evidence the Borrower's obligation to pay principal of and interest on the Loans; provided that, notwithstanding anything to the contrary contained therein, such Note shall be governed by and construed in accordance with the laws of the State of New York, including without limitation Section 5-1401 of the General Obligations Law, but otherwise without regard to conflicts of law principles, and the applicable laws of the United States of America. (b) Upon the effectiveness of this Agreement, each reference to the Earlier Credit Agreement in any other instrument, document or agreement executed and/or delivered in connection therewith shall mean and be a reference to this Agreement. ARTICLE II LOANS SECTION 2.01. Committed Loans. Subject to the terms and conditions of this Agreement, the Bank agrees to make one or more loans ("Committed Loans") to the Borrower from time to time from and including the date hereof to but excluding the Termination Date, provided that the sum of (i) the aggregate principal amount of the Loans outstanding plus (ii) the aggregate amount of all LOC Obligations, shall not at any time exceed the amount of the Commitment. Subject to the foregoing limitations, and the other terms and provisions of this Agreement, the Borrower may borrow, repay, and reborrow hereunder within the limits of the Commitment by means of Base Rate Loans and Eurodollar Loans. SECTION 2.02. Money Market Loans. In addition to Committed Loans pursuant to Section 2.01, the Borrower in accordance with the terms hereof may from time to time to but excluding the Termination Date request offers from the Bank for loans (each a "Money Market Loan") on a specific date, at a fixed rate of interest (the "Money Market Rate"), and for an Interest Period quoted by the Bank. Upon receipt of each such request for a Money Market Loan offer, the Bank may, but shall have no obligation to, offer to make such Money Market Loan on such terms and conditions as the Bank may determine at such time. The Borrower may accept each such offer for a Money Market Loan by submitting to the Bank a notice of borrowing pursuant to Section 2.09. SECTION 2.03. Note. The Loans made by the Bank shall be evidenced by that certain promissory note of the Borrower in substantially the form of Exhibit A, dated May 14, 1996 and executed and delivered pursuant to the Earlier Credit Agreement, payable to the order of the Bank in a principal amount equal to the Commitment as originally in effect and otherwise duly completed (as from time to time amended, modified, renewed, or extended, the "Note"). SECTION 2.04. Repayment of Loans. The Borrower shall pay to the Bank the outstanding principal amount of the Loans on the Termination Date. SECTION 2.05. Interest. The Borrower shall pay to the Bank interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan to but excluding the date such Loan shall be paid in full, at the following rates per annum: (a) during the periods such Loan is a Base Rate Loan, the Base Rate plus the Applicable Margin; (b) during the periods such Loan is a Eurodollar Loan, the Adjusted Eurodollar Rate plus the Applicable Margin; and (c) during the periods such Loan is a Money Market Loan, the Money Market Rate for such Loan. Notwithstanding the foregoing, the Borrower shall pay to the Bank interest at the Default Rate on any principal of any Loan and (to the fullest extent permitted by law) on any other amount payable by the Borrower under this Agreement or any other Loan Document which is not paid in full when due (whether at stated maturity, by acceleration, or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full. Accrued interest on the Loans shall be due and payable as follows: (i) in the case of Base Rate Loans, on each Quarterly Date; (ii) in the case of each Eurodollar Loan, on the last day of the Interest Period with respect thereto and, in the case of an Interest Period greater than three months, at three-month intervals after the first day of such Interest Period; (iii) in the case of each Money Market Loan, on the last day of the Interest Period with respect thereto and, in the case of an Interest Period greater than 90 days, at 90-day intervals after the first day of such Interest Period; (iv) upon the payment or prepayment of any Loan or the Conversion of any Loan to a Loan of another Type (but only on the principal amount so paid, prepaid, or Converted); and (v) on the Termination Date; provided that interest payable at the Default Rate shall be payable from time to time on demand. SECTION 2.06. Borrowing Procedure. The Borrower shall give the Bank notice of each borrowing hereunder in accordance with Section 2.09. Not later than 2:00 p.m. (at the Principal Office) on the date specified for each borrowing hereunder, the Bank will make available the amount of the Loan to be made by it on such date to the Borrower by depositing the same, in immediately available funds, in an account of the Borrower (designated by the Borrower) maintained with the Bank at the Principal Office, or as otherwise directed by the Borrower. SECTION 2.07. Prepayments, Conversions, and Continuations of Loans. Subject to Section 2.08, the Borrower shall have the right from time to time to prepay the Loans, or to Convert all or part of a Loan of one Type into a Loan of another Type or to Continue Fixed Rate Loans of one Type as Fixed Rate Loans of the same Type, provided that: (a) the Borrower shall give the Bank notice of each such prepayment, Conversion, or Continuation as provided in Section 2.09, (b) Fixed Rate Loans may only be Converted on the last day of the Interest Period, (c) the Borrower may not Continue a Money Market Loan or Convert a Loan into a Money Market Loan unless the Borrower and the Bank shall have agreed upon the rate of interest and the Interest Period for such Loan in accordance with Section 2.02, and (d) except for Conversions into Base Rate Loans, no Conversions or Continuations shall be made while a Default has occurred and is continuing. SECTION 2.08. Minimum Amounts. Except for Conversions and prepayments pursuant to Section 2.15 and Article III and Committed Loans made pursuant to Section 2.16 to satisfy the Borrower's reimbursement obligations in respect of a Letter of Credit, each borrowing, each Conversion, and each prepayment of principal of the Loans shall be in an amount at least equal to $1,000,000. Anything in this Agreement to the contrary notwithstanding, the aggregate principal amount of Fixed Rate Loans of the same Type having the same Interest Period shall be at least equal to $1,000,000. SECTION 2.09. Certain Notices. Notices by the Borrower to the Bank of a termination or reduction of the Commitment, of borrowings, Conversions, Continuations and optional prepayments of Loans and of the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Bank not later than 11:00 a.m. (local time at the Principal Office) on the number of Business Days prior to the date of the relevant termination, reduction, borrowing, Conversion, Continuation, or prepayment or the first day of such Interest Period specified below: Number of Business Notice Days Prior Termination or reduction of Commitment 1 Borrowing or prepayment of, or Conversions into, Base Rate Loans same day Borrowing or prepayment of, Conversions into, Continuations as, or duration of Interest Periods for, Eurodollar Loans 3 Borrowing or prepayment of, or Conversions into, Continuations as, or duration of Interest Periods same day for, Money Market Loans Each such notice of termination or reduction shall specify the amount of the Commitment to be terminated or reduced. Each such notice of borrowing, Conversion, Continuation, or optional prepayment shall specify (a) the amount and Type of the Loan to be borrowed, Converted, Continued, or prepaid (and, in the case of a Conversion, the Type of Loan to result from such Conversion), (b) the date of borrowing, Conversion, Continuation, or prepayment (which shall be a Business Day), and (c) in the case of a borrowing of a Fixed Rate Loan, Conversion, or Continuation, the duration of the Interest Period. In the event the Borrower fails to select the Type of Loan, or the duration of any Interest Period for any Fixed Rate Loan, within the time period and otherwise as provided in this Section 2.09, such Loan (if outstanding as a Fixed Rate Loan) will be automatically Converted into a Base Rate Loan on the last day of the preceding Interest Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate Loan. SECTION 2.10. Use of Proceeds. The proceeds of the Loans shall be used by the Borrower for general corporate purposes. The Borrower will not, directly or indirectly, use any part of such proceeds for the purpose of purchasing or carrying any margin stock within the meaning of Regulations G, U, T, or X of the Board of Governors of the Federal Reserve System. SECTION 2.11. Fees. The Borrower agrees to pay to the Bank the Fees as specified herein. In addition, the Borrower shall pay to the Bank the customary charges from time to time of the Bank with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, the Letters of Credit to the extent set forth in the LOC documents. SECTION 2.12. Computations. Interest and Fees payable by the Borrower hereunder and under the other Loan Documents shall be computed on the basis of a year of 365/366 days and the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which payable, except with respect to Eurodollar Loans which shall be computed based on a year of 360 days. SECTION 2.13. Reduction or Termination of Commitment. The Borrower shall have the right to irrevocably terminate or reduce in part the unused portion of the Commitment at any time and from time to time, provided that: (a) the Borrower shall give notice of each such termination or reduction as provided in Section 2.09; and (b) each partial reduction shall be in an aggregate amount at least equal to $1,000,000. SECTION 2.14. Payments. All payments of principal, interest, and other amounts to be made by the Borrower under this Agreement and other Loan Documents shall be made to the Bank at the Principal Office in Dollars and in immediately available funds, without setoff, deduction, or counterclaim. Whenever any payment under this Agreement or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time in such case shall be included in the computation of interest and Fees, as applicable and as the case may be. SECTION 2.15. Mandatory. If at any time the sum of (i) the outstanding principal amount of the Loans plus (ii) the aggregate amount of LOC Obligations exceeds the Commitment, the Borrower shall immediately make a prepayment of the Loans and/or provide cash collateral in respect of the LOC Obligations in an aggregate amount equal to the excess. SECTION 2.16. Letter of Credit Subfacility. (a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the Bank may reasonably require, the Bank shall issue from time to time such Letters of Credit from the date hereof until the Termination Date as the Borrower may request in a form acceptable to the Bank; provided, however, that no Letter of Credit will be issued if on the date of issuance, before and after taking such Letter of Credit into account, (i) the LOC Obligations at such time would exceed $15,000,000 or (ii) the principal amount of the Loans outstanding plus the LOC Obligations would exceed the Commitment. Except for the Existing Letters of Credit and except as otherwise expressly agreed by the Bank, no Letter of Credit shall have an original expiry date more than one year from the date of issuance; provided, however, so long as no Default or Event of Default has occurred and is continuing and subject to the other terms and conditions to the issuance of Letters of Credit hereunder and at the request of the Borrower, the expiry dates of Letters of Credit may, in the Bank's sole discretion, be extended annually on each anniversary date of their date of issuance for an additional one year period. If the Bank elects not to extend any Letter of Credit, it shall take such action, if any, as is required to be taken by it under the applicable LOC Documents. Each Letter of Credit shall comply with the related LOC Documents. The issuance and expiry date of each Letter of Credit shall be a Business Day. (b) Request for Issuance. Any request for the issuance of a Letter of Credit shall be submitted to the Bank at least three (3) Business Days prior to the requested date of issuance. (c) Reimbursement. The Borrower shall reimburse the Bank in same day funds for each drawing made under a Letter of Credit on the day of such drawing. In the event of any drawing under any Letter of Credit, the Bank will promptly notify the Borrower. Unless the Borrower shall immediately notify the Bank of its intent to otherwise reimburse the Bank, the Borrower shall be deemed to have requested a Committed Loan in the amount of the drawing, the proceeds of which will be used to satisfy the reimbursement obligations in respect of such drawing. Each such Committed Loan will be a Base Rate Loan or, if the Borrower shall have provided a notice of borrowing requesting that such Committed Loan be a Eurodollar Loan in accordance with Section 2.09, a Eurodollar Loan. If the Borrower shall not have arranged for the reimbursement of the Bank as provided hereinabove and Committed Loans are not available on such date for the reimbursement of the drawing under the Letter of Credit, the unreimbursed amount of such drawing shall bear interest from and after such date until paid in full at the Default Rate. The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of set- off, counterclaim or defense to payment the Borrower may claim or have against the Bank, the beneficiary of the Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of the Borrower to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. (d) Uniform Customs and Practices. The Bank may have the Letters of Credit be subject to the Uniform Customs and Practice for Documentary Credits, as published as of the date of issue by the International Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated therein and deemed in all respects to be a part thereof. (e) Indemnification; Nature of Bank's Duties. (i) In addition to its other obligations under this Agreement, the Borrower hereby agrees to protect, indemnify, pay and save the Bank harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that the Bank may incur or be subject to as a direct consequence of (A) the issuance of any Letter of Credit or (B) the failure of the Bank to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions, herein called "Government Acts"). (ii) As between the Borrower and the Bank, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Bank shall not be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) for failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (D) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (F) for any consequences arising from causes beyond the control of the Bank, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Bank's rights or powers hereunder. (iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Bank, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put such Bank under any resulting liability to the Borrower. It is the intention of the parties that this Agreement shall be construed and applied to protect and indemnify the Bank against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The Bank shall not, in any way, be liable for any failure by the Bank or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Bank. (iv) The obligations of the Borrower under this Section 2.16 shall survive the termination of this Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Bank to enforce any right, power or benefit under this Agreement. (v) Notwithstanding anything to the contrary contained in this Section 2.16, the Borrower shall have no obligation to indemnify the Bank pursuant to this or any other section of this Agreement in respect of any liability incurred by the Bank arising directly out of the gross negligence or willful misconduct of the Bank. (f) Termination Date. If any Letter of Credit remains outstanding upon the occurrence of the Termination Date, the Borrower shall, upon demand by the Bank provide one or more of the following to the Bank (such election being at the Borrower's option): (i) to the extent not already provided to the Bank, provide cash collateral to the Bank on such Termination Date in an amount equal to the maximum amount available to be drawn under such Letter of Credit, (ii) cause the original of such Letter of Credit to be returned to the Bank, or (iii) deliver to the Bank a letter of credit, indemnification or other comparable form of credit enhancement acceptable to the Bank, in support of the Borrower's reimbursement obligations in respect of such Letter of Credit, which letter of credit, indemnification or other credit enhancement shall (i) have a stated amount equal to the maximum amount available to be drawn under such Letter of Credit, (ii) not expire prior to the tenth Business Day following the expiry date of such Letter of Credit, (iii) be issued by an issuer reasonably acceptable to the Bank and (iv) otherwise be in form and substance reasonably satisfactory to the Bank. ARTICLE III CHANGE IN CIRCUMSTANCES SECTION 3.01. Increased Cost and Reduced Return. (a) If the Bank shall have determined that the adoption of any applicable law, rule, or regulation, or any change in any applicable law, rule, or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such Governmental Authority: (i) shall change the basis of taxation of any amounts payable to the Bank under this Agreement or the Note in respect of any Fixed Rate Loans or LOC Obligations (other than taxes imposed on the overall net income of the Bank by the jurisdiction in which the Bank has its Principal Office); (ii) shall impose or modify any reserve, special deposit, or similar requirement (other than the Reserve Requirement utilized in the determination of the Adjusted Eurodollar Rate) relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, the Bank (including the Commitment); or (iii) shall impose on the Bank or on the London interbank market any other condition affecting this Agreement or the Note or any of such extensions of credit or liabilities or commitments; and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining any Fixed Rate Loans or of issuing and maintaining Letters of Credit or to reduce any sum received or receivable by the Bank under this Agreement, the Note or any LOC Document, then the Borrower shall pay to the Bank on demand such amount or amounts as will compensate the Bank for such increased cost or reduction. (b) If the Bank shall have determined that the adoption of any applicable law, rule, or regulation regarding capital adequacy or any change therein or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, has or would have the effect of reducing the rate of return on the capital of the Bank as a consequence of the Bank's obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time upon demand the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction. (c) A certificate of the Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of clearly demonstrable error. In determining such amount, the Bank may use any reasonable averaging and attribution methods. SECTION 3.02. Limitation on Types of Loans. If on or prior to the first day of any Interest Period for any Eurodollar Loan: (a) the Bank determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or (b) the Bank determines (which determination shall be conclusive) that the Adjusted Eurodollar Rate will not adequately and fairly reflect the cost to the Bank of funding Eurodollar Loans for such Interest Period; then the Bank shall give the Borrower prompt notice thereof specifying the relevant Type of Loans and the relevant amounts or periods, and so long as such condition remains in effect, the Bank shall be under no obligation to make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Loans of any other Type into Eurodollar Loans and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans into another Type of Loan in accordance with the terms of this Agreement. SECTION 3.03. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for the Bank to make, maintain, or fund Eurodollar Loans hereunder, then the Bank shall promptly notify the Borrower thereof and the Bank's obligation to make or Continue Eurodollar Loans and to Convert other Types of Loans into Eurodollar Loans shall be suspended until such time as the Bank may again make, maintain, and fund Eurodollar Loans and the Borrower shall, on the last day of the Interest Period for each outstanding Eurodollar Loan (or earlier, if required by law), either prepay such Loans or Convert such Loans into Base Rate Loans in accordance with the terms of this Agreement. SECTION 3.04. Compensation. Upon the request of the Bank, the Borrower shall pay to the Bank such amount or amounts as shall be sufficient (in the reasonable opinion of the Bank) to compensate it for any loss, cost, or expense incurred by it as a result of: (a) any payment, prepayment or Conversion of a Fixed Rate Loan for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 7.02) on a date other than the last day of an Interest Period for such Loan; or (b) any failure by the Borrower for any reason (including, without limitation, the failure of any conditions precedent specified in Article IV to be satisfied) to borrow, Convert, Continue, or prepay a Fixed Rate Loan on the date for such borrowing, Conversion, Continuation, or prepayment specified in the relevant notice of borrowing, prepayment, Continuation, or Conversion under this Agreement. Without limiting the effect of the preceding sentence, such compensation shall include any loss incurred in obtaining, liquidating, or employing deposits from third parties. SECTION 3.05 Taxes. (a) Any and all payments by the Borrower to or for the account of the Bank hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of the Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which the Bank is organized or any political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Loan Document to the Bank, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.05) the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, and (iv) the Borrower shall furnish to the Bank, at its address referred to in Section 8.07, the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made hereunder or under any other Loan Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) The Borrower agrees to indemnify the Bank for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.05) paid by the Bank and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. ARTICLE IV CONDITIONS SECTION 4.01. Effectiveness of this. This Agreement shall become effective as of the Effective Date subject to the condition precedent that the Bank shall have received duly executed counterpart signature pages to this Agreement on or prior to such date. SECTION 4.02. Each Loan and Letter of Credit. The obligation of the Bank to make any Loan or to issue any Letter of Credit is subject to the satisfaction of the following conditions precedent: (a) receipt by the Bank of (i) in the case of a Loan, a notice of borrowing in accordance with Section 2.06 and (ii) in the case of a Letter of Credit, a request for the issuance thereof in accordance with Section 2.16(b); (b) the fact that immediately after the making of such Loan or the issuance of such Letter of Credit, as applicable, the sum of (i) the aggregate outstanding principal amount of the Loans plus (ii) the aggregate amount of the LOC Obligations, will not exceed the amount of the Commitment; (c) the fact that, immediately before and after such Loan or the issuance of such Letter of Credit, as applicable, no Default shall have occurred and be continuing; and (d) the fact that the representations and warranties of the Borrower contained in this Agreement and the other Loan Documents shall be true and correct on and as of the date such Loan is made or such Letter of Credit is issued, as applicable. Each borrowing hereunder and each issuance of a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such borrowing or such issuance, as applicable, that the conditions precedent specified in clauses (b), (c), and (d) of this Section have been satisfied. ARTICLE V REPRESENTATIONS AND WARRANTIES To induce the Bank to enter into this Agreement, the Borrower represents and warrants to the Bank that: SECTION 5.01. Existence. The Borrower and each Subsidiary (a) is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; and (b) has the requisite power and authority and legal right to own its assets and carry on its business as now being or as proposed to be conducted. The Borrower has the power, authority, and legal right to execute, deliver, and perform its obligations under the Loan Documents. SECTION 5.02. Financial Statements. The Financial Statements are complete and correct, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis, and fairly and accurately present the financial condition of the Borrower and the Subsidiaries as of the respective dates indicated therein and the results of operations for the respective periods indicated therein. Since the date of the Financial Statements, no event or condition has occurred that could have a Material Adverse Effect. SECTION 5.03. Authorization; No Breach. The execution, delivery, and performance by the Borrower of the Loan Documents to which it is a party and compliance with the terms and provisions thereof have been duly authorized by all requisite action on the part of the Borrower and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) the articles of incorporation, bylaws, or other organizational documents of the Borrower or any of the Subsidiaries, (ii) any applicable law, rule, or regulation or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any agreement or instrument to which the Borrower or any of the Subsidiaries is a party or by which any of them or any of their property is bound or subject, or (b) constitute a default under any such agreement or instrument. SECTION 5.04. Litigation. Except as previously disclosed to the Bank in a Disclosure Letter dated March 1, 1996, provided by IMC Global Inc., et al., there is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending, or to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary, that could, if adversely determined, have a Material Adverse Effect. SECTION 5.05. Enforceability. This Agreement, the Note and all other Loan Documents executed and delivered by the Borrower on or prior to the date hereof constitute, and the other Loan Documents when executed and delivered by the Borrower shall constitute, the legal, valid, and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as limited by applicable Debtor Relief Laws and general principles of equity. SECTION 5.06. Approvals. No authorization, approval, or consent of, and no filing or registration with, any Governmental Authority or third party is or will be necessary for the execution, delivery, or performance by the Borrower of any of the Loan Documents to which it is a party or for the validity or enforceability thereof. SECTION 5.07. Disclosure. No statement, information, report, representation, or warranty made by the Borrower in any Loan Document or furnished to the Bank in connection with any Loan Document contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. ARTICLE VI COVENANTS The Borrower agrees that, so long as the Bank has any Commitment hereunder or any amount payable under the Note or any LOC Obligation remains unpaid: SECTION 6.01. Information. The Borrower shall deliver to the Bank: (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower a consolidated balance sheet of the Borrower and the Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with generally accepted accounting principles applied on a consistent basis and certified by independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower a consolidated balance sheet of the Borrower and the Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the Borrower's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year, all in reasonable detail and duly certified (subject to normal year-end adjustments) by the chief financial officer or treasurer of the Borrower as having been prepared in accordance with generally accepted accounting principles applied on a consistent basis; (c) within three (3) days after any officer of the Borrower obtains knowledge of any Default, a certificate of the chief financial officer or treasurer of the Borrower setting forth the details thereof and any action which the Borrower is taking or proposes to take with respect thereto; and (d) from time to time such additional information regarding the financial condition or business of the Borrower and the Subsidiaries as the Bank may reasonably request. SECTION 6.02. Obligations. The Borrower shall, and shall cause each of the Subsidiaries to: (a) preserve and maintain all of its rights, privileges, and franchises necessary or desirable in the normal conduct of its business; (b) comply with all applicable laws, rules, regulations and orders of, and all applicable restrictions imposed by all applicable Governmental Authorities applicable to it and its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls) if noncompliance with any such law, rule, regulation or restriction would have a Material Adverse Effect; (c) pay and discharge when due all taxes, assessments, and governmental charges or levies imposed on it or on its income or profits or any of its property, except for any such tax, assessment, charge, or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; (d) subject to prudent business management, maintain and preserve its properties and equipment used or useful in its business (in whomsoever's possession as they may be) in good repair, working order and condition, normal wear and tear excepted, and make, or cause to be made, in such properties and equipment from time to time all repairs, renewals, replacements, extensions, additions, betterments and improvements thereto as may be needed or proper, to the extent and in the manner customary for companies in similar businesses. (e) permit representatives of the Bank, during normal business hours, to examine, copy, and make extracts from its books and records, to inspect its properties, and to discuss its business and affairs with its officers, directors, and accountants; and (f) maintain insurance in such amounts, with such deductibles, and against such risks as is customary for similarly situated businesses. ARTICLE VII DEFAULT SECTION 7.01. Events of. Each of the following shall constitute an "Event of Default": (a) (i) The Borrower shall fail to pay when due any principal of any Loan or any reimbursement obligation arising from a drawing under a Letter of Credit, or (ii) the Borrower shall fail to pay when due any interest on any Loan, or any Loan Party shall fail to pay when due any other amount payable under any Loan Document and any such default specified in this clause (ii) shall continue for five or more days. (b) Any representation, warranty, certification, or statement made or deemed made by any Loan Party (or any of its officers) in any Loan Document or in any certificate, financial statement, or other document delivered pursuant thereto shall be false, misleading, or incorrect in any material respect when made or deemed made. (c) The Borrower shall fail to perform, observe, or comply with any covenant, agreement, or term contained in Section 6.01 of this Agreement; or any Loan Party shall fail to perform, observe, or comply with any other covenant, agreement, or term contained in any Loan Document (other than a failure covered elsewhere in this Section 7.01) and such failure shall continue for a period of thirty (30) days after notice thereof to such Loan Party by the Bank. (d) Any Loan Party or any Subsidiary shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due. (e) Any voluntary or involuntary proceeding under any Debtor Relief Law shall be commenced by or against any Loan Party or any Subsidiary or any of their respective assets, and if an involuntary proceeding is commenced, such proceeding shall not be dismissed within thirty (30) days after the commencement thereof. (f) Any Loan Party or any Subsidiary shall fail to pay when due any principal of or interest on any indebtedness for borrowed money (other than the Note) having an outstanding principal amount greater than $5,000,000, whether as principal obligor, guarantor, or otherwise, or the maturity of any such indebtedness shall have been accelerated, or any event shall have occurred that permits (or, with the giving of notice or lapse of time or both, would permit) any holder or holders of such indebtedness or any Person acting on behalf of such holder or holders to accelerate the maturity thereof. (g) Any judgment or order for the payment of money in excess of $500,000 shall be rendered against any Loan Party or any Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. (h) Any Loan Party shall dissolve, liquidate, or terminate its legal existence or shall convey, transfer, lease, or dispose of (whether in one transaction or a series of transactions) all or substantially all of its assets to any Person. (i) IMC Global Inc. shall at any time fail to (A) own, directly or indirectly, at least 50% of the capital interests in the Borrower, (B) own, directly or indirectly, at least 50% of the capital stock or capital interests in the corporate managing partner of the Borrower, or (C) appoint and control, directly or indirectly, at least 50% of the members of the Policy Committee (or other governing body) of the Borrower. (j) Any event or condition shall occur that could reasonably be expected to have a Material Adverse Effect. SECTION 7.02. Remedies. If any Event of Default shall occur and be continuing, the Bank may do any one or more of the following: (a) Acceleration. Declare all outstanding principal of and accrued and unpaid interest on the Note and all other amounts payable by the Borrower under the Loan Documents immediately due and payable, and the same shall thereupon become immediately due and payable, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate, or other notices or formalities of any kind, all of which are hereby expressly waived by the Borrower. (b) Termination of Commitment. Terminate the Commitment without notice to the Borrower. (c) Rights. Exercise any and all rights and remedies afforded by applicable law or otherwise. (d) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice or the occurrence of an Event of Default under Section 7.01(e), it will immediately pay) to the Bank additional cash, to be held by the Bank in a cash collateral account as additional security for the LOC Obligations for subsequent drawings under all then outstanding Letters of Credit in an amount equal to the maximum aggregate amount which may be drawn under all Letters of Credit then outstanding. Notwithstanding the foregoing, upon the occurrence of an Event of Default under Section 7.01(e), the Commitment shall automatically terminate, and the outstanding principal of and accrued and unpaid interest on the Note and all other amounts payable by the Borrower under the Loan Documents shall thereupon become immediately due and payable without presentment, demand, protest, notice of acceleration, notice of intent to accelerate, or other notices or formalities of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Expenses. The Borrower shall on demand pay or reimburse the Bank for paying (a) all reasonable costs and expenses of the Bank, including the fees and disbursements of counsel for the Bank (including the allocated cost of internal counsel), in connection with the administration of the Loan Documents, the preparation of any waiver or consent thereunder or any amendment thereof or any Default or alleged Default and (b) if an Event of Default occurs, all costs and expenses incurred by the Bank, including the fees and disbursements of counsel (including the allocated cost of internal counsel), in connection with such Event of Default and any collection, bankruptcy, insolvency, and other enforcement proceedings resulting therefrom. SECTION 8.02. Indemnification. The Borrower agrees to indemnify the Bank and each affiliate thereof and their respective officers, directors, employees, attorneys, and agents (each an "Indemnified Person") from, and hold each of them harmless against, any and all losses, liabilities, claims, damages, penalties, judgments, disbursements, costs, and expenses, including all fees and disbursements of counsel (including the allocated cost of internal counsel) (collectively the "Indemnified Liabilities"), which directly or indirectly arise from or relate to any Loan Document or any of the transactions contemplated thereby, but excluding any of the foregoing to the extent caused by the gross negligence or willful misconduct of the Indemnified Person. Without limiting any provision of any Loan Document, it is the express intention of the parties hereto that each Indemnified Person shall be indemnified from and held harmless against any and all Indemnified Liabilities arising out of or resulting from the sole or contributory negligence of the Indemnified Person. SECTION 8.03. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank (or any of its affiliates) to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether the Bank shall have made any demand under the Loan Documents and although such obligations may be unmatured. The Bank agrees promptly to notify the Borrower after any such set-off and application made by the Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Bank may have. SECTION 8.04. No Waiver; Cumulative Remedies. No failure on the part of the Bank to exercise and no delay in exercising, and no course of dealing with respect to, any right, power, or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided for in the Loan Documents are cumulative and not exclusive of any rights and remedies provided by law. SECTION 8.05. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Bank. The Bank may at any time and from time to time (a) grant participating interests in the Commitment and the Loans to any Person(s), and (b) assign all or any portion of its rights and/or obligations under the Loan Documents to any Person(s); provided, that the Bank may not assign its Commitment to any Person (other than an affiliate of the Bank) without the prior written consent of the Borrower. All information provided by the Borrower to the Bank may be furnished by the Bank to its affiliates and to any actual or proposed assignee or participant. SECTION 8.06. Amendments. No amendment or waiver of any provision of any Loan Document to which the Borrower is a party, nor any consent to any departure by the Borrower therefrom, shall be effective unless the same shall be agreed or consented to in writing by the Bank and the Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 8.07. Notices. All notices, requests, and other communications to either party hereunder shall be in writing (including bank wire, facsimile transmission, or similar writing) and shall be given to such party at its address or facsimile number set forth on the signature pages hereof. Each such notice, request, or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number referred to in this Section and confirmation of receipt is received, (ii) if given by mail, three (3) Business Days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address referred to in this Section; provided that notices to the Bank shall not be effective until received. SECTION 8.08. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 8.09.. Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision held to be invalid or illegal. SECTION 8.10. Controlling Agreemen. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the "Maximum Rate"). If the Bank shall receive interest in an amount that exceeds the Maximum Rate, the excessive interest shall be applied to the principal of the Loans or, if it exceeds the unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Bank exceeds the Maximum Rate, the Bank may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Loans. SECTION 8.11. Survival. All representations and warranties made or deemed made by the Borrower in the Loan Documents shall survive the execution and delivery thereof and the making of the Loans and the issuance of the Letters of Credit, and no investigation by the Bank or any closing shall affect the representations and warranties by the Borrower or the right of the Bank to rely upon them. Without prejudice to the survival of any other obligation of the Borrower hereunder, the obligations of the Borrower under Article III and Sections 8.01 and 8.02 shall survive repayment of the Note and termination of the Commitment. SECTION 8.12. Governing Law. This Agreement and the other Loan Documents shall be governed by and construed in accordance with the laws of the State of New York, including without limitation Section 5- 1401 of the General Obligations Law, but otherwise without regard to conflicts of law principles, and the applicable laws of the United States of America. The Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court and each state court in the city where the Principal Office is located for the purposes of all legal proceedings arising out of or relating to any of the Loan Documents or the transactions contemplated thereby. The Borrower irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address set forth underneath its signature hereto. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. SECTION 8.13. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF. SECTION 8.14. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. BORROWER: IMC-AGRICO COMPANY By: IMC-Agrico MP, Inc., a Delaware corporation By: Title Address for Notices: 2100 Sanders Road Northbrook, IL 60062 Facsimile No.: (847) 205-4803 Attention: Karen N. Latham Assistant Treasurer BANK: NATIONSBANK, N.A. By: Title: Address for Notices: Sears Tower 233 S. Wacker Drive, Ste. 2800 Chicago, IL 60606-6306 Facsimile No.: (312) 234-5601 Attention: Wallace Harris SCHEDULE 1.02 EXISTING LETTERS OF CREDIT Letter of Credit No. Expiry Date Amount 39829 May 31, 1997 $2,832,500 40790 May 31, 1997 $570,000 41265-A December 31, 1996 $6,000,000 (evergreen with final expiry date of December 30, 2002) EXHIBIT A PROMISSORY NOTE $50,000,000 May 14, 1996 FOR VALUE RECEIVED, the undersigned, IMC-AGRICO COMPANY, a Delaware general partnership (the "Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., (the "Bank"), at the Principal Office, in lawful money of the United States of America and in immediately available funds, the principal amount of Fifty Million Dollars ($50,000,000) or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Bank to the Borrower under the Credit Agreement referred to below, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The books and records of the Bank shall be prima facie evidence of all amounts outstanding hereunder. This Note is the Note referred to in the Credit Agreement of even date herewith, between the Borrower and the Bank (such Credit Agreement, as the same may be amended, modified, or supplemented from time to time, being referred to herein as the "Credit Agreement"), and evidences Loans made by the Bank thereunder. The Credit Agreement, among other things, contains provisions for acceleration of the maturity of this Note upon the happening of certain stated events and for prepayments of Loans prior to the maturity of this Note upon the terms and conditions specified in the Credit Agreement. Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement. This Note shall be governed by and construed in accordance with the laws of the State where the Principal Office is located and the applicable laws of the United States of America. IMC-AGRICO COMPANY By: IMC-Agrico MP, Inc., a Delaware corporation By: Title: EX-10.67 14 SECOND AMENDED AND RESTATED RELATED PARTY GUARANTY EXHIBIT 10.67 EXHIBIT E SECOND AMENDED AND RESTATED RELATED PARTY GUARANTY THIS SECOND AMENDED AND RESTATED PARTY GUARANTY, dated as of February 28, 1996 (the "Guaranty Agreement"), is made by IMC GLOBAL INC., a Delaware corporation ("IMC") and The Vigoro Corporation, a Delaware corporation ("Vigoro") in favor of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey mutual insurance company ("Prudential"), each "Prudential Affiliate" (as defined in the Note Agreement referred to below) which is a holder of a Note (as defined in the Note Agreement referred to below) and each "Transferee" (as defined in the Note Agreement referred to below). Prudential, each such Prudential Affiliate and each such Transferee are collectively referred to herein as the "Purchasers." Reference is made to paragraph 9B hereof for definitions of certain capitalized terms used herein and not otherwise defined herein. RECITALS: A. Kalium Canada, Ltd., a corporation organized under the federal laws of Canada ("Kalium"), is a party to that certain Second Amended and Restated Note Purchase Agreement dated as of the date hereof between Kalium and Prudential (as amended, restated, extended, renewed, supplemented or otherwise modified from time to time, the "Note Agreement"). B. Kalium is an indirect wholly-owned subsidiary of Vigoro. Vigoro has heretofore guaranteed all of the obligations of Kalium under the Note Agreement pursuant to that certain Amended and Restated Related Party Guaranty dated as of December 22, 1994 made by Vigoro in favor of the Purchasers (as heretofore amended, restated, extended, renewed, supplemented and otherwise modified from time to time, the "Existing Guaranty"). C. Vigoro is a party to that certain Agreement and Plan of Merger dated as of November 13, 1995 among Vigoro, IMC and Bull Merger Company, a Delaware corporation and wholly-owned subsidiary of IMC ("Bull"), pursuant to which it is intended that Bull merge with and into Vigoro (the "Merger"). After giving effect to the Merger, Kalium will be an indirect wholly-owned subsidiary of IMC. D. IMC and Vigoro desire that the Merger be consummated and that the Purchasers give their requisite consent thereto. E. The Purchasers' willingness to consent to the Merger is conditioned upon, among other things, the execution and delivery of this Guaranty Agreement. F. In addition, IMC and Vigoro desire hereby to amend and restate the Existing Guaranty in order to make certain changes therein in light of the facts set forth in the foregoing recitals. NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to IMC and Vigoro, the receipt and sufficiency of which are hereby acknowledged, IMC and Vigoro hereby make the following representations and warranties to the Purchasers and hereby covenant and agree with each Purchaser as follows: 1. AMENDMENT AND RESTATEMENT ASSUMPTION; GUARANTY. 1A. AMENDMENT AND RESTATEMENT. Subject to the satisfaction (or express written waiver by the Purchasers) of all of the conditions of effectiveness contained in paragraph 3 of the Note Agreement, this Guaranty Agreement amends and restates in its entirety the Existing Guaranty, and the Existing Guaranty is fully superseded hereby; provided, however, that this Guaranty Agreement shall not constitute a novation of any debts, liabilities or obligations under the Existing Guaranty. Without limiting the foregoing, notwithstanding that certain provisions in the Existing Guaranty have been deleted in this Guaranty Agreement, the Purchasers are not waiving any of their respective rights, powers or remedies with respect to any misrepresentation, breach or fraud by Vigoro in connection with the Existing Guaranty. 1B. ASSUMPTION. Each of IMC and Vigoro hereby represents, warrants and agrees that the Existing Guaranty is presently in full force and effect and that it is enforceable in accordance with its terms. IMC hereby irrevocably, absolutely, unconditionally and expressly assumes all debts, liabilities, and obligations of Vigoro arising under and otherwise relating to the Existing Guaranty (collectively, the "Vigoro Obligations"). Notwithstanding the foregoing assumption, Vigoro shall continue to be liable, jointly and severally with IMC, for the Vigoro Obligations until the "Change Date", (as defined below). On the Change Date, Vigoro shall be permanently released (automatically and without the need for any further action) from all of the Vigoro Obligations hereunder (including, without limitation, any obligations arising under paragraph 4A hereof). The term "Change Date" shall mean the date (if any) designated as the "Change Date" for purposes of this Guaranty Agreement in a written notice given to Vigoro by the Purchasers in substantially the form of Annex I hereto or such other form as the Purchasers may reasonably choose (it being acknowledged and agreed that the Purchasers shall be under no obligation to give any such notice, and the Purchasers may or may not do so as determined by them in their sole discretion). 1C. GUARANTY. The Guarantor (as defined below in paragraph 9B) irrevocably and unconditionally guarantees to each Purchaser, as primary obligor and not merely as surety, the full and prompt payment of (i) the principal of, premium, if any, and interest on, and any other amounts due under, the Notes (including obligations which, but for the automatic stay under Section 362 (a) of the Bankruptcy Code would become due) when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by acceleration or otherwise) and (ii) any other sums now existing or hereafter incurred under, arising out of or in connection with the Note Agreement and the Notes (all such obligations described in clauses (i) and (ii) above are herein called the "Guaranteed Obligations"). The guaranty in the preceding sentence is an absolute, present and continuing guaranty of payment and not of collectibility and is in no way conditional or contingent upon any attempt to collect from Kalium or any other guarantor of the Notes or upon any other action, occurrence or circumstance whatsoever. In the event that Kalium shall fail so to pay any of such Guaranteed Obligations, the Guarantor agrees to pay the same when due to the holders of the Notes entitled thereto, without demand, presentment, protest or notice of any kind. Each default in payment of principal of, premium, if any, or interest on any Note shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises. The Guarantor hereby agrees to pay and to indemnify and save the holders of the Notes harmless from and against any damage, loss, cost or expense (including reasonable attorneys' fees) which such holder may incur or be subject to as a consequence, direct or indirect, of (i) any breach by the Guarantor or by Kalium of any warranty, covenant, term or condition in, or the occurrence of any default under, this Guaranty Agreement, the Notes or the Note Agreement, together with all expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, and (ii) any legal action commenced to challenge the validity of this Guaranty Agreement, the Notes or the Note Agreement. 2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder shall be primary, absolute, irrevocable and unconditional, irrespective of the validity, regularity or enforceability of the Notes or of the Note Agreement, shall not be subject to any counterclaim, setoff, deduction or defense based upon any claim the Guarantor may have against Kalium or any holder of the Notes or otherwise, and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not the Guarantor shall have any knowledge or notice thereof), including, without limitation: (a) any amendment, restatement, modification of or supplement to the Note Agreement, the Notes or any other instrument referred to therein (except that the obligations of the Guarantor hereunder shall apply to the Note Agreement, the Notes or such other instruments as so amended, restated, modified or supplemented) or any assignment or transfer of any thereof or of any interest therein, or any furnishing, acceptance or release of any security for the Notes; (b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of the Notes or in respect of the Note Agreement; (c) any bankruptcy, insolvency, readjustment, composition, liquidation or similar proceeding with respect to Kalium or its property; (d) any merger, amalgamation or consolidation of the Guarantor or of Kalium into or with any other corporation or any sale, lease or transfer of any or all of the assets of the Guarantor or of Kalium to any Person; (e) any failure on the part of Kalium for any reason to comply with or perform any of the terms of any other agreement with the Guarantor; or (f) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Guarantor covenants that its obligations hereunder will not be discharged except as expressly provided herein. 3. WAIVER; OBLIGATIONS UNIMPAIRED; DUTY TO STAY INFORMED. 3A. WAIVER. The Guarantor unconditionally waives to the fullest extent permitted by law, (a) notice of acceptance hereof, of any action taken or omitted in reliance hereon and of any defaults by Kalium in the payment of any amounts due under the Notes or the Note Agreement, and of any of the matters referred to in paragraph 2 hereof, (b) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights of each holder from time to time of the Notes against the Guarantor, including, without limitation, presentment to or demand for payment from Kalium or the Guarantor with respect to any Note, notice to Kalium or to the Guarantor of default or protest for nonpayment or dishonor and the filing of claims with a court in the event of the bankruptcy of Kalium, (c) any right to the enforcement, assertion or exercise by any holder of the Notes of any right, power or remedy conferred in this Guaranty Agreement, the Note Agreement, the Notes or any other guaranty, (d) any requirement of diligence on the part of any holder of the Notes and (e) any other act or omission or thing or delay to do any other act or thing which night in any manner or to any extent vary the risk of the Guarantor or which might otherwise operate as a discharge of the Guarantor. 3B. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes the holders of the Notes, without notice or demand to the Guarantor and without affecting its obligations hereunder, from time to time (a) to renew, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms (including, without limitation, the interest rate on or the Yield-Maintenance Amount with respect to the Notes) of, all or any part of the Notes, the Note Agreement or any other instrument referred to therein; (b) to take and hold security for the payment of the Notes, for the performance of this Guaranty Agreement or otherwise for the indebtedness guaranteed hereby and to exchange, enforce, waive and release any such security; (c) to apply any such security and to direct the order or manner of sale thereof as the holders of the Notes in their sole discretion may determine; (d) to obtain additional or substitute endorsers or guarantors; (e) to release and discharge any Guarantor or all or any additional guarantor or endorser of the Guaranteed Obligations (including, without limitation, to release and discharge Vigoro as a Guarantor on the Change Date) (f) to exercise or refrain from exercising any rights against Kalium and others; and (g) to apply any sums, by whomsoever paid or however realized, to the payment of the principal of, premium, if any, and interest on the Notes ad any other Guaranteed Obligation hereunder. The Guarantor waives any right to require the holders of the Notes to proceed against any Guarantor or any additional or substitute endorsers or guarantors or to pursue or exhaust any security provided by Kalium, the Guarantor or any other Person or to pursue any other remedy available to such holders. 3C. DUTY TO STAY INFORMED. The Guarantor assumes all responsibility for being and keeping itself informed of Kalium's financial condition and assets, and of all other circumstances bearing upon the risk of non-payment of the Guaranteed Obligations and the nature, scope and extent of the risks which the Guarantor assumes and incurs hereunder, and agrees that the Purchasers shall have no duty to advise the Guarantor of information known to them regarding such circumstances or risks. 4. REINSTATEMENT OF GUARANTY; PAYMENTS; RANK OF GUARANTY. 4A. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall continue to be effective, or be reinstated, as the case may be, if and to the extent at any time payment, in whole or in part, of any of the sums due to any holder of the Notes for principal, premium, if any, or interest on the Notes or any of the other Guaranteed Obligations is rescinded or must otherwise be restored or returned by such holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Kalium, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to Kalium or any substantial part of its property, or otherwise, all as though such payments had not been made. If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing and such acceleration shall at such time be prevented or the right of any holder of a Note to receive any payment under any Note shall at such time be delayed or otherwise affected by reason of the pendency against Kalium of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty Agreement and its obligations hereunder, the maturity of such principal amount shall be deemed to have been accelerated with the same effect as if the holders of the Notes had accelerated the same in accordance with the terms of the Note Agreement, and the Guarantor shall forthwith pay such accelerated principal amount, accrued interest and premium, if any, thereon and any other amounts guaranteed hereunder. 4B. PAYMENTS. The Guarantor hereby guarantees that the Guaranteed Obligations will be paid to each holder of the Notes in lawful currency of the United States of America and in immediately available funds, at the times and places provided in, and otherwise strictly in accordance with the terms and provisions of, the Note Agreement and the Notes (regardless of any law, regulation or decree now or hereafter in effect which might in any manner affect the Guaranteed Obligations, or the rights of any such holder with respect thereto as against Kalium, or cause or permit to be invoked any alteration in the time, amount or manner of payment by Kalium of any or all of the Guaranteed Obligations), without set-off or counterclaim and free and clear of, and without reduction for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions, withholdings now or hereafter imposed, levied, collected, withheld or assessed by any country (or by any political subdivision or taxing authority thereof or therein) excluding income and franchise taxes of the United States of America or any political subdivision, state or taxing authority thereof or therein such non- excluded taxes being called "Foreign Taxes") . If any Foreign Taxes are required to be withheld from any amount payable to any such holder under this Guaranty Agreement or under the Notes, the amounts so payable to such holder shall be increased to the extent necessary to yield to such-holder (after payment of all Foreign Taxes) interest or any such other amounts at the rates or in the amounts specified in the Note Agreement and the Notes. 4C. RANK OF GUARANTY. The Guarantor agrees that its obligations under this Guaranty Agreement shall rank at least pari passu with all other unsecured senior obligations of the Guarantor now or hereafter existing. 5. AFFIRMATIVE COVENANTS. 5A. Financial Statements. The Guarantor covenants that it will cause to be delivered to each Significant Holder of any Notes in triplicate: (i) as soon as practicable and in any event within 50 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year, Consolidated statements of income and cash flows of IMC and its Subsidiaries for the period from the beginning of the current fiscal year to the end of such quarterly period, and a Consolidated balance sheet of IMC and its Subsidiaries as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and certified by an authorized financial officer of IMC, subject to changes resulting from year-end adjustments; (ii) as soon as practicable and in any event within 95 days after the end of each fiscal year, (a) Consolidated statements of income and cash flows and a Consolidated statement of shareholders' equity of IMC and its Subsidiaries for such year, and a Consolidated balance sheet of IMC and its Subsidiaries as at the end of such year, setting forth in each case in comparative form corresponding Consolidated figures from the preceding annual audit, reported on by independent public accountants of recognized national standing selected by IMC whose report shall be without limitation as to scope of the audit and shall not be qualified in any respect, and (b) a Consolidated unaudited balance sheet of each Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated unaudited statements of income and cash flows of such Borrower and its Subsidiaries for such fiscal year; (iii) promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it shall send to its public stockholders and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission) , other than any such reports to which the Securities and Exchange Commission accords confidential treatment; and (iv) with reasonable promptness, such other information respecting the business, condition (financial or otherwise), operations, performance, properties or prospects of IMC or any of its Subsidiaries as such Significant Holder may from time to time reasonably request. Together with each delivery of financial statements required by clauses (i) and (ii) above, the Guarantor will cause to be delivered to each holder of any Notes an Officer's Certificate demonstrating (with computations in reasonable detail) compliance by IMC and its Subsidiaries with the provisions of paragraphs 5J, 6B(l)(iii), 6B(l)(vii), 6B(l)(x), 6B(2)(i), 6B(2)(ii)(F), 6B(2)(ii)(G), 6B(2)(ii)(J), 6B(2)(ii)(K), 6B(2)(ii)(M), 6B(2)(iii)(F), 6B(2)(iii)(G), 6B(3)(xiv), 6B(6)(ix) and stating that there exists no Event of Default or Default, or, if any Event of Default or Default exists, specifying the nature and period of existence thereto and what action the Guarantor proposes to take with respect thereto. Together with each delivery of financial statements required by clause (ii) above, the Guarantor will cause to be delivered to each holder of any Notes a certificate of such accountants stating that, in making the audit necessary for their report on such financial statements, they have obtained no knowledge of any Event of Default or Default, or, if they have obtained knowledge of any Event of Default or Default, specifying the nature and period of existence thereof. Such accountants, however, shall not be liable to anyone by reason of their failure to obtain knowledge of any Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards. The Guarantor also covenants that immediately after any Responsible Officer obtains actual knowledge of an Event of Default or Default, it will cause to be delivered to each holder of any Notes an Officer's Certificate specifying the nature and period of existence thereof and what action the Guarantor proposes to take with respect thereto. 5B. Inspection of Property. The Guarantor covenants that it will permit any Person designated by any Significant Holder in writing, at such Significant Holder's expense, under guidance of officers of the Guarantor or its Subsidiaries, to visit and inspect any of the properties of the Guarantor and its Subsidiaries, to examine the corporate books and financial records of the Guarantor and its Subsidiaries and make copies thereof and extracts therefrom and to discuss the affairs, finances and accounts of any of such corporations with the principal officers of the Guarantor, all at such reasonable times and as often as such Significant Holder may reasonably request. Notwithstanding anything to the contrary in paragraph 5A or 5B or elsewhere in this Guaranty Agreement, unless and until an Event of Default shall have occurred and be continuing, the Guarantor and its Subsidiaries shall have no obligation to disclose to any Purchaser or Transferee, or any representative or agent of any Purchaser or Transferee, any confidential non-public proprietary information relating to operational technology, including, without limitation, information relating to the process of solution mining of potash (when there is an Event of Default, to the extent practicable and to the extent consistent with such Significant Holder's objectives, such Person shall use reasonable efforts to inspect such confidential non- public proprietary information on-site without making copies thereof). If any such information does become known to any such Person, it shall use its best efforts to keep such information confidential in accordance with the requirements of this Guaranty Agreement. 5C. Covenant to Secure Notes Equally. The Guarantor covenants that, if it or any Subsidiary shall create or assume any Lien upon any of its property or assets, whether now owned or hereafter acquired, other than Liens permitted by the provisions of paragraph 6B(l) (unless prior written consent to the creation or assumption thereof shall have been obtained pursuant to paragraph (10A), it will make or cause to be made effective provision whereby the Notes will be secured by such Lien equally and ratably with any and all other Debt thereby secured so long as any such other Debt shall be so secured. 5D. Maintenance of Insurance. The Guarantor covenants that it and each Subsidiary shall maintain, with financially sound and reputable insurers, insurance in such amounts and against such liabilities and hazards as ordinarily carried by companies similarly situated in the same or similar lines of business; provided, however, that the Guarantor and its Subsidiaries may self-insure to the same extent as other companies similarly situated in the same or similar lines of business. The Guarantor has delivered to the Purchasers a summary of the insurance plans set forth the Disclosure Letter and such summary and the coverage described therein is satisfactory to the Purchasers as of the date hereof. 5E. Agreement Assuming Liability on Notes. The Guarantor covenants that, if at any time any Person should become liable (as co- obligor, endorser, guarantor or surety) on any other obligation for borrowed money of the Guarantor or on any obligation for borrowed money of any Subsidiary (other than obligations incurred by such Subsidiary in the ordinary course of its business in connection with take-or-pay contracts, chemical supply contracts or other similar ordinary course agreements or arrangements), the Guarantor will, at the same time, cause such Person to deliver to the holders of the Notes an agreement pursuant to which such Person becomes similarly liable on the Notes. 5F. Compliance with Laws. Except as to environmental matters, the Guarantor covenants that it and each Subsidiary shall comply with all applicable laws, rules, regulations, decrees and orders of all Federal, state, local or foreign courts or governmental agencies, authorities, instrumentalities or regulatory bodies noncompliance with which could be reasonably expected to result in a Material Adverse Effect. With respect to environmental matters, the Guarantor covenants that it and each Subsidiary shall comply with all applicable laws, rules, regulations, decrees and orders of all federal, state, local or foreign courts or governmental agencies, authorities, instrumentalities or regulatory bodies relating to the protection of the environment ("Environmental Laws") noncompliance with which could be reasonably expected to have a material adverse effect on the ability of the Guarantor and its Subsidiaries to perform and comply with all of their obligations under this Guaranty Agreement and the documents delivered in connection herewith. Notwithstanding any other provision contained in this Guaranty Agreement to the contrary, the provisions of the immediately preceding sentence of this paragraph 5F shall be the only covenant applicable to compliance with Environmental Laws. 5G. Payment of Taxes, Etc. The Guarantor covenants that it will pay and discharge, and cause the Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all income and other material taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Guarantor nor any Subsidiary shall be required to pay or discharge any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings and as to which adequate reserves are being maintained, unless and until any Lien attaches with respect thereto which is not a Lien permitted under paragraph 6B(l). 5H. Performance of Related Documents. The Guarantor covenants that it will, and will cause each Subsidiary (as applicable) to, perform and observe all of the terms and provisions of each Related Document to be performed or observed by it, maintain each such Related Document in full force and effect, enforce such Related Document in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by any Significant Holder and, upon the reasonable request of any Significant Holder, make to each other party to each such Related Document such demands and requests for information and reports or for action as such Person is entitled to make under such Related Document, in each case except to the extent that the failure to do so could not be reasonably likely to materially impair the value of the interests or materially impair the rights of the Guarantor or any Subsidiaries and could not be reasonably likely to materially impair the interests or materially impair the rights of any holder of Notes. 5I. Transactions with Affiliates. The Guarantor covenants that it will conduct, and cause the Subsidiaries to conduct, all transactions otherwise permitted under this Guaranty Agreement with any of their Affiliates on terms that are fair and reasonable and no less favorable to the Guarantor or such Subsidiary (as applicable) than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate, other than: (i) the marketing and administrative services agreement between Global Operations and the Managing Partner, (ii) the employee leasing agreement between Global Operations and the Managing Partner, (iii) transactions between the Joint Venture Company and (A) Global Operations' railcar repair business located at Fitzgerald, Georgia, (B) Global Operations' "Rainbow" Division, (C) Vigoro's and its Subsidiaries, "FarMarkets" Divisions pursuant to the arrangements set forth in the Partnership Agreement as in effect on the date hereof and (D) IMC Canada and (iv) Investments and other transactions between or among the Guarantor and its Subsidiaries to the extent expressly permitted by paragraphs 6B(2), 6B(3), 6B(5) or 6B(6). 5J. Financial Covenants. The Guarantor covenants that there shall be: (a) Tangible Net Worth. Maintained at the end of each fiscal quarter of IMC Adjusted Tangible Net Worth in an amount equal at least to the sum of (i) $900,000,000, (ii) an amount equal to 40% of cumulative Consolidated net income (calculated with the payment of dividends on the Vigoro Series E Preferred Stock being treated as interest payments) of IMC and its Subsidiaries for each fiscal quarter of IMC commencing April 1, 1996 and (iii) the amount, if any, of equity resulting from the conversion of IMC's 6.25% Convertible Subordinated Notes due 2001 into equity. (b) Interest Coverage Ratio. Maintained at the end of each fiscal quarter of IMC a ratio of (x) an amount equal to (i) Consolidated EBITDA of IMC and its Subsidiaries less (ii) income from minority interests held by IMC or any of its Subsidiaries to (y) the sum of (A) interest payable on, and amortization of debt discount in respect of, all Debt of IMC and its Subsidiaries (excluding, to the extent included therein, interest in respect of the Chemical Supplier Debt and contingent obligations in respect of Membership Debt) and (B) cash dividends on the Vigoro Series E Preferred Stock of not less than 3.25:1 for the four consecutive fiscal quarters of the Guarantor then ended. (c) Leverage Ratio. Maintained at all times a ratio of (i) the sum of (A) Consolidated Funded Debt and (B) the average (calculated as at the end of each of the twelve most recently ended months) outstanding Consolidated short-term Debt with a maturity of less than one year from the date of the creation of such liabilities (excluding, to the extent included therein, Debt in respect of Hedge Agreements, the Chemical Supplier Debt and contingent obligations in respect of Membership Debt) and (C) the book value of the Vigoro Series E Preferred Stock minus (D) cash and Cash Equivalents in excess of $15,000,000 of IMC and its Subsidiaries on hand at such time to (ii) Capitalization, in each case, of IMC and its Subsidiaries of not more than 0.55:1. 6. NEGATIVE COVENANTS. Unless the Required Holder(s) shall otherwise consent in writing, the Guarantor agrees to observe and perform and to cause its Subsidiaries to observe and perform each of the negative covenants set forth below so long as any Note shall remain outstanding. 6A. [INTENTIONALLY OMITTED] 6B. Credit and other Restrictions. The Guarantor covenants that it will not and will not permit any Subsidiary to: 6B(l). Lien Restrictions. Create, incur, assume or suffer to exist any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file under the Uniform Commercial Code or other applicable personal property security legislation of any jurisdiction, a financing statement that names the Guarantor or any Subsidiary as debtor, or sign any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, excluding, however, from the operation of the foregoing restrictions the following: (i) Permitted Liens; (ii) Liens in existence on the date hereof which are specifically described on Schedule 6B(l) of the IMC Agreement; (iii) (A) Liens arising in connection with Capitalized Leases, provided that no such Lien shall extend to or cover any property or assets other than the assets subject to such Capitalized Leases, and (B) Liens upon or in real property or equipment acquired or held by the Guarantor or any of its Subsidiaries in the ordinary course of business after the date hereof to secure the purchase price of such property or equipment or to secure Debt incurred or assumed solely for the purpose of financing the acquisition, construction or improvement of any such property or equipment to be subject to such Liens, or Liens existing on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount as at the time of such acquisition, construction or improvement; provided, however, that no such Lien shall extend to or cover any property other than the property or equipment being acquired, constructed or approved and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; provided further that such Lien shall be incurred within 180 days after such acquisition, construction or improvement; and provided still further that the aggregate principal amount of the Debt secured by Liens permitted by this clause (iii) shall not exceed $25,000,000 at any time outstanding and that any such Debt shall not otherwise be prohibited by the terms of this Guaranty Agreement; (iv) Liens arising by reason of customary deposits necessary to qualify the Guarantor or any of its Subsidiaries to maintain self-insurance, to the extent such self-insurance is permitted hereunder; (v) security deposits customarily required in connection with leases of real property entered into in the ordinary course of business; (vi) any interest or title of a lessor under any operating lease and liens arising from precautionary filings of UCC financing statements regarding leases; (vii) attachment, judgment and other similar Liens arising in connection with court proceedings; provided that the execution or other enforcement of such Liens is effectively stayed within ten days after the Guarantor or one of its Subsidiaries receives notice thereof and the claims secured thereby are being actively contested in good faith by appropriate proceedings and against which an adequate reserve has been established, and Provided further that the aggregate amount secured by such Liens does not exceed $15,000,000; (viii) Liens on accounts receivable and other related assets (including the taking of possession of chattel paper) arising solely in connection with the sale, assignment or other disposition of such accounts receivable permitted under paragraph 6B(7); (ix) The replacement, extension or renewal of any Lien permitted by clause (ii) above upon or in the same property theretofore subject thereto (provided there is no increase in the amount, nor any change in any direct or contingent obligor, of the Debt secured thereby); and (X) Liens not otherwise covered in (i) through (ix) of this paragraph 6B(l) which Liens do not secure obligations in an amount exceeding $25,000,000 in the aggregate. 6B(2). Debt Restriction. Create, incur, assume or suffer to exist any Debt other than: (i) in the case of IMC, unsecured Debt, provided that immediately after giving effect thereto, IMC shall be in pro forma compliance (calculated based on historical financial statements most recently furnished or required to be furnished pursuant to paragraph 5A(i) or (ii) as though such Debt had been incurred at the beginning of the period covered thereby, adjusted to account for the refinancing or replacement of Debt by such Debt being incurred and for any permanent repayments of Debt) with the covenants set forth in paragraph 5J, provided further, that with respect to any Debt arising under Hedge Agreements, such Hedge Agreements shall be designed to hedge against fluctuations in interest rates, commodity prices or foreign exchange rates incurred in the ordinary course of business, shall be consistent with prudent business practices, and shall be non-speculative in nature (including, without limitation, with respect to the term and purpose thereof); (ii) in the case of IMC's Subsidiaries (other than the Joint Venture Company), (A) Membership Debt with respect to (i) Canpotex incurred in the ordinary course of business and consistent with prudent business practices or (ii) SKMG incurred in the ordinary course of business and consistent with past business practices, (B) Debt existing on the date hereof, as set forth on Part I of Schedule 6B(2) of the IMC Agreement (such Debt, other than Debt consisting of Intercompany Debt, being the "Existing Subsidiary Debt"), and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any Existing Subsidiary Debt, provided that the terms of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are no more restrictive in any material respects than the terms of the Existing Subsidiary Debt being extended, refunded or refinanced thereby (it being understood that Debt being refinanced at maturity may bear interest at then-market rates) and provided further that the principal amount of such Existing Subsidiary Debt shall not be increased above the principal amount thereof outstanding immediately prior to the Restatement Date and the direct and contingent obligors therefor shall not be changed (other than the addition of the guaranty of such Debt by IMC) to the extent such guarantee is otherwise permitted under paragraph 6B(2)(i) , as a result of or in connection with such extension, refunding or refinancing, (C) Debt arising under Hedge Agreements designed to hedge against fluctuations in interest rates, commodity prices or foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practices, provided that such Hedge Agreements shall be non- speculative in nature (including, without limitation, with respect to the term and purpose thereof), (D) indorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (E) Debt owing from a Subsidiary Guarantor to another Subsidiary Guarantor, (F) (i) prior to the Release Date, (x) Debt owing from a Subsidiary Guarantor to a Non-Guarantor Subsidiary (y) Debt owing from a Non-Guarantor Subsidiary to any other Non- Guarantor Subsidiary, and (z) Debt owing from a Non-Guarantor Subsidiary to a Subsidiary Guarantor, which, shall not exceed, in the aggregate, $25,000,000 at any time outstanding, and (ii) after the Release Date, Debt owing from any Subsidiary of IMC to any other Subsidiary of IMC, (G) (i) Debt in an amount of $300,000,000 in connection with the reinstatement of the Subordinated Intercompany Notes, and (ii) other Debt owing to IMC, which, prior to the Release Date, shall not exceed, in the aggregate, $300,000,000 at any time outstanding, (H) Chemical Supplier Debt incurred in the ordinary course of business and consistent with past business practices, (I) Debt of any Subsidiary arising in connection with the redemption of the Vigoro Series E Preferred Stock outstanding on the date hereof upon exercise of any mandatory redemption right; provided, however, that the provisions of the documents governing or evidencing the same are, in the good faith determination of the Required Holder(s), not materially more restrictive than the provisions in this Guaranty Agreement and not materially adverse to the interests of the holders of the Notes, (J) in the case of Global Operations only and only during such time as Global Operations is a party to the Subsidiary Guaranty as a "Guarantor" (as such term is defined therein) and the Subsidiary Guaranty is in full force and effect, Debt constituting money borrowed by Global Operations under the New Credit Agreement; provided, however, that the aggregate outstanding principal amount thereof at no time exceeds $405,000,000 minus the aggregate outstanding principal amount of money borrowed by IMC under the New Credit Agreement; provided further, that in the event any Default or Event of Default shall occur and be continuing Global Operations shall not, during such time, be permitted by reason of this clause (J) to incur Debt (as opposed to permitting to exist Debt theretofore incurred) constituting money borrowed under the New Credit Agreement, (K) in the case of Kalium only, Funded Debt constituting money borrowed by Kalium under the New Credit Agreement; provided, however, that the aggregate principal amount borrowed shall not exceed $50,000,000, (L) other Debt not to exceed in the aggregate $120,000,000 outstanding at any time; (iii) in the case of the Joint Venture Company, (A) Debt existing on the date hereof, as set forth on Part II of Schedule 6B (2) of the IMC Agreement (the "Existing JV Debt"), and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, any JV Existing Debt, provided that the terms of any such extending, refunding or refinancing Debt, and of any agreement entered into and of any instrument issued in connection therewith, are no more restrictive in any material respects than the terms of the Existing Debt being extended, refunded or refinanced thereby (it being understood that Debt being refinanced at maturity may bear interest at then-market rates) and provided further that the principal amount of such JV Existing Debt shall not be increased above the principal amount thereof outstanding immediately prior to the Restatement Date and the direct and contingent obligors therefor shall not be changed as a result of or in connection with such extension, refunding or refinancing, (B) indorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (C) Debt arising under Hedge Agreements designed to hedge against fluctuations in interest rates, commodity prices or foreign exchange rates incurred in the ordinary course of business and consistent with prudent business practices, provided that such Hedge Agreements shall be non- speculative in nature (including, without limitation, with respect to the term and purpose thereof), (D) Membership Debt with respect to PhosChem or Phosrock incurred in the ordinary course of business and consistent with past business practices, (E) Chemical Supplier Debt incurred in the ordinary course of business and consistent with past business practices, and (F) other Debt not to exceed in the aggregate $50,000,000 outstanding at any time; and (iv) notwithstanding the foregoing provisions of this paragraph 6B(2), the Guarantor shall at all times be in compliance with the provisions of paragraph 5J. 6B(3). Investments. Make or hold any Investment in any Person other than: (i) the Guarantor and its Subsidiaries may acquire and hold receivables owing to them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with prudent business practices; (ii) Investments by the Guarantor or any of its Subsidiaries in Cash Equivalents; (iii)Investments by the Guarantor or any of its Subsidiaries resulting from Hedge Agreements permitted under paragraph 6B(2)(i) or (ii)(C); (iv) Investments (a) by Global Operations and the Managing Partner in the Joint Venture Company in accordance with the terms of the Partnership Agreement and (b) by Global Operations in IMC Partner, the Managing Partner and the Joint Venture Company, in each case pursuant to and in accordance with the Partnership Agreement or as otherwise permitted under paragraph 6B(2)(iii)(A); (v) Equity investments by the Guarantor or any of its Subsidiaries in any of its Subsidiaries made prior to the date hereof; (vi) Investments by the Guarantor or any of its Subsidiaries in any third party made prior to the date hereof and set forth on Schedule 6B(3) of the IMC Agreement; (vii) Investments in connection with the acquisition of all or a material part of the assets or capital stock or other equity interest of any Person provided, however, that in connection with any such acquisition for which the aggregate consideration payable in connection therewith is in excess of 5% of Adjusted Tangible Net Worth (calculated as at the end of the most recent fiscal quarter for which financial statements have been furnished to the Significant Holders pursuant to paragraph 5A(i) or (ii)), the Guarantor shall cause to be delivered to each holder of Notes an officer's certificate executed by the chief financial officer or treasurer of IMC which certificate shall (a) demonstrate that on a pro forma basis determined as if such acquisition had been consummated on the date occurring 12 months prior to the last day of the most recently ended fiscal quarter for which financial statements have been furnished pursuant to paragraph 5A(i) or (ii), IMC and its Subsidiaries would have been in compliance with paragraph 5J(b) for the relevant period ended on the last day of such fiscal quarter, (b)demonstrate compliance with paragraph 5J(a) and paragraph 5J(c) after giving effect to such acquisition, and (c) state that no Default or Event of Default then exists or would result therefrom; (viii) the Guarantor or any of its Subsidiaries may acquire and hold promissory notes received in connection with any asset sale permitted pursuant to paragraph 6B(6)(ix); (ix) Equity Investments made after the date hereof by the Guarantor and its Subsidiaries in any of its Subsidiaries; (x) Investments consisting of Debt owing to the Guarantor or any of its Subsidiaries permitted under paragraph 6B(2)(i) or (ii)(E), (F) or (G); (xi) Investments consisting of guaranties by the Guarantor of Debt of its Subsidiaries to the extent permitted under paragraph 6B(2); (xii) Investments consisting of the purchase, repurchase, self-tender or redemption of capital stock of IMC; (xiii) Investments in special purpose vehicles on a basis' consistent with the securitization program for the Joint Venture Company in effect on the date hereof in connection with securitizations, to the extent otherwise permitted hereunder; and (xiv) other Investments having an aggregate cost at any time not to exceed $35,000,000. 6B(4). Sale of Stock of Subsidiaries. Sell or otherwise dispose of any shares of Voting Stock of any Relevant Subsidiary (other than (i)the contribution of the Voting Stock of Kalium and/or CCP to IMC Global Potash Holdings and (ii) the sale or other disposition by Kalium of 10 shares of Preferred Stock owned by it in KCL Holdings, Inc.) or any warrants, rights or options to acquire such Voting Stock or permit any Relevant Subsidiary to issue, sell or otherwise dispose of any shares of its Voting Stock or the Voting Stock of any other Relevant Subsidiary (other than the issuance of Preferred Stock of IMC Global Potash Holdings in an amount not to exceed $10,000,000) or any warrants, rights or options to acquire such Voting Stock. 6B(5). Mergers, Etc. Merge into, amalgamate or consolidate with any Person or permit any Person to merge into it, or permit any of its Subsidiaries to do so, or enter into any contract or arrangement that, upon consummation, will result in any Person or two or more Persons acquiring control over Voting Stock of the Company (or other securities convertible into such securities) representing 35% or more of the combined voting power of all Voting Stock of the Company, except that (i) IMC, Bull and Vigoro may consummate the Merger, (ii) any Non- Guarantor subsidiary may merge into, amalgamate or consolidate with any other Non-Guarantor Subsidiary, (iii) any Subsidiary Guarantor may merge into, amalgamate or consolidate with any other Subsidiary Guarantor, (iv) any Subsidiary Guarantor may merge into, amalgamate or consolidate with any Non-Guarantor Subsidiary, provided, however, that in the case of any such merger, amalgamation or consolidation prior to the Release Date, such Subsidiary Guarantor is the surviving corporation and (v) after the Release Date, (x) any of IMC's wholly owned Subsidiaries may merge into IMC and (y) any of IMC's Subsidiaries may merge into any other of IMC's Subsidiaries; provided further that in each case, immediately after giving effect thereto, no event shall occur and be continuing that constitutes a Default or an Event of Default and, in the case of any such merger to which IMC is a party, IMC is the surviving corporation. 6B(6). Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of any assets, including, without limitation, any manufacturing plant or substantially all assets constituting the business of a division, branch or other unit operation, or grant any option or other right to purchase, lease or otherwise acquire any assets other than inventory to be sold in the ordinary course of its business, except: (i) sales of assets in the ordinary course of its business (whether to a to a third party or to any other Subsidiary); (ii) in a transaction authorized by paragraph 6B(5); (iii) the sale of IMC's 50% interest in Chinhae Chemical Company, Ltd., a Korean Chemical Company, for cash and for fair value; (iv) the limited recourse sale of accounts receivable permitted under paragraph 6B(7); (v) the lease (as lessee) by the Guarantor or any of its Subsidiaries of real or personal property in the ordinary course of business (as long as such lease does not create Debt under Capitalized Leases not permitted under paragraph 6B(2)); (vi) prior to the Release Date, any sale of assets by (A) any Subsidiary Guarantor to any Non-Guarantor Subsidiary, (B) the Guarantor to any of its Subsidiaries, and (C) any Subsidiary Guarantor to the Guarantor in an aggregate amount under this subclause (vi) not to exceed $25,000,000, from the date hereof to the Release Date; (vii) after the Release Date, any sale or other disposition of assets (A) made by the Guarantor to a Subsidiary of the Guarantor for fair value (including by way of liquidation or dissolution of such Subsidiary) and (B) made by a Subsidiary of the Guarantor to any other Subsidiary of the Guarantor or to the Guarantor; (viii) sale, discount, or transfer of (a) delinquent accounts receivable in the ordinary course of business for purposes of collection or (b) receivables arising in connection with credit card purchases sold or transferred, in each case, in the ordinary course of business and consistent with past practices; and (ix) other sales of assets (except as set forth below) and for fair value in an amount not to exceed (A) an aggregate purchase price of $50,000,000 for any consecutive twelve-month period or (B) an aggregate of $150,000,000 from the date hereof until all Notes are fully paid. 6B(7). Sale or Discount of Receivables. Notwithstanding any other provision herein, sell with recourse, or discount or otherwise sell, assign or dispose for less than the fact value thereof, any of its notes or accounts receivable, provided that IMC and its Subsidiaries may sell with recourse or discount or otherwise sell, assign or dispose for less than face value thereof notes or accounts receivable having a face value that does not exceed an aggregate outstanding amount of $150,000,000 at any time. 6C. Business. The Guarantor covenants that it will not, and will not permit any of its Subsidiaries to, engage (directly or indirectly) in any business other than lines of business in which IMC or its Subsidiaries was engaged on the date hereof and other reasonably related business incidental to such lines of business. 6D. Charter Amendments. IMC covenants that it will not amend, or permit any of its Subsidiaries to amend, its charter or bylaws in any manner that could be reasonably expected to be adverse to any holder of Notes. 6E. Accounting Changes. IMC covenants that it will not make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted (with the consent of the Guarantor's independent public accountants), by U.S. or Canadian generally accepted accounting principles or make more than two changes in its fiscal year, provided that the Guarantor shall promptly provide written notice to the holders of Notes of any change in its fiscal year; provided further, however, that if any changes in U.S. GAAP or Canadian GAAP are hereafter required or permitted and are adopted by the Guarantor or any of its Subsidiaries and such changes result in a material change in the method of calculation of any of the financial covenants contained in paragraph 5J or the restrictions contained in paragraph 6B or in the related definitions or terms used in either of such Sections ("Material Accounting Changes"), the parties hereto agree to enter into negotiations, in good faith, in order to amend such provisions in a credit neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating IMC and its Subsidiaries, financial condition shall be the same after such changes as if such changes had not been made; provided, however, that no Material Accounting Change shall be given effect in such calculations until such provisions are amended, in a manner reasonably satisfactory to IMC and the Required Holders. 6F. Amendment, Etc. of Related Documents. The Guarantor covenants that it will not cause the cancellation of or termination of any Related Document or consent to or accept any cancellation or termination thereof, amend or otherwise modify any Related Document or give any consent, waiver or approval thereunder, waive any default under or breach of any Related Document, agree in any manner to any other amendment, modification or change of any term or condition of any Related Document or take any other action in connection with any Related Document or permit any of its Subsidiaries to do any of the foregoing, in each case, that would materially impair or reduce the value of the interests or materially impair the rights of the Guarantor or any Subsidiary or that would materially impair the interests or materially impair the rights of any holder of Notes. 6G. Partnerships. The Guarantor covenants that it will not become a general partner in any general or limited partnership, or permit any of its Subsidiaries to do so, other than (i) any Subsidiary the sole assets of which consist of its interest in such partnership, (ii) as contemplated by, and in accordance with the terms of, the Partnership Agreement and (iii) other partnerships so long as before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing. 7. [Intentionally Left Blank] 8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Guarantor represents, covenants and warrants as follows: 8A. Organization, Etc. (a) The Guarantor (i) is a corporation duly organized, validly existing and good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed could not be reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (b) Set forth on Schedule 8A(b) of the IMC Agreement is a complete and accurate list of all Relevant Subsidiaries as of the Restatement Date, showing as of the Restatement Date (as to each such Subsidiary) the jurisdiction of its incorporation, as of the Restatement Date, the number of shares of each class of capital stock authorized, and the number outstanding, on the Restatement Date and the percentage of the outstanding shares of each such class owned (directly or indirectly) by IMC and its Subsidiaries and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding capital stock of all of such Subsidiaries has been validly issued, is fully paid and non- assessable and is owned as of the Restatement Date by the Guarantor or one or more of its Subsidiaries free and clear of all Liens. Each such Subsidiary (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign or extra-provincial corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed except where the failure to so qualify or be licensed could not be reasonably likely to have a Material Adverse Effect and (iii) has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (c) The execution, delivery and performance by the Guarantor of this Guaranty Agreement, is within the Guarantor's corporate powers, and has been duly authorized by all necessary corporate action. (d) All applicable waiting periods in connection with the Merger and the other transactions contemplated hereby have expired and no action has been taken by any competent authority restraining, preventing or imposing materially adverse conditions upon the transactions contemplated hereby. (e) This Guaranty Agreement has been duly executed and delivered by the Guarantor. This Guaranty Agreement is the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors, rights generally. 8B. Financial Statements. (a) The Consolidated balance sheets of IMC and its Subsidiaries as at June 30, 1995, and the related Consolidated statement of operations of IMC and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of IMC's independent public accountants, and the Consolidated balance sheets of IMC and its Subsidiaries as at September 30, 1995, and the related Consolidated statement of operations of IMC and its Subsidiaries for the three months then ended, duly certified by the treasurer or chief financial officer of IMC, copies of which have been furnished to the Purchasers, fairly present, subject, in the case of said balance sheets as at September 30, 1995, and said statement of operations for the three months then ended, to year- end audit adjustments, the Consolidated financial condition of IMC and its Subsidiaries as at such dates and the Consolidated results of the operations of IMC and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis, and since June 30, 1995, there has been no Material Adverse Change. (b) The Consolidated balance sheets of Vigoro and its Subsidiaries as at December 31, 1994, and the related Consolidated statements of income and cash flows of Vigoro and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Vigoro's independent public accountants, and the Consolidated balance sheets of Vigoro and its Subsidiaries as at December 31, 1995, and the related Consolidated statements of income and cash flows of Vigoro and its Subsidiaries for the twelve months then ended, duly certified by the treasurer or chief financial officer of Vigoro, copies of which have been furnished to you, fairly present, subject, in the case of said balance sheets as at December 31, 1995, and said statements of income and cash flows for the twelve months then ended, to year-end audit adjustments, the Consolidated financial condition of Vigoro and its Subsidiaries as at such dates and the Consolidated results of the operations of Vigoro and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis, and since December 31, 1994, there has been no Material Adverse Change. (c) The unaudited Consolidated pro forma condensed combined financial information of IMC and its Subsidiaries consisting of the unaudited Consolidated pro forma combined statement of operations for the one-year period ending June 30, 1995 and the unaudited pro forma condensed Consolidated pro forma combined balance sheet at September 30, 1995, certified by the treasurer or chief financial officer of IMC and the treasurer or chief financial officer of Vigoro, copies of which have been furnished to you, fairly present the Consolidated pro forma financial condition of IMC and its Subsidiaries at September 30, 1995 and the Consolidated pro forma results of operations of IMC and its Subsidiaries for the one-year period ended on June 30, 1995, in each case giving effect to the Merger all in accordance with U.S. GAAP. (d) The Consolidated forecasted balance sheets, income statements and cash flows statements of IMC and its Subsidiaries delivered to you in connection herewith were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in the light of conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, IMC's and Vigoro's, as applicable, good faith estimate of its and its applicable Subsidiaries, future financial performance, it being understood that uncertainty is inherent in any forecasts or projections and that no assurances can be given by IMC or Vigoro of the future achievement of such performance. 8C. Actions Pending. Except as to environmental matters (which are addressed solely by paragraph 8L) and litigation set forth in the Disclosure Letter, there is no action, suit, investigation or proceeding pending or, to the actual knowledge of the Responsible Officers of IMC, threatened against the Guarantor or any Subsidiary or any properties or rights of the Guarantor or any Subsidiary, by or before any court, arbitrator or administrative or governmental body which could be reasonably expected to have a Material Adverse Effect, and there has been no material change in the status, or financial effect on IMC or any Subsidiary, of the litigation and environmental matters referenced in the Disclosure Letter from that described therein that could reasonably be expected to have a Material Adverse Effect. With respect to the litigation set forth in the Disclosure Letter, to the actual knowledge of the Responsible Officers of IMC, there have been no actions taken by IMC or any of its Subsidiaries that are the subject of such litigation that could be reasonably expected to have a material adverse effect on the ability of IMC and its Subsidiaries to perform and comply with all their respective obligations under this Guaranty Agreement and the other Transaction Documents. 8D. Outstanding Indebtedness. Neither the Guarantor nor any Subsidiary has any Debt outstanding except as permitted by paragraph 6B(2). There exists no default under the provisions of any instrument evidencing such Debt or of any agreement relating thereto. 8E. Title to Properties. IMC has, and each Subsidiary has, good and indefeasible title to its respective real properties(other than properties which it leases)and good title to all of its other properties and assets, including the properties and assets reflected in the most recent audited balance sheet of IMC referred to in paragraph 8B (other than properties and assets disposed of in the ordinary course of business), subject to no Lien of any kind except Liens permitted by paragraph 6B(l). IMC and each Subsidiary enjoys peaceful an undisturbed possession of all leases necessary in any material respect for the conduct of their respective businesses, none of which contains any unusual or burdensome provisions which could be reasonably expected to materially affect or impair the operation of such businesses. All such leases are valid and subsisting and are in full force and effect. 8F. Taxes. IMC has, and each Subsidiary has, filed all federal, state, provincial, local and foreign income and other material tax returns which are required to be filed, and each has paid all income and other material taxes as shown on such returns and on all assessments received by it to the extent that such taxes have become due, except for such taxes for which valid extensions have been filed and not denied and for such other taxes as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with generally accepted accounting principles, unless and until any Lien resulting therefrom attaches which is not a Lien permitted under paragraph 6(B)(1). 8G. Conflicting Agreements and Other Matters. As of the Restatement Date, neither the Guarantor nor any of its Subsidiaries is a party to any contract or agreement or subject to any charter or other corporate restriction which materially and adversely affects its business, property or assets, or financial condition. Neither the execution nor delivery of this Guaranty Agreement or any other Transaction Document, nor the offering, issuance and sale of the Notes, nor fulfillment of nor compliance with the terms and provisions hereof and thereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien upon any of the properties or assets of the Guarantor or any of its Subsidiaries pursuant to, the charter or by-laws of the Guarantor or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders) , instrument, order, judgment, decree, statute, law, rule or regulation to which IMC or any of its Subsidiaries is subject. 8H. [INTENTIONALLY OMITTED.] 8I. Regulation G, Etc. The proceeds of sale of the Vigoro Notes were used primarily to refinance certain existing Debt of Vigoro and for its working capital purposes. None of such proceeds were used, directly or indirectly, for the purpose whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any Debt which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of Regulation G. Neither the Guarantor nor any of its Subsidiaries is engaged principally, or as one of their important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, and less than twenty-five percent (25%) of the assets of the Guarantor and its Subsidiaries subject to any arrangement (as such term is used in Section 207.2(f) of Regulation G) hereunder consists of margin stock. Neither the Guarantor nor any agent acting on its behalf has taken or will take any action which might cause this Guaranty Agreement to violate Regulation G, Regulation T or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, as amended, in each case as in effect now or as the same may hereafter be in effect. 8J. ERISA. No accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any Plan (other than a Multiemployer Plan). No liability to the Pension Benefit Guaranty Corporation has been or is expected by IMC or any ERISA Affiliate to be incurred with respect to any Plan (other than a Multiemployer Plan) by IMC, any Subsidiary or any ERISA Affiliate which is or would be materially adverse to the performance, business, assets, operations, properties, condition (financial or otherwise) or prospects of IMC and its Subsidiaries taken as a whole. Neither IMC, any Subsidiary or any ERISA Affiliate has incurred or presently expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan which is or would be materially adverse to IMC and its Subsidiaries taken as a whole. 8K. Governmental Consent. Neither the nature of the Guarantor or of any Subsidiary, nor any of their respective businesses or properties, nor any relationship between the Guarantor or any Subsidiary and any other Person, is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or administrative or governmental body (other than routine filings after the date of closing with the Securities and Exchange Commission and/or state Blue Sky authorities) in connection with the execution and delivery of this Guaranty Agreement, or the fulfillment of or compliance with the terms and provisions of this Guaranty Agreement. 8L. Environmental Compliance. To the best knowledge of the Responsible Officers of IMC and except as disclosed in the Disclosure Letter, IMC and its Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all applicable Environmental Laws except, in any such case, where failure to comply either individually or in the aggregate could not reasonably be expected to have a material adverse effect on the ability of the Guarantor and its Subsidiaries to perform and comply with all of their respective obligations under this Guaranty Agreement. Notwithstanding any other provision contained in paragraph 8, the provisions of this paragraph 8L shall be the only representations and warranties applicable to compliance with Environmental Laws 8M. Disclosure. Other than projections and forecasts as to which no representation under this paragraph 8M is made, neither this Guaranty Agreement nor any other document, certificate or statement furnished to any holder of any Note by or on behalf of the Guarantor in connection herewith (taken as a whole) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading at the time and in light of the circumstances under which such information was provided. There is no fact peculiar to the Guarantor or any of its Subsidiaries which materially adversely affects or in the future may (so far as the Guarantor can now reasonably foresee) materially adversely affect the business, property or assets, or financial condition of the Guarantor and its Subsidiaries taken as a whole and which has not been set forth in this Guaranty Agreement or in the other documents, certificates and statements furnished to the Purchasers by the Guarantor prior to the date hereof in connection with the transactions contemplated hereby. 9. DEFINITIONS. For the purpose of this Guaranty Agreement, the following terms shall have the meanings specified with respect thereto below: 9A. [Intentionally Left Blank] 9B. DEFINED TERMS. "Adjusted Tangible Net Worth" shall mean, at any time of determination, an amount equal to the amount by which (a) Consolidated total shareholders' equity (excluding the aggregate liquidation preference of the Vigoro Series E Preferred Stock) in IMC and its Subsidiaries exceeds (b) Consolidated total intangible assets of IMC and its Subsidiaries; provided, however, that in calculating Adjusted Tangible Net Worth, the one time and ongoing impact of the change in the functional currency of any foreign Subsidiary for purposes of the consolidation of their accounts with those of IMC and its other Subsidiaries in the financial statements of IMC recorded as the foreign currency translation adjustment in the equity accounts of the Consolidated financial statements of IMC shall be excluded. "Agreement Accounting Principles" shall mean U.S. GAAP or Canadian GAAP, as the case may be, as applied in the preparation of the financial statements referred to in paragraph 8B, applied in all material respects on a consistent basis, together with any changes in U.S. GAAP or Canadian GAAP, as the case may be, after the date hereof or any inconsistent applications by IMC or any of its Subsidiaries arising as a result of the Merger, in each case, which are not Material Accounting Changes, to the extent permitted under paragraph 6E. In the event an amendment is entered into pursuant to paragraph 6E, all references in this Guaranty Agreement to Agreement Accounting Principles, U.S. GAAP or Canadian GAAP shall mean U.S. GAAP or Canadian GAAP, as applicable, as in effect from time to time after the date of such amendment, applied in all material respects thereafter on a consistent basis taking into account such amendment, together with any changes in U.S. GAAP or Canadian GAAP, as applicable, or any inconsistent applications by IMC or any of its Subsidiaries arising as a result of the Merger after the date of such amendment in each case which are not Material Accounting Changes, to the extent permitted under paragraph 6E. "Bankruptcy Code" shall mean Title 11 of the United States Code (11 U.S.C. 101 et. seq.) , as amended from time to time, or any successor statute. "Bankruptcy Law" shall have the meaning specified in clause (viii) of paragraph 7A of the IMC Agreement. "Borrower" shall mean Global Operations, KCL Holdings, Inc. and IMC Global Potash Holdings. "Canadian GAAP" shall mean, at any time, accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants, applied, except as otherwise provided in paragraph 6E, on a consistent basis. "Canpotex" shall mean Canpotex Limited, a corporation organized under the federal laws of Canada. "Canpotax Debt" shall mean all Debt of IMC Canada and Kalium or any other Subsidiary of IMC arising out of or related to their membership in Canpotex, including all Debt under (i) the Ground Lease and the Facilities Lease with the Port of Portland and related documents in connection with the issuance by the Port of Portland of $48,000,000 in aggregate principal amount of its Special Obligation Revenue Bonds, Series 1996 (Portland Bulk Terminals, L.L.C. Project and (ii) the Loan Agreement with London Life Insurance Company and the corresponding Neptune Port Expansion Loan Agreement with Neptune Bulk Terminal (Canada) LTD and related documents in the aggregate principal amount of Canadian $30,000,000. "Capitalization" shall mean the sum of (a) Adjusted Tangible Net Worth plus (b) Consolidated Funded Debt. "Capitalized Leases" has the meaning specified in clause (e) of the definition of Debt. "Cash Equivalents" shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States, or Canada or any province thereof, or any agency or instrumentality thereof (provided that the full faith and credit of the United States, or Canada or any province thereof, is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (ii) time deposits and certificates of deposit of any commercial bank incorporated in the United States or Canada of recognized standing having capital and surplus in excess of $250,000,000 having, or which is the principal banking subsidiary of a bank holding company having, a long-term unsecured debt rating of at least "A" or the equivalent thereof from S&P or "A-2" or the equivalent thereof from Moody's or at least A or the equivalent thereof by Canadian Bond Rating Service Limited or at least A Middle or the equivalent thereof by Dominion Bond Rating Service Limited with maturities of not more than six months from the date of acquisition by such Person, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper issued by any Person incorporated in the United States, or Canada or any province thereof, rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's or at least A-l or the equivalent thereof by Canadian Bond Rating Service Limited or at least R-1 (Middle or High) or the equivalent thereof by Dominion Bond Rating Service Limited and in each case maturing not more than six months after the date of acquisition by such Person, (v) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (iv) above and (vi) investments in funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding without regard to the credit rating qualifications set forth in any of such clauses. "CCP" shall mean Central Canada Potash, Inc., a Delaware corporation. "Chemical Supplier Debt" shall mean indebtedness incurred in the ordinary course of business owing by IMC or any of its Subsidiaries to chemical suppliers, which indebtedness represents a financing of the purchase price of such goods. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Consolidated" refers to the consolidation of accounts in accordance with Agreement Accounting Principles. "Consolidated Funded Debt" as of any date means the aggregate amount of the Consolidated Funded Debt of IMC and its Consolidated Subsidiaries outstanding on that date (but excluding, to the extent otherwise included therein, Excluded Debt). "Current Interest" has the meaning specified in Section 4.01 of the Partnership Agreement. "Debt" of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all payment obligations of such Person for the deferred purchase price of property or services (other than trade payables and other accrued expenses not overdue by more than 180 days incurred in the ordinary course of such Person's business and other than Obligations of such Person arising in connection with take-or-pay contracts not overdue by more than 180 days with suppliers of ammonia, phosphate, natural gas or other fertilizer, or for transport of such products to meet its normal raw material supply requirements in the ordinary course of business) such as take-or- pay and similar obligations, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under leases that have been or should be, in accordance with Agreement Accounting Principles, recorded as capital leases ("Capitalized Leases"), (f) all Obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any of its Affiliates or any warrants, rights or options to acquire such capital stock, valued, in the case of Redeemable Preferred Stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Obligations of such Person for production payments from property operated by or on behalf of such Person and other similar arrangements with respect to natural resources, (i) all Obligations of such Person in respect of Hedge Agreements, (j) all Debt of others referred to in clauses (a) through (i) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (k) all Debt referred to in clauses (a) through (j) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. For purposes only of paragraph 6B(2), the term Debt shall include obligations incurred in connection with the limited recourse sale of accounts receivable. For all other purposes, including, without limitation, for purposes of the financial covenants in paragraph 5J, Debt shall not be interpreted to include any such obligations incurred in connection with the sales of receivables permitted under paragraph 6B(7). "Disclosure Letter" shall mean that certain letter dated February 28, 1996 from IMC to the Purchasers in which disclosures of certain litigation and environmental matters regarding IMC and its Subsidiaries, certain insurance matters and certain joint venture accounting matters are set forth. "EBITDA" shall mean, for any period, net income (or net loss) (calculated prior to giving effect to any dividends on the Vigoro Series E Preferred Stock) plus the sum of (a) interest expense, (b) income tax expense, (c) the "JV Consolidation Adjustment" (calculated on substantially the same basis as set forth in the Disclosure Letter, (d) depreciation, amortization and depletion expense (including, without limitation, depreciation, amortization and depletion expense relating to oil and gas-producing properties but excluding depreciation, amortization and depletion expense included in the "JV Consolidation Adjustment" referred to in clause (c) above), (e) any non- cash foreign exchange losses, (f) extraordinary losses (other than extraordinary losses realized in cash from the utilization of net operating loss carry forwards) and (g) any income, loss or expense of the Joint Venture Company attributable to Freeport (calculated based on the Current Interest then held by it in the Joint Venture Company), in each case determined in accordance with Agreement Accounting Principles for such period minus (i) any non-cash foreign exchange gains and (ii) extraordinary gains (other than extraordinary gains realized in cash from the utilization of net operating loss carry forwards). "Environmental Laws" has the meaning specified in paragraph 5F. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall mean any corporation which is a member of the same controlled group of corporations as IMC within the meaning of section 414(b) of the Code, or any trade or business which is under common control with IMC within the meaning of section 414(c) of the Code. "Event of Default" shall mean any of the events specified in paragraph 7A of the IMC Agreement, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "Default" shall mean any of such events, whether or not any such requirement has been satisfied. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Excluded Debt" means Chemical Supplier Debt, Debt consisting of obligations in respect of Hedge Agreements and contingent obligations in respect of Membership Debt. "Freeport" shall mean Freeport-McMoRan Resource Partners, Limited Partnership, a Delaware limited partnership. "Funded Debt" shall mean, with respect to any Person, all Debt of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendible at the option of the debtor to a date more than one year (including an option of the debtor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from, the date of the creation thereof (except Debt in respect of Hedge Agreements) and shall include, without limitation, the current portion of Funded Debt. "Guarantor" shall mean each of IMC and Vigoro, jointly and severally; provided, however, that on and after the Change Date, Guarantor shall mean only IMC. "Global Operations" shall mean IMC Global Operations Inc. "Global Operations Credit Agreement" means the Amended and Restated Credit Agreement dated as of July 31, 1995, as amended, among Global Operations, as borrower, IMC, as guarantor, the banks parties thereto, Citibank, as administrative agent, co-agent and swing line bank and NationsBank and Cooperative Centrale Raiffeissen- Boerenleenbank B.A., as co-agents. "Hedge Agreements" shall mean interest rate swap, cap or collar agreements, interest rate future or option contracts, foreign exchange contracts, currency swap agreements, currency future or option contracts, commodity contracts (including, without limitation, options, forwards, futures and similar agreements) and other similar agreements. "IMC Agreement" shall mean that Secured Amended and Restated Note Purchase Agreement dated February 28, 1996 between IMC and Prudential as amended, restated, extended, renewed, supplemented or otherwise modified from time to time in accordance with the terms thereof. "INC Canada" shall mean International Minerals & Chemical (Canada) Global Limited, a corporation organized under the federal laws of Canada. "IMC Global Potash Holdings" shall mean IMC Global Potash Holdings Inc., a Delaware corporation. "IMC Partner" shall mean IMC-Agrico GP Company, a Delaware corporation, or any successor corporation otherwise permitted hereunder. "Institutional Investor" shall mean Prudential, any Prudential Affiliate or any bank, bank affiliate, financial institution, insurance company, pension fund, endowment or other organization which regularly acquires debt instruments for investment. "Investment" in any Person shall mean any loan or advance to such Person, any purchase or other acquisition of any capital stock, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clauses (i) and (j) of the definition of "Debt" in respect of such Person. "Joint Venture Company" shall mean IMC-Agrico Company, a Delaware general partnership established pursuant to the terms of the Partnership Agreement. "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien (statutory or otherwise) or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction) or any other type of preferential arrangement for the purpose, or having the effect, of protecting a creditor against loss or securing the payment or performance of an obligation. "Managing Partner" shall mean IMC-Agrico MP, Inc., a Delaware corporation. "Margin Stock" shall have the meaning specified in Regulation G. "Material Accounting Changes" has the meaning specified in paragraph 6E. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of IMC and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of IMC and its Subsidiaries taken as a whole, (b) the rights and remedies of any holder of any Note under any Transaction Document or (c) the ability of IMC or any Subsidiary to perform its Obligations under any Transaction Document or Related Document to which it is or is to be a party. "Membership Debt" shall mean, with respect to IMC or any of its Subsidiaries, (a) Canpotex Debt and (b) all Debt arising out of or related to its membership in SKMG, PhosChem or Phosrock. "Moody's" shall mean Moody's Investors Service, Inc. "Multiemployer Plan" shall mean any Plan which is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "New Credit Agreement" shall mean that certain Credit Agreement dated as of February 28, 1996 among IMC, Kalium, certain other Subsidiaries, certain financial institutions, Citibank, N.A., as U.S. administrative agent, Citibank Canada, as Canadian administrative agent, and certain other parties, as amended, restated, extended, renewed, supplemented or otherwise modified from time to time in accordance with the terms thereof. "Non-Guarantor Subsidiary" means any Subsidiary of IMC other than a Subsidiary Guarantor. "Notes" shall have the meaning specified in the Note Agreement. "Obligation" shall mean any obligation of any kind, including, without limitation, any liability on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding under any Bankruptcy Law. "Officer's Certificate" shall mean a certificate signed in the name of IMC by an Responsible Officer of IMC. "Partnership Agreement" shall mean the Amended and Restated Partnership Agreement dated as of July 1, 1993 (as further amended and restated as of May 26, 1995, as further amended as of January 25, 1996) among IMC Partner, Agrico, Limited Partnership, the Managing Partner and Global Operations, together with all schedules and exhibits thereto, as amended, supplemented or otherwise modified from time to time in accordance with its terms to the extent permitted in accordance with the IMC Agreement. "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced or as to which such enforcement, collection, execution, levy or foreclosure proceeding is being contested in good faith in a proper proceeding, and is not reasonably likely to have a Material Adverse Effect: (a) liens imposed by law, such as suppliers', vendors', carriers', landlords', warehousemen's, workmen's, materialmen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure obligations other than for money borrowed and that are not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on the Guarantor's books; (b) easements, building restrictions, zoning restrictions, reservations, exceptions, encroachments, rights of way, covenants running with the land, encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not materially affect the marketability of such real property or interfere in any material respect with the ordinary conduct of the Guarantor or its Subsidiaries; (c) liens securing the performance of any contract or undertaking made in the ordinary course of business (as such business is currently conducted) other than for the borrowing of money; (d) deposits or pledges under worker's compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business; (e) liens which arise by operation of law under Article 4 of the Uniform Commercial Code in favor of a collecting bank; and (f) liens with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established. "Person" shall mean an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "PhosChem" shall mean The Phosphate Chemicals Export Association. "Phosrock" shall mean The Phosphate Rock Export Association. "Plan" shall mean any "employee pension benefit plan" (as such term is defined in section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by IMC or any ERISA Affiliate. "Preferred Stock" shall mean, with respect to any corporation, capital stock issued by such corporation that is entitled to a preference or priority over any other capital stock issued by such corporation upon any distribution of such corporation's assets, whether by dividend or upon liquidation. "Purchaser" shall mean any Note holder identified on the Purchaser Schedule of the Note Agreement. "Redeemable" shall mean, with respect to any capital stock, Debt or other right or Obligation, any such right or obligation that(a) the issuer has undertaken to redeem at a fixed or determinable date or dates, whether by operation of a sinking fund or otherwise, or upon the occurrence of a condition not solely within the control of the issuer or (b) is redeemable at the option of the holder. "Regulation G" shall mean Regulation G of the Board of Governors of the Federal Reserve System. "Related Documents" shall mean the Merger Agreement and the Partnership Agreement. "Release Date" shall mean the date on which IMC shall have received a rating of BBB- or above from S&P or Baa3 or above from Moody's on any class of IMC's non-credit enhanced long-term senior unsecured Debt, provided that no Default or Event of Default shall have occurred and shall be continuing on such date. "Relevant Subsidiary" shall mean, at any time, a Subsidiary of IMC having (a) at least 5% of the total Consolidated assets of IMC and its Subsidiaries (determined as of the last day of the most recent fiscal quarter of such Person) or (b) at least 5% of the Consolidated EBITDA of IMC and its Subsidiaries for the four consecutive fiscal quarters most recently ended, in each case as shown in a certificate of the treasurer or chief financial officer of IMC. "Required Holder(s)" shall mean, at any time, the holder or holders of at least 51% of the aggregate principal amount of the Notes outstanding at such time. "Responsible Officer" shall mean the chief executive officer, chief operating officer, chief financial officer, treasurer, or chief accounting officer of IMC or any other officer of IMC involved principally in its financial administration or its controllership function. "Restatement Date" shall mean March 1, 1996, or such other date as the parties hereto may agree in writing. "S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. "Securities Act" shall mean the Securities Act of 1933, as amended. "Significant Holder" shall mean (i) Prudential or any Prudential Affiliate, so long as Prudential or any Prudential Affiliate shall hold any Note or (ii) any other holder of at least 10% of the aggregate principal amount of any Series of Notes from time to time outstanding. To the extent that any notice or document is required to be delivered to the Significant Holders under this Guaranty Agreement, such requirement shall be satisfied with respect to Prudential and all Prudential Affiliates by giving notice, or delivery of a copy of any such document, to Prudential (addressed to Prudential and each such Prudential Affiliate). "SKMG" shall mean The Sulphate of Potash Magnesia Export Association. "Subordinated Intercompany Notes" shall mean (i) the Substitute Subordinated Intercompany Promissory Note dated March 1, 1996 in the principal amount of $215,000,000 issued by Global Operations to the Company, (ii) the Substitute Subordinated Intercompany Promissory Note dated March 1, 1996 in the principal amount of $260,000,000 issued by Global Operations to the Company, and (iii) the Substitute Subordinated Intercompany Note dated March 1, 1996 in the principal amount of $160,000,000 issued by Global Operations to the Company. "Subsidiary" of any Person shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries; provided that in any event, (i) the Joint Venture Company shall be deemed to be a Subsidiary of Global Operations and IMC and (ii) the term "Subsidiary" shall be determined after giving effect to the Merger. Unless otherwise expressly provided, all references herein to "Subsidiary" shall mean a Subsidiary of IMC. "Subsidiary Guarantors" means the Subsidiaries listed on Schedule 8A(b) to the IMC Agreement hereto and any other Relevant Subsidiaries (other than IMC Canada, IMC Global Potash Holdings and the Joint Venture Company) that shall be required to execute and deliver a guaranty or otherwise become a guarantor hereunder pursuant to paragraph 5J. "Subsidiary Guaranty" shall mean that certain Amended and Restated Affiliate Guaranty dated as of the date hereof made by the Subsidiary Guarantors in favor of Prudential and certain other Persons substantially in the form of Exhibit G attached to the IMC Agreement, as amended, restated, extended, renewed, supplemented or otherwise modified from time to time in accordance with the terms thereof. "U.S. GAAP" shall mean, at any time, accounting principles generally accepted in the United States of America as recommended by the Financial Accounting Standards Board, applied, except as otherwise provided in paragraph 6E on a consistent basis. "Vigoro Credit Agreement" means the Amended and Restated Credit Agreement dated as of December 22, 1994 by and among Vigoro, Kalium, CCP, the banks parties thereto, Bankers Trust Company, as Administrative Agent and Harris Trust and Savings Bank, as Paying Agent. "Vigoro Series E Preferred Stock" shall mean the shares of preferred stock of Vigoro, par value $100 per share, designated Series E. "Voting Stock" shall mean capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors(or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 10. MISCELLANEOUS. 10A. CONSENT TO AMENDMENTS. This Guaranty Agreement may be amended, and the Guarantor may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Guarantor shall obtain the written consent to such amendment, action or omission to act, of the Required Holder(s) of the Notes. 10B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein or made in writing by or on behalf of the Guarantor in connection herewith shall survive the execution and delivery of this Guaranty Agreement, the transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of any Purchaser or any Transferee. Subject to the preceding sentence, this Guaranty Agreement embodies the entire agreement and understanding between the Guarantor and the Purchasers with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. 10C. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Guaranty Agreement shall bind and inure to the benefit of the respective successors and assigns of the Purchasers whether so expressed or not. 10D. NOTICES. All written communications provided for hereunder shall be deemed to have been duly given if sent by first class mail, nationwide overnight delivery service (with charges prepaid) or personal delivery and (i) if to any Purchaser, addressed to such Purchaser at the address specified for such communications pursuant to the Note Agreement or at such other address as any Purchaser shall have specified in writing to the Guarantor, and (ii) if to any other holder of any Note, addressed to such other holder at such address as such other holder shall have specified in writing to the Guarantor or, if any such other holder shall not have so specified an address to the Guarantor, then addressed to such other holder in care of the last holder of such Note which shall have so specified an address to the Guarantor, (iii) if to IMC, addressed to it at IMC Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention: Treasurer, or at such other address as IMC shall have specified to the holder of each Note in writing, and (iv) if to Vigoro, addressed to it at The Vigoro Corporation, c/o IMC Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention: Treasurer, or at such other address as Vigoro shall have specified to the holder of each Note in writing. 10E. DISCLOSURE TO OTHER PERSONS. By its acceptance of any Note, each Purchaser agrees to use its best efforts to hold in confidence and not disclose any written information (other than information (a) which was publicly known or otherwise known to such Person, at the time of disclosure (except pursuant to disclosure in connection with this Guaranty Agreement), (b) which subsequently becomes publicly known through no act or omission by such Person, or (c) which otherwise becomes known to such Person, other than through disclosure by the Guarantor) delivered or made available by or on behalf of the Guarantor or any Subsidiary to such Person (including, without limitation, any non-public information obtained pursuant to paragraph 5A or 5B) in connection with or pursuant to this Guaranty Agreement which is proprietary in nature; provided, however, that nothing herein shall prevent the holder of any Note from disclosing any information disclosed to such holder to (i) its directors, officers, employees, agents and professional consultants, (ii) any Institutional Investor which holds any Note, (iii) any Institutional Investor to which it offers to sell any Note or any part thereof, (iv) any Institutional Investor to which it sells or offers to sell a participation in all or any part of any Note, (v) any Institutional Investor from which it offers to purchase any security of the Guarantor, (vi) any federal or state regulatory authority having jurisdiction over it, (vii) the National Association of Insurance Commissioners or any similar organization, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (1) in compliance with any law, rule, regulation or order applicable to it, (2) in response to any subpoena or other legal process or informal investigative demand, (3) in connection with any litigation to which it is a party or (4) in order to protect its investment and enforce the rights of any holder in any Note; provided, further, that -in regard to any such disclosure to a Person described in clause (ii), (iii), (iv) or (v), such Person agrees in writing to be bound by the provisions of this paragraph. 10F. SEVERABILITY. Any provision of this Guaranty Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10G. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Guaranty Agreement are inserted for convenience only and do not constitute a part of this Guaranty Agreement. 1OH. SATISFACTION REQUIREMENTS. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Guaranty Agreement required to be satisfactory to any Purchaser, to any holder of Notes or to the Required Holder(s), the determination of such satisfaction shall be made by such Purchaser, such holder or the Required Holder(s), as the case may be, in the sole and exclusive judgment (exercised in good faith) of the Person or Persons making such determination. 10I. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS. 10J. COUNTERPARTS. This Guaranty Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 10K. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all guarantees, covenants and agreements of the Guarantor contained herein shall continue in full force and effect and shall not be discharged until such time as all of the Guaranteed obligations shall be paid or otherwise discharged in full, subject in the case of Vigoro to the terms of paragraph 1B above. 10L. FURTHER ASSURANCES. The Guarantor hereby agrees to execute and deliver all such instruments and take all such action as the holders of the Notes may from time to time reasonably request in order to effectuate fully the purposes of this Guaranty Agreement. * * * * * IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to be duly executed and delivered as of the date and year first above written. IMC GLOBAL INC. By: Title: THE VIGORO CORPORATION By: Title: Agreed and accepted: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: Vice President EX-10.68 15 THIRD AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.68 THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT dated as of August 1, 1995 (the "Third Amendment") is to that Credit Agreement dated as of February 9, 1994, as amended by that certain First Amendment to Credit Agreement dated as of June , 1994 (the "First Amendment") as further amended by that certain Second Amendment to Credit Agreement dated as of February 24, 1995 (the "Second Amendment") (as amended and modified hereby and as the same may be further amended, modified and restated from time to time hereafter, the "Credit Agreement"; terms used but not otherwise defined herein shall have the meanings assigned in the Credit Agreement), by and among IMC-AGRICO COMPANY, a Delaware general partnership (the "Borrower"), the Banks identified therein, and NATIONSBANK, N.A. (CAROLINAS) (successor in interest to NationsBank of North Carolina, N.A.), as Agent (the "Agent"). W I T N E S S E T H: WHEREAS, the Banks have, pursuant to the terms of the Credit Agreement, made available to the Borrower a $75,000,000 credit facility; WHEREAS, the Borrower has requested a modification to the negative covenant relating to Indebtedness contained therein; and WHEREAS, the Required Banks have agreed to the requested changes on the terms and conditions hereinafter set forth; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 6.01 of the Credit Agreement entitled "Indebtedness" is amended to include a new subsection "(k)" to read as follows: "(k) For the period from August 1, 1995 to June 30, 1996, additional Indebtedness for borrowed money in an aggregate amount not to exceed $50,000,000." 2. In connection with this Third Amendment, the Borrower hereby represents and warrants that as of the date hereof (a) the representations and warranties set forth in Section 4 of the Credit Agreement are true and correct in all material respects (except for those which expressly relate to an earlier date), and (b) no Default or Event of Default presently exists under the Credit Agreement. 3. Except as expressly modified hereby, all of the terms and provisions of the Credit Agreement remain in full force and effect. 4. The Borrower agrees to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this Third Amendment, including the reasonable fees and expenses of the Agent's legal counsel. 5. This Third Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. It shall not be necessary in making proof of this Third Amendment to produce or account for more than one such counterpart. 6. This Third Amendment, as the Credit Agreement, shall be deemed to be a contract under, and shall for all purposes be construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Third Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:____________________________ Title: BANKS: NATIONSBANK, (CAROLINAS) N.A. individually in its capacity as a Bank and in its capacity as Agent By Christopher B. Torie Senior Vice President CITIBANK, N.A. By Title COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By Title By:__________________________________ Title:_______________________________ ARAB BANKING CORPORATION By___________________________________ Title________________________________ EX-10.69 16 FOURTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.69 FOURTH AMENDMENT AND WAIVER AGREEMENT THIS FOURTH AMENDMENT AND WAIVER AGREEMENT dated as of May 14, 1996 (the "Fourth Amendment") is to that Credit Agreement dated as of February 9, 1994, as amended by that certain First Amendment to Credit Agreement dated as of June 15, 1994 (the "First Amendment") as further amended by that certain Second Amendment to Credit Agreement dated as of February 24, 1995 (the "Second Amendment") as further amended by that certain Third Amendment to Credit Agreement dated as of August 1, 1995 (the "Third Amendment") (as amended and modified hereby and as the same may be further amended, modified and restated from time to time hereafter, the "Credit Agreement"; terms used but not otherwise defined herein shall have the meanings assigned in the Credit Agreement), by and among IMC-AGRICO COMPANY, a Delaware general partnership (the "Borrower"), the Banks identified therein, and NATIONSBANK, N.A. (successor in interest to NationsBank, N.A. (Carolinas) and NationsBank of North Carolina, N.A.), as Agent (the "Agent"). W I T N E S S E T H: WHEREAS, the Banks have, pursuant to the terms of the Credit Agreement, made available to the Borrower a $75,000,000 credit facility; WHEREAS, (i) the Borrower has informed the Agent that an Event of Default may exist under the terms of the Credit Agreement due to incorrect calculations with respect to the ownership of the Borrower in connection with the Change of Control requirements set forth in section 7.01(h) of the Credit Agreement and (ii) the Borrower has requested certain other modifications to various provisions contained therein; and WHEREAS, the Required Banks have agreed and waive such Event of Default and to approve the requested changes on the terms and conditions hereinafter set forth; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. The definition of "Change of Control" in Section 1.01 of the Credit Agreement is hereby amended and modified to read as follows: "Change of Control" means (i) IMC Global Inc., a Delaware corporation ("IMC Global"), and Freeport-McMoRan Resource Partners, Limited Partnership, a Delaware limited partnership, collectively, shall at any time fail to own, directly or indirectly, (A) at least 85% of the capital interests in the Borrower, or (B) at least 85% of the capital stock or capital interests in the corporate managing partner of the Borrower, (ii) IMC Global Inc., individually, shall at any time fail to (A) own, directly or indirectly, at least 50% of the capital interests in the Borrower, (B) own, directly or indirectly, at least 50% of the capital stock or capital interests in the corporate managing partner of the Borrower, (C) appoint and control, directly or indirectly, at least 50% of the members of the Board of Directors (or other governing body) of the Borrower, or (iii) Freeport-McMoRan, Inc., shall at any time fail to own, directly or indirectly, in excess of 50% of the capital interests in Freeport-McMoRan Resource Partners, Limited Partnership. 2. Subsection (k) of Section 6.01 of the Credit Agreement is hereby amended and modified to read as follows: "(k) additional Indebtedness for borrowed money in an aggregate amount not to exceed $60,000,000." 3. Subsections (i) and (ii) of Section 6.07 of the Credit Agreement is hereby amended and modified to read as follows: "(i) after the issuance thereof, amend or modify (or permit the amendment or modification of, if reasonably adverse to the interests of the Banks, any of the terms of any subordinated Indebtedness; (ii) except with respect to Indebtedness permitted pursuant to Section 6.01(k), make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or redemption or acquisition for value of (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due) or exchange of any other subordinated Indebtedness for borrowed money or" 4. The Banks hereby confirm and agree to a waiver of any Default or Event of Default which existed or may have existed prior to the date of this Fourth Amendment on account of a violation of the Change of Control requirement contained in Section 7.01(h) of the Credit Agreement. The Borrower shall, however, hereafter keep and maintain such requirement in accordance with the terms of Section 7.01(h) of the Credit Agreement, as amended hereby. 5. In connection with this Fourth Amendment, the Borrower hereby represents and warrants that as of the date hereof (before (except for Section 7.01(h) of the Credit Agreement to the extent described in the first sentence of Section 4 of this Fourth Amendment) and after giving effect to this Amendment) (a) the representations and warranties set forth in Section 4 of the Credit Agreement are true and correct in all material respects (except for those which expressly relate to an earlier date), and (b) no Default or Event of Default presently exists under the Credit Agreement. 6. Except as expressly modified hereby, all of the terms and provisions of the Credit Agreement remain in full force and effect. 7. The Borrower agrees to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this Fourth Amendment, including the reasonable fees and expenses of the Agent's legal counsel. 8. This Fourth Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. It shall not be necessary in making proof of this Fourth Amendment to produce or account for more than one such counterpart. 9. This Fourth Amendment, as the Credit Agreement, shall be deemed to be a contract under, and shall for all purposes be construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Fourth Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, INC., a Delaware corporation, as Managing Partner By:___________________ Title:________________ BANKS: NATIONSBANK, N.A. individually in its capacity as a Bank and in its capacity as Agent By:_______________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:_______________________ Title:____________________ COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK, B.A. By:___________________ Title:________________ By:___________________ Title:________________ ARAB BANKING CORPORATION By:___________________ Title:________________ EX-10.70 17 FIFTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.70 FIFTH AMENDMENT TO CREDIT AGREEMENT THIS FIFTH AMENDMENT TO CREDIT AGREEMENT dated as of February 4, 1997 (the "Fifth Amendment") is to that Credit Agreement dated as of February 9, 1994, as amended by that certain First Amendment to Credit Agreement dated as of June 15, 1994 (the "First Amendment"), as further amended by that certain Second Amendment to Credit Agreement dated as of February 24, 1995 (the "Second Amendment"), as further amended by that certain Third Amendment to Credit Agreement dated as of August 1, 1995 (the "Third Amendment"), and as further amended by that certain Fourth Amendment to Credit Agreement dated as of May 14, 1996 (the "Fourth Amendment") (as amended and modified hereby and as the same may be further amended, modified and restated from time to time hereafter, the "Credit Agreement"), by and among IMC-AGRICO COMPANY, a Delaware general partnership (the "Borrower"), the Banks identified therein, and NATIONSBANK, N.A. (successor in interest to NationsBank, N.A. (Carolinas) and NationsBank of North Carolina, N.A.), as Agent (the "Agent"). Terms used but not otherwise defined herein shall have the meanings assigned in the Credit Agreement. W I T N E S S E T H: WHEREAS, the Banks have, pursuant to the terms of the Credit Agreement, made available to the Borrower a $75,000,000 credit facility (the "Facility"); WHEREAS, the Banks and the Borrower have agreed, pursuant to a letter agreement dated October 30, 1996, to a permanent reduction in the maximum amount available under the Facility from $75,000,000 to $45,000,000, effective as of November 4, 1996; WHEREAS, the Borrower has requested (i) that the Termination Date of the Facility be extended for a period of one year, (ii) that the Banks agree to an adjustment of the interest rate of the Revolving Loans and (iii) that the Banks agree to an adjustment of the Commitment Fee; WHEREAS, the Banks have agreed to approve the requested changes on the terms and conditions hereinafter set forth; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The definition of "Applicable Margin" in Section 1.01 of the Credit Agreement is hereby amended and modified to read as follows: "Applicable Margin" means (i) in the case of Base Rate Loans, 0%, and (ii) in the case of Eurodollar Loans, .425%. 2. Section 2.01 of the Credit Agreement is hereby amended by substituting the first sentence thereof with the following: "Revolving Loan Commitment. Subject to and upon the terms and conditions and relying upon the representations and warranties herein set forth, each Bank severally agrees, from time to time from the Closing Date until February 9, 1998 (such date, as it may be extended, from time to time, in the sole discretion of the Banks as hereinafter provided, is hereinafter referred to as the "Termination Date") to make revolving credit loans (each a "Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower for the purposes hereinafter set forth; provided, however, that (i) with regard to the Banks collectively, the principal amount of Revolving Loans outstanding shall not at any time exceed FORTY-FIVE MILLION DOLLARS ($45,000,000) in the aggregate (as such aggregate maximum amount may be reduced from time to time as hereinafter provided, the "Revolving Committed Amount"), and (ii) with regard to each Bank individually, each such Bank's pro rata share of outstanding principal amount of Revolving Loans and LOC Obligations shall not at any time exceed such Bank's Revolving Committed Amount; provided, further, that notwithstanding anything herein to the contrary, the sum of the principal amount of Revolving Loans plus LOC Obligations shall not at any time exceed the aggregate Revolving Committed Amount; and provided, further, still, that notwithstanding anything to the contrary contained herein, for a period of 30 consecutive days during each calendar year, the Borrower will pay the Revolving Loans down to, and maintain for such period, a zero outstanding balance." 3. Subsection (a) of Section 2.10 of the Credit Agreement is hereby amended and modified to read as follows: "(a) Commitment Fee. In consideration for the Commitments by the Banks hereunder, the Borrower agrees to pay to the Agent quarterly in arrears on the 15th day following the last day of each of the Borrower's fiscal quarters for the ratable benefit of the Banks a commitment fee (the "Commitment Fee") of one-eighth of one percent (1/8%) per annum on the average daily unused amount of the Revolving Committed Amount for such prior fiscal quarter." 4. In connection with this Fifth Amendment, the Borrower hereby represents and warrants that as of the date hereof (before and after giving effect to this Amendment) (a) the representations and warranties set forth in Section 4 of the Credit Agreement are true and correct in all material respects (except for those which expressly relate to an earlier date), and (b) no Default or Event of Default presently exists under the Credit Agreement. 5. Except as expressly modified hereby, all of the terms and provisions of the Credit Agreement remain in full force and effect. 6. The Borrower agrees to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this Fifth Amendment, including the reasonable fees and expenses of the Agent's legal counsel. 7. This Fifth Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. It shall not be necessary in making proof of this Fifth Amendment to produce or account for more than one such counterpart. 8. This Fifth Amendment, as the Credit Agreement, shall be deemed to be a contract under, and shall for all purposes be construed in accordance with, the laws of the State of New York. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Fifth Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name:________________________________ Title:_______________________________ BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name:________________________________ Title:_______________________________ COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name:________________________________ Title:_______________________________ By:__________________________________ Name:________________________________ Title:_______________________________ ARAB BANKING CORPORATION By:__________________________________ Name:________________________________ Title:_________________________________ IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Fifth Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name:________________________________ Title:_______________________________ BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Mary W. Corcoran Title: Vice President COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name:________________________________ Title:_______________________________ By:__________________________________ Name:________________________________ Title:_______________________________ ARAB BANKING CORPORATION By:__________________________________ Name:________________________________ Title:_________________________________ IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Fifth Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name:________________________________ Title:_______________________________ BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name:________________________________ Title:_______________________________ COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By:__________________________________ Name:________________________________ Title:_______________________________ By:__________________________________ Name: Dana W. Hemenway Title: Vice President ARAB BANKING CORPORATION By:__________________________________ Name:________________________________ Title:_______________________________ IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Fifth Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name:________________________________ Title:_______________________________ BANKS: NATIONSBANK, N.A. individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name:________________________________ Title:_______________________________ COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name:________________________________ Title:_______________________________ By:__________________________________ Name:________________________________ Title:_______________________________ ARAB BANKING CORPORATION By:__________________________________ Name: Grant E. McDonald Title: Vice President EX-10.71 18 SIXTH AMENDMENT, CONSENT AND WAIVER EXHIBIT 10.71 SIXTH AMENDMENT, CONSENT AND WAIVER THIS SIXTH AMENDMENT, CONSENT AND WAIVER dated as of May, 1997 (the "Amendment") relating to the Credit Agreement referenced below, by and among IMC-AGRICO COMPANY, a Delaware general partnership, the Banks identified therein and NATIONSBANK, N.A. (formerly known as NationsBank of North Carolina, N.A.), as Agent. Terms used but not otherwise defined shall have the meanings provided in the Credit Agreement. W I T N E S S E T H WHEREAS, a $45 million credit facility has been extended to IMC- Agrico Company pursuant to the terms of that Credit Agreement dated as of February 9, 1994, as amended by those First through Fifth Amendments dated as of June 4, 1994, February 24, 1995, August 5, 1995, May 14, 1996 and February 4, 1997, respectively, (as amended and modified, the "Credit Agreement") among IMC-Agrico Company, the Banks identified therein and NationsBank of North Carolina, N.A. (now known as NationsBank, N.A.), as Agent; WHEREAS, the Borrower has requested modification of the way in which the Fixed Charge Coverage Ratio under Section 5.11(b) of the Credit Agreement is calculated, and a waiver in connection therewith; WHEREAS, such modification and waiver requires the consent of the Required Banks; WHEREAS, the Required Banks have consented to the requested modifications and waiver on the terms and conditions set forth herein; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 5.11(b) of the Credit Agreement is amended to read as follows: (b) Fixed Charge Coverage Ratio. The Borrower will keep and maintain as of each Determination Date, for a period of four consecutive fiscal quarters ending as of such Determination Date, a ratio of (a) the sum of (i) EBITDA during such period minus (ii) Capital Expenditures made during such period, to (b) the sum of (i) cash interest payable on, and amortization of debt discount in respect of, all Indebtedness during such period plus (ii) regularly scheduled principal amounts of all Indebtedness (including current obligations owing under Capitalized Leases, but for purposes hereof exclusive of (A) the aggregate outstanding principal amount of current obligations owing by the Borrower through December 31, 1997 under each of (1) the Credit Agreement dated as of February 9, 1994, as amended, among the Borrower, the Banks identified therein and NationsBank of North Carolina, N.A. (now known as NationsBank, N.A.), as Agent, (2) the Amended and Restated Credit Agreement, dated as of October 23, 1996, as amended, between the Borrower and NationsBank, N.A., as Lender, and (3) the Revolving Loan Agreement, dated as of May 10, 1996, as amended, between the Borrower and Bank of America Illinois, and (B) the attributed principal amount relating to any accounts receivables securitization financing or sale transaction) payable during the period of the next four consecutive fiscal quarters beginning on the day after such Determination Date, of not less than 5.0 to 1.0. 2. The Required Banks hereby waive any Default or Event of Default which existed or may have existed prior to the effective date of this Amendment solely on account of calculation of the Fixed Charge Coverage Ratio under Section 5.11(b) of the Credit Agreement prior to its amendment hereunder. 3. The Borrower hereby represents and warrants in connection herewith that as of the date hereof (after giving effect hereto) (i) the representations and warranties set forth in Section 4 of the Credit Agreement are true and correct in all material respects (except those which expressly relate to an earlier date), and (ii) no Default or Event of Default presently exists under the Credit Agreement. 4. Except as expressly modified hereby, all of the terms and provisions of the Credit Agreement remain in full force and effect. 5. The Borrower agrees to pay all reasonable costs and expenses in connection with the preparation, execution and delivery of this Amendment, including the reasonable fees and expenses of the Agent's legal counsel. 6. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original. It shall not be necessary in making proof of this Amendment to produce or account for more than one such counterpart. 7. This Amendment, as the Credit Agreement, shall be deemed to be a contract under, and shall for all purposes be construed in accordance with, the laws of the State of New York. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name: Title: BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name: Title: By:__________________________________ Name: Title: ARAB BANKING CORPORATION By:__________________________________ Name: Title: IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name: Title: BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name: Title: By:__________________________________ Name: Title: ARAB BANKING CORPORATION By:__________________________________ Name: Title: IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name: Title: BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Mary W. Corcoran Title: Vice President COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name: Title: By:__________________________________ Name: Title: ARAB BANKING CORPORATION By:__________________________________ Name: Title: IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name: Title: BANKS: NATIONSBANK, N.A., individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By:__________________________________ Name: W. Jeffrey Vollack Title: Vice President, Manager By:__________________________________ Name: Dana W. Hemenway Title: Vice President ARAB BANKING CORPORATION By:__________________________________ Name: Title: IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written. BORROWER: IMC-AGRICO COMPANY, a Delaware general partnership by its Managing Partner By: IMC-AGRICO MP, Inc., a Delaware corporation, as Managing Partner By:__________________________________ Name: Title: BANKS: NATIONSBANK, N.A. individually in its capacity as a Bank and in its capacity as Agent By:__________________________________ Wallace Harris, Jr. Vice President CITIBANK, N.A. By:__________________________________ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK, B.A. By:__________________________________ Name: Title: By:__________________________________ Name: Title: ARAB BANKING CORPORATION By:__________________________________ Name: Grant E. McDonald Title: Vice President EX-10.72 19 TRANSFER AND ADMINISTRATION AGREEMENT EXHIBIT 10.72 _______________________________________________________________ TRANSFER AND ADMINISTRATION AGREEMENT between ENTERPRISE FUNDING CORPORATION, as Company and IMC-AGRICO RECEIVABLES COMPANY L.L.C. as Transferor and IMC-AGRICO COMPANY individually and as Collection Agent Dated as of June 27, 1997 _______________________________________________________________ TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.1. Certain Defined Terms 1 SECTION 1.2. Other Terms 25 SECTION 1.3. Computation of Time Periods 25 ARTICLE II PURCHASES AND SETTLEMENTS SECTION 2.1. Facility 26 SECTION 2.2. Transfers; Company Certificate; Eligible Receivables 26 SECTION 2.3. Selection of Tranche Periods and Tranche Rates 29 SECTION 2.4. Discount, Fees and Other Costs and Expenses 30 SECTION 2.5. Non-Liquidation Settlement and Reinvestment Procedures 30 SECTION 2.6. Liquidation Settlement Procedures 31 SECTION 2.7. Fees 32 SECTION 2.8. Protection of Ownership Interest of the Company 32 SECTION 2.9. Deemed Collections; Application of Payments 34 SECTION 2.10. Payments and Computations, Etc. 35 SECTION 2.11. Reports. 35 SECTION 2.12. Collection Account 36 SECTION 2.13. Net Investment Amount. 36 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1. Representations and Warranties of the Transferor 38 SECTION 3.2. Representations and Warranties of the Collection Agent 42 SECTION 3.3. Reaffirmation of Representations and Warranties by the Transferor and Collection Agent 44 ARTICLE IV CONDITIONS PRECEDENT SECTION 4.1. Conditions to Closing. 45 ARTICLE V COVENANTS SECTION 5.1 Affirmative Covenants of Transferor 48 SECTION 5.2. Negative Covenants of Transferor 54 SECTION 5.3. Minimum Net Worth of the Transferor 56 SECTION 5.4. Covenants of the Collection Agent 56 SECTION 5.5. Covenants of the Seller 58 ARTICLE VI ADMINISTRATION AND COLLECTIONS SECTION 6.1. Appointment of Collection Agent 60 SECTION 6.2. Duties of Collection Agent 60 SECTION 6.3. Rights After Designation of New Collection Agent 63 SECTION 6.4. Responsibilities of the Transferor and the Seller 63 ARTICLE VII TERMINATION EVENTS SECTION 7.1. Termination Events 65 SECTION 7.2. Termination 66 ARTICLE VIII INDEMNIFICATION; EXPENSES; RELATED MATTERS SECTION 8.1. Indemnities by the Transferor 68 SECTION 8.2. Indemnity for Taxes, Reserves and Expenses 70 SECTION 8.3. Other Costs, Expenses and Related Matters 73 SECTION 8.4. Reconveyance Under Certain Circumstances 74 ARTICLE IX MISCELLANEOUS SECTION 9.1. Term of Agreement 75 SECTION 9.2. Waivers; Amendments 75 SECTION 9.3. Notices 75 SECTION 9.4. Governing Law; Submission to Jurisdiction; Integration 77 SECTION 9.5. Severability; Counterparts 78 SECTION 9.6. Successors and Assigns 78 SECTION 9.7. Waiver of Confidentiality 78 SECTION 9.8. Confidentiality Agreement 79 SECTION 9.9. No Bankruptcy Petition Against the Company 80 SECTION 9.10. No Recourse Against Stockholders, Officers or Directors 80 SECTION 9.11. Characterization of the Transactions Contemplated by the Agreement 80 EXHIBITS EXHIBIT A Form of Contract EXHIBIT B Credit and Collection Policies and Practices EXHIBIT C List of Lock-Box Banks EXHIBIT D Form of Lock-Box Agreement EXHIBIT E Form of Investor Report EXHIBIT F Form of Transfer Certificate EXHIBIT G Certain Definitions EXHIBIT H-1 List of Actions and Suits of Transferor EXHIBIT H-2 List of Action and Suits of Seller EXHIBIT I [Reserved] EXHIBIT J [Reserved] EXHIBIT K Form of Opinion of Counsel for the Seller, Collection Agent and Transferor EXHIBIT L-1 Form of Responsible Officer's Certificate of Transferor EXHIBIT L-2 Form of Responsible Officer's Certificate of Seller EXHIBIT M Form of Company Certificate TRANSFER AND ADMINISTRATION AGREEMENT TRANSFER AND ADMINISTRATION AGREEMENT (this "Agreement"), dated as of June 27, 1997, among IMC-Agrico Receivables Company L.L.C., a Delaware limited liability company as transferor (the "Transferor"), IMC-AGRICO COMPANY, a general partnership formed under the laws of the State of Delaware, individually, as Seller (in such capacity the "Seller") and as collection agent (in such capacity, the "Collection Agent"), and ENTERPRISE FUNDING CORPORATION, a Delaware corporation (the "Company"). PRELIMINARY STATEMENTS WHEREAS, the Transferor may desire to convey, transfer and assign, from time to time, undivided percentage interests in certain accounts receivable, and the Company may desire to accept such conveyance, transfer and assignment of such undivided percentage interests, subject to the terms and conditions of this Agreement. NOW, THEREFORE, the parties hereby agree as follows: DEFINITIONS SECTION 1.1. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Adverse Claim" means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person's assets or properties in favor of any other Person. "Administrative Agent" means NationsBank, N.A., as administrative agent. "Affiliate" means, with respect to any Person, any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of voting stock, by contract or otherwise. "Affiliated Obligor" means any Obligor which is an Affiliate of another Obligor. "Aggregate Unpaids" means, at any time, an amount equal to the sum of (i) the aggregate accrued and unpaid Discount with respect to all Tranche Periods at such time, (ii) the Net Investment at such time, and (iii) all other amounts owed (whether due or accrued) hereunder by Transferor to the Company at such time. "Amendment Fee" means the fee payable by the Transferor to the Administrative Agent pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee Letter. "Average Collection Period" means at any time a period of days (rounded up to the next whole day) equal to the product of (i) a fraction the numerator of which shall be the amount set forth in the most recent Investor Report as the "Beginning Balance" of the Receivables and the denominator of which shall be the Collections as set forth in the most recent Investor Report and (ii) thirty (30). "Base Rate" or "BR" means, a rate per annum equal to the greater of (i) the prime rate of interest announced by the Liquidity Provider from time to time, changing when and as said prime rate changes (such rate not necessarily being the lowest or best rate charged by the Liquidity Provider) and (ii) the rate equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Liquidity Provider from three Federal funds brokers of recognized standing selected by it plus 2%. "Business Day" means any day excluding Saturday, Sunday and any day on which banks in New York, New York, Charlotte, North Carolina, Dallas, Texas or Chicago, Illinois are authorized or required by law to close, and, when used with respect to the determination of any Eurodollar Rate or any notice with respect thereto, any such day which is also a day for trading by and between banks in United States dollar deposits in the London interbank market. "BR Tranche" means a Tranche as to which Discount is calculated at the Base Rate. "BR Tranche Period" means, with respect to a BR Tranche, prior to the Termination Date, a period of up to 30 days requested by the Transferor and agreed to by the Company or the Liquidity Provider , as the case may be, commencing on a Business Day requested by the Transferor and agreed to by the Company or the Liquidity Provider , as the case may be, and after the Termination Date, a period of one day. If such BR Tranche Period would end on a day which is not a Business Day, such BR Tranche Period shall end on the next succeeding Business Day. "Capitalized Lease" of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with generally accepted accounting principles. "CD Rate" shall mean, with respect to any CD Tranche Period, a rate which is 0.375% in excess of a rate per annum equal to the sum (rounded upward to the nearest 1/100 of 1%) of (A) the rate obtained by dividing (x) the Certificate of Deposit Rate for such CD Tranche Period by (y) a percentage equal to 100% minus the stated maximum rate for all reserve requirements as specified in Regulation D (including without limitation any marginal, emergency, supplemental, special or other reserves) that would be applicable during such Tranche Period to a negotiable certificate of deposit in excess of $100,000, with a maturity approximately equal to such Tranche Period, of any member bank of the Federal Reserve System plus (B) the then daily net annual assessment rate (rounded upward, if necessary, to the nearest 1/100 of 1%) as estimated by the Liquidity Provider for determining the current annual assessment payable by the Liquidity Provider to the Federal Deposit Insurance Corporation for insuring such certificates of deposit. "CD Tranche" means a Tranche as to which Discount is calculated at the CD Rate. "CD Tranche Period" means, with respect to a CD Tranche, prior to the Termination Date, a period of up to one month requested by the Transferor and agreed to by the Company or the Liquidity Provider, as the case may be, commencing on a Business Day requested by the Transferor and agreed to by the Company or the Liquidity Provider, as the case may be, and after the Termination Date, a period of one day. If such CD Tranche Period would end on a day which is not a Business Day, such CD Tranche Period shall end on the next succeeding Business Day. "Certificate of Deposit Rate" means, with respect to any CD Tranche Period, the average of the bid rates determined by the Liquidity Provider to be bid rates per annum, at approximately 10:00 a.m. (New York City time) on the Business Day before the first day of the CD Tranche Period for which such CD Rate is to be applicable, of two or more New York certificate of deposit dealers of recognized standing selected by the Liquidity Provider for the purchase in New York from the Liquidity Provider at face value of certificates of deposit of the Liquidity Provider in an aggregate amount approximately comparable to the amount of the CD Tranche to which such CD Rate is to be applicable and with a maturity approximately equal to the applicable CD Tranche Period. "Closing Date" means June 30, 1997. "Collateral Agent" means NationsBank, N.A., as collateral agent for any Liquidity Provider, any Credit Support Provider, the holders of Commercial Paper and certain other parties. "Collections" means, with respect to any Receivable, all cash collections and other cash proceeds of such Receivable, including, without limitation, all Finance Charges, if any, and cash proceeds of Related Security with respect to such Receivable and any Deemed Collections. "Collection Account" means the account, established by the Collateral Agent, for the benefit of the Company, pursuant to Section 2.12. "Collection Agent" means at any time the Person then authorized pursuant to Section 6.1 to service, administer and collect Receivables. "Collection Delay" means 30 days, or upon written notice to the Collection Agent, such higher number of days as the Administrative Agent may estimate to be necessary for the collection of a Receivable. "Commercial Paper" means the promissory notes of the Company issued by the Company in the commercial paper market. "Company Certificate" means the certificate issued to the Company pursuant to Section 2.2 hereof. "Concentration Factor" means for any Designated Obligor at any time (a) (i) with respect to any Designated Obligor and its affili ates whose long term unsecured debt obligations are rated at least "A1" by Moody's and at least "A+" by Standard & Poor's and with respect to which rating neither Moody's nor Standard & Poor's shall have made a public announcement anticipating a downgrading of such Designated Obligor's long term unsecured debt obligations to a rating less than the aforementioned ratings ("A1/A+ Rated Obligors") 5% of the Outstanding Balance of all Eligible Receivables at such time; (ii) with respect to Phosphate Chemicals Export Association, Inc. (a "Special Obligor"), 50% of the Outstanding Balance of all Eligible Receivables at such time, provided that such amount shall not exceed $32,500,000, and the Company shall have full recourse to the Transferor for all Receivables payable by Phosphate Chemicals Export Association, Inc.; and (iii) with respect to any other Designated Obligor, 3% of the Outstanding Balance of all Eligible Receivables at such time, or (b) such other amount determined by the Company in the reasonable exercise of its good faith judgment and disclosed in a written notice delivered to the Transferor. "Contract" means an agreement or invoice in substantially the form of one of the forms set forth in Exhibit A or otherwise approved by the Company, pursuant to or under which an Obligor shall be obligated to pay for merchandise purchased or services rendered. "CP Rate" means, with respect to any CP Tranche Period, the rate equivalent to the rate (or if more than one rate, the weighted average of the rates) at which Commercial Paper having a term equal to such CP Tranche Period may be sold by any placement agent or commercial paper dealer selected by the Company, provided, however, that if the rate (or rates) as agreed between any such agent or dealer and the Company is a discount rate, then the rate (or if more than one rate, the weighted average of the rates) resulting from the Company's converting such discount rate (or rates) to an interest-bearing equiva lent rate per annum. "CP Tranche" means a Tranche as to which Discount is calculated at a CP Rate. "CP Tranche Period" means, with respect to a CP Tranche, a period of days not to exceed 120 days commencing on a Business Day requested by the Transferor and agreed to by the Company pursuant to Section 2.3. If such CP Tranche Period would end on a day which is not a Business Day, such CP Tranche Period shall end on the next succeeding Business Day. "Credit and Collection Policy" shall mean the Transferor's credit and collection policy or policies and practices, relating to Contracts and Receivables existing on the date hereof and referred to in Exhibit B attached hereto, as modified from time to time in compliance with Section 5.2(c). "Credit Support Agreement" means the agreement between the Company and the Credit Support Provider evidencing the obligation of the Credit Support Provider to provide credit support to the Company in connection with the issuance by the Company of Commercial Paper. "Credit Support Provider" means the Person or Persons who will provide credit support to the Company in connection with the issuance by the Company of Commercial Paper. "Dealer Fee" means the fee payable by the Transferor to the Collateral Agent, pursuant to Section 2.4 hereof, the terms of which are set forth in the Fee Letter. "Deemed Collections" means any Collections on any Receivable deemed to have been received pursuant to Section 2.9(a) or (b). "Defaulted Receivable" means a Receivable: (i) as to which any payment, or part thereof, remains unpaid for 91 days or more from the original due date for such Receivable; (ii) as to which an Event of Bankruptcy has occurred with respect to the Obligor thereof; (iii) which has been identified by the Seller, the Transferor or the Collection Agent as uncollectible; or (iv) which, consistent with the Credit and Collection Policy, should be written off as uncollectible. "Delinquency Ratio" means, the ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate Outstanding Balance of all Delinquent Receivables as of such date by (ii) the aggregate Outstanding Balance of all Receivables as of such date less Defaulted Receivables as of such date. "Delinquent Receivable" means a Receivable: (i) as to which any payment, or part thereof, remains unpaid for more than 30 days from the original due date for such Receivable and (ii) which is not a Defaulted Receivable. "Designated Obligor" means, at any time, each Obligor; provided, however, that any Obligor shall cease to be a Designated Obligor upon notice to the Transferor from the Company, delivered at any time. "Dilution Ratio" means the ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate amount of credits, rebates, discounts, disputes, warranty claims, repossessed or returned goods, charge back allowances and other dilutive factors, and any other billing or other adjustment by the Transferor or the Collection Agent, provided to Obligors in respect of Receivables during such calendar month by (ii) the aggregate Outstand ing Balance of all Receivables which arose during the immediately preceding calendar month. "Discount" means, with respect to any Tranche Period: (TR x TNI x AD) 360 Where: TR = the Tranche Rate applicable to such Tranche Period. TNI = the portion of the Net Investment allocated to such Tranche Period. AD = the actual number of days during such Tranche Period. provided, however, that no provision of this Agreement shall require the payment or permit the collection of Discount in excess of the maximum amount permitted by applicable law; and provided, further, that Discount shall not be considered paid by any distribution if at any time such distribution is rescinded or must be returned for any reason. "Discount Reserve" means, at any time, an amount equal to: TD + LY Where: TD = the sum of the unpaid Discount for all Tranche Periods. LY = the Liquidation Yield "Early Collection Fee" means, for any Tranche Period (such Tranche Period to be determined without regard to the last sentence in Section 2.3(a) hereof) during which the portion of the Net Investment that was allocated to such Tranche Period is reduced for any reason whatsoever, the excess, if any, of (i) the additional Discount that would have accrued during such Tranche Period if such reductions had not occurred, minus (ii) the income, if any, received by the Company from investing the proceeds of such reductions. "Eligible Investments" means any of the following (a) negotia ble instruments or securities represented by instruments in bearer or registered or in book-entry form which evidence (i) obligations fully guaranteed by the United States of America; (ii) time deposits in, or bankers acceptances issued by, any depositary institution or trust company incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by Federal or state banking or depositary institution authorities; provided, however, that at the time of investment or contractual commitment to invest therein, the certificates of deposit or short-term deposits, if any, or long-term unsecured debt obligations (other than such obligation whose rating is based on collateral or on the credit of a Person other than such institution or trust company) of such depositary institution or trust company shall have a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, in the case of the certificates of deposit or short-term deposits, or a rating not lower than one of the two highest investment categories granted by Moody's and by S&P; (iii) certificates of deposit having, at the time of investment or contractual commitment to invest therein, a rating from Moody's and S&P of at least "P-1" and "A-1", respectively; (iv) investments in money market funds rated in the highest investment category or otherwise approved in writing by the applicable rating agencies, (b) demand deposits in any depositary institution or trust company referred to in (a)(ii) above, (c) commercial paper (having original or remaining maturities of no more than 30 days) having, at the time of investment or contractual commitment to invest therein, a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, (d) Eurodollar time deposits having a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, and (e) repurchase agreements involving any of the Eligible Investments described in clauses (a)(i), (a)(iii) and (d) hereof so long as the other party to the repurchase agreement has at the time of investment therein, a rating from Moody's and S&P of at least "P-1" and "A-1", respectively. "Eligible Receivable" means, at any time, any Receivable: (i) which (a) has been originated by the Seller, (b) which has been sold or otherwise conveyed by the Seller to the Transferor pursuant to (and in accordance with) the Receivables Purchase Agreement and (c) to which the Transferor has good title thereto, free and clear of all Adverse Claims; (ii) the Obligor of which is a United States resident, is a Designated Obligor at the time of the initial creation of an interest therein hereunder, is not an Affiliate of any of the parties hereto, and is not a government or a governmental subdivision or agency; (iii) which is not a Defaulted Receivable at the time of the initial creation of an interest of the Company therein; (iv) which is not a Delinquent Receivable at the time of the initial creation of an interest of the Company therein; (v) which is required to be paid in full within not more than 30 days of the original billing date therefor; provided that not more than 10.0% of the Receivables (determined by reference to the Outstanding Balance of such Receivables and the aggregate Outstanding Balance of all Receivables) may be required to be paid in full greater than 30 days but within 90 days of the original billing date therefor; (vi) which is an "eligible asset" as defined in Rule 3a-7 under the Investment Company Act of 1940, as amended; (vii) a purchase of which with the proceeds of Commercial Paper would constitute a "current transaction" within the meaning of Section 3(a)(3) of the Securities Act of 1933, as amended; (viii) which is an "account" or "chattel paper" within the meaning of Article 9 of the UCC of all applicable jurisdictions; (ix) which is denominated and payable only in United States dollars in the United States; (x) which, arises under a Contract that together with the Receivable related thereto, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms and is not subject to any offset, counterclaim or other defense at such time; (xi) which, together with the Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation in any material respect; (xii) which (A) satisfies all applicable requirements of the Credit and Collection Policy and (B) arises pursuant to a Contract with respect to which the Seller has performed all obligations required to be performed by it thereunder at the time it is transferred to the Buyer including, but not limited to, the shipment of the product; (xiii) which was generated in the ordinary course of the Seller's business; (xiv) the Obligor of which has been directed to make all payments to a specified account of the Transferor covered by a Lock-Box Agreement; (xv) which (together with the Collections and Related Security related thereto) has been the subject of either a valid transfer and assignment from the Transferor to the Company of all the Transferor's right, title, and interest therein or the grant of a first priority perfected security interest therein (and in the Collections and Related Security related thereto), effective until the termination of this Agreement; and (xvi) the assignment of which by the Seller to the Transferor under the Receivables Purchase Agreement and hereunder by the Transferor to the Company does not violate, conflict or contravene any applicable laws, rules, regulations, orders or writs or any contractual or other restriction, limitation or encumbrance. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. "Estimated Maturity Period" means, at any time, the period, rounded upward to the nearest whole number of days, equal to the weighted average number of days until due of the Receivables as calculated by the Collection Agent in good faith and set forth in the most recent Investor Report, such calculation to be based on the assumptions that (a) each Receivable within a particular aging category, (as set forth in the Investor Report) will be paid on the last day of such aging category and (b) the last day of the last such aging category coincides with the last date on which any Outstanding Balance of any Receivables would be written off as uncollectible or charged against any applicable reserve or similar account in accordance with the objective requirements of the Credit and Collection Policy and the Seller's normal accounting practices applied on a basis consistent with those reflected in the Seller's financial statements, provided, however, that if the Company shall reasonably disagree with any such calculaion, the Company may recalculate the Estimated Maturity Period, and such recalculation, in the absence of manifest error, shall be conclusive. "Eurodollar Rate" means, with respect to any Eurodollar Tranche Period, a rate which is 0.25% in excess of a rate per annum equal to the sum (rounded upwards, if necessary, to the next higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable LIBOR Rate by (ii) a percentage equal to 100% minus the reserve percentage used for determining the maximum reserve requirement as specified in Regulation D (including, without limitation, any marginal, emergency, supplemental, special or other reserves) that is applicable to the Liquidity Provider during such Eurodollar Tranche Period in respect of eurocurrency or eurodollar funding, lending or liabilities (or, if more than one percentage shall be so applicable, the daily average of such percentage for those days in such Eurodollar Tranche Period during which any such percentage shall be applicable) plus (B) the then daily net annual assessment rate (rounded upwards, if neces sary, to the nearest 1/100 of 1%) as estimated by the Liquidity Provider for determining the current annual assessment payable by the Liquidity Provider to the Federal Deposit Insurance Corporation in respect of eurocurrency or eurodollar funding, lending or liabilities. "Eurodollar Tranche" means a Tranche as to which Discount is calculated at the Eurodollar Rate. "Eurodollar Tranche Period" means, with respect to a Eurodollar Tranche, prior to the Termination Date, a period of up to one month requested by the Transferor and agreed to by the Company or the Liquidity Provider, as the case may be, commencing on a Busness Day requested by the Transferor and agreed to by the Company; provided, however, that if such Eurodollar Tranche Period would expire on a day which is not a Business Day, such Eurodollar Tranche Period shall expire on the next succeeding Business Day; provided, further, that if such Eurodollar Tranche Period would expire on (a) a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Eurodollar Tranche Period shall expire on the next preceding Business Day or (b) a Business Day for which there is no numerically corresponding day in the applicable subsequent calendar month, such Eurodollar Tranche Period shall expire on the last Business Day of such month. "Event of Bankruptcy", with respect to any Person, shall mean (i) that such Person shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or compostion of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property provided that in the case of any such proceeding instituted against such Person, either such proceeding shall remain undismissed or unstayed for a period of thirty (30) days or any action sought in such proceeding shall occur or (ii) if such Person is a corporation, such Person or any Subsidiary shall take any corporate action to authorize any of the actions set forth in the preceding clause (i). "Fee Letter" means the letter agreement dated the date hereof between the Transferor and the Company, as amended, modified or supplemented from time to time. "Finance Charges" means, with respect to a Contract, any finance, interest, late or similar charges owing by an Obligor pursuant to such Contract. "Guaranty" means, with respect to any Person, any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any other creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement or take-or-pay contract and shall include, without limitation, the contingent liabilIty of such Person in connection with any application for a letter of credit. "Incremental Transfer" means a Transfer which is made pursuant to Section 2.2(a). "Indebtedness" means, with respect to any Person such Person's (i) obligations for borrowed money, (ii) obligations repre senting the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person's business on terms customary in the trade, (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) Capitalized Lease obligations and (vi) obligations for which such Person is obligated pursuant to a Guaranty. "Indemnified Amounts" has the meaning specified in Section 8.1. "Indemnified Parties" has the meaning specified in Section 8.1. "Investor Report" means a report, in substantially the form of Exhibit E or in such other form as is mutually agreed to by the Transferor and the Company, furnished by the Collection Agent to the Company and the Administrative Agent pursuant to Section 2.11. "Law" shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body. "LIBOR Rate" shall mean, with respect to any Eurodollar Tranche Period, the rate at which deposits in dollars are offered to the Liquidity Provider in the London interbank market at approximately 11:00 a.m. (London time) two Business Days before the first day of such Eurodollar Tranche Period in an amount approximately equal to the Eurodollar Tranche to which the Eurodollar Rate is to apply and for a period of time approximately equal to the applicable Eurodollar Tranche Period. "Liquidation Yield" means, at any time, an amount equal to: (RVF x LBR x NI) x (EM + CD) 360 Where: RVF = the Rate Variance Factor at such time. LBR = the Base Rate at such time which is applicable to the liquidation period of the Net Investment at such time. NI = the Net Investment at such time. EM = the Estimated Maturity Period of the Receivables. CD = the Collection Delay. "Liquidity Provider Agreement" means the agreement between the Company and the Liquidity Provider evidencing the obligation of the Liquidity Provider to provide liquidity support to the Company in connection with the issuance by the Company of Commercial Paper. "Liquidity Provider" means the Person or Persons who will provide liquidity support to the Company in connection with the issuance by the Company of Commercial Paper. "Lock-Box Account" means an account maintained by the Collection Agent at a Lock-Box Bank for the purpose of receiving Collections from Receivables. "Lock-Box Agreement" means an agreement among the Collateral Agent, the Collection Agent and a Lock-Box Bank in substantially the form of Exhibit D hereto. "Lock-Box Bank" means each of the banks set forth in Exhibit C hereto and such banks as may be added thereto or deleted therefrom pursuant to Section 2.8. "Loss Percentage" means on any day the greater of (i) five (5) times the highest Loss-to-Liquidation Ratio as of the last day of the 12 calendar months preceding the then current calendar month and (ii) 10%. "Loss Reserve" means, on any day, an amount equal to: LP x (NI + DR + SFR) Where: LP = the Loss Percentage at the close of business of the Collection Agent on such day. NI = the Net Investment at the close of business of the Collection Agent on such day. DR = the Discount Reserve at the close of business of the Collection Agent on such day. SFR = the Servicing Fee Reserve at the close of business of the Collection Agent on such day. Notwithstanding the foregoing, the Loss Reserve shall at all times be at least equal to $3,000,000. "Loss-to-Liquidation Ratio" means the ratio (expressed as a percentage) computed as of the last day of each calendar month by dividing (i) the aggregate Outstanding Balance of all Receivables which became Defaulted Receivables during such calendar month, by (ii) the aggregate amount of Collections received by the Collection Agent during such calendar month. "Management Committee" means the management committee of the Transferor. "Maximum Net Investment" means $65,000,000. "Maximum Percentage Factor" means 95%. "Moody's" means Moody's Investors Service, Inc. "Net Investment" means the sum of the amounts paid to the Transferor for each Incremental Transfer less the aggregate amount of Collections received and applied by the Company to reduce such Net Investment pursuant to Section 2.6 or Section 2.9; provided that the Net Investment shall be restored in the amount of any Collections so received and applied if at any time the distribution of such Collections is rescinded or must otherwise be returned for any reason; provided further that at no time shall the Net Investment exceed the Maximum Net Investment. "Net Receivables Balance" means at any time the Outstanding Balance of the Eligible Receivables at such time reduced by the sum of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Designated Obligor exceeds the Concentration Factor for such Designated Obligor, plus (ii) the aggregate Outstanding Balance of all Eligible Receivables which are Defaulted Receivables, plus (iii) the aggregate OutStanding Balance of all Eligible Receivables of each Obligor with respect to which 50% or more of such Obligor's Receivables are Delinquent Receivables. "Net Worth" means, with respect to the Transferor and at any time, an amount equal to the aggregate outstanding balance of all Eligible Receivables at such time minus the amount of the Net Investment at such time minus the outstanding principal amount at such time of the subordinated note issued by the Transferor in connection with the Receivables Purchase Agreement entered into with the Seller minus any other liabilities of the Transferor plus all cash of the Transferor. "Obligor" means a Person obligated to make payments for the provision of goods and services pursuant to a Contract. "Official Body" shall mean any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic. "Operating Manager" means IMC-Agrico Company in its capacity as the operating manager of the Transferor. "Other Transferor" means any Person other than the Transferor that has entered into a receivables purchase agreement or transfer and administration agreement with the Company. "Outstanding Balance" of any Receivable at any time means the then outstanding principal amount thereof including any accrued and outstanding Finance Charges related thereto. "Percentage Factor" means the percentage computed at any time of determination as follows: NI + LR + DR + SFR NRB Where: NI = the Net Investment at the time of such computation. LR = the Loss Reserve at the time of such computation. DR = the Discount Reserve at the time of such computation. SFR = the Servicing Fee Reserve at the time of such computation. NRB = the Net Receivables Balance at the time of such computation. Notwithstanding the foregoing computation, the Percentage Factor shall not exceed one hundred percent (100%). The Percentage Factor shall be calculated by the Collection Agent on the day of the initial Incremental Transfer hereunder. Thereafter, until the Termination Date, the Collection Agent shall daily recompute the Percentage Factor and report such recomputations to the Company monthly in the Investor Report or as requested by the Company. The Percentage Factor shall remain constant from the time as of which any such compu tation or recomputation is made until the time as of which the next such recomputation shall be made, notwithstanding any additional Receivables arising, any Incremental Transfer made pursuant to Section 2.2(a) or any reinvestment Transfer made pursuant to Section 2.2(b) and 2.5 during any period between computations of the Percentage Factor. The Percentage Factor, as calculated at the close of business on the Business Day immediately preceding the Termination Date, shall remain constant at all times thereafter until such time as the Company shall have received the Aggregate Unpaids, at which time the Percentage Factor shall be recomputed in accordance with Section 2.6. "Person" means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincoporated organization, enterprise, government or any department or agency of any government. "Potential Termination Event" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Termination Event. "Proceeds" means "proceeds" as defined in Section 9-306(1) of the UCC. "Program Fee" means the fee payable by the Transferor to the Company pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee Letter. "Purchased Interest" means the interest in the Receivables acquired by the Liquidity Provider through purchase pursuant to the terms of the Liquidity Provider Agreement. "Rate Variance Factor" means the number, computed from time to time in good faith by the Company, that reflects the largest potential variance (from minimum to maximum) in selected interest rates over a period of time selected by the Company from time to time, set forth in a written notice by the Company to the Transferor and the Collection Agent. As of the date hereof, the Rate Variance Factor is 1.15% (it being understood that such number is subject to change as set forth above). "Receivable" means the indebtedness owed to the Seller by any Obligor (without giving effect to any purchase under the Receivables Purchase Agreement by the Transferor at any time) under a Contract and sold or otherwise conveyed by the Seller to the Transferor pursuant to the Receivables Purchase Agreement whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale or lease of merchandise or the rendering of services by the Seller and includes the right to payment of any Finance Charges and other obligations of such Obligor with respect thereto. Notwithstanding the foregoing, once a Receivable has been deemed collected pursuant to Section 2.9 hereof, it shall no longer constitute a Receivable hereunder. "Receivables Purchase Agreement" means that certain Receivables Purchase Agreement dated as of June 27, 1997 between the Seller as seller and the Transferor as purchaser, as such agreement may be amended, modified or supplemented and in effect from time to time. "Records" means all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) maintained with respect to Receivables and the related Obligors. "Related Security" means with respect to any Receivable all of the Transferor's right, title and interest in, to and under: (i) all of the Transferor's interest, if any, in the merchandise (including returned or repossessed merchandise), if any, the sale of which by the Seller to the relevant Obligor gave rise to such Receivable; (ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements signed by an Obligor describing any collateral securing such Receivable; (iii) all guarantees, indemnities, warranties, insurance (and proceeds and premium refunds thereof) or other agreements or arrangements of any kind from time to time sup porting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise; (iv) all Records related to such Receivables; (v) all rights and remedies of the Transferor under the Receivables Purchase Agreement, together with all financing statements filed by the Transferor against the Sell er in connection therewith; and (vi) all Proceeds of any of the foregoing. "Section 8.2 Costs" has the meaning specified in Section 8.2(d). "Seller" means IMC-Agrico Company as seller under the Receivables Purchase Agreement and its successors and permitted assigns. "Servicing Fee" shall mean the fee payable by the Company to the Collection Agent, with respect to a Tranche, in an amount equal to 0.75% per annum on the amount of the Net Investment allocated to such Tranche pursuant to Section 2.3. Such fee shall accrue from the date of the initial purchase of an ownership interest in the Receivables to the later of the Termination Date or the date on which the Net Investment is reduced to zero. On or prior to the Termination Date such fee shall be payable only from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.5. After the Termination Date such fee shall be payable only from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.6. "Servicing Fee Reserve" means at any time the sum of (i) the Servicing Fee for all outstanding Tranches and (ii) an amount equal to the product of (A) the Net Investment at such time, and (B) the Servicing Fee percentage and (C) a fraction having as the numerator, the sum of the Estimated Maturity Period and the Collection Delay and as the denominator, 360. "Standard & Poor's" or "S&P" means Standard & Poor's Ratings, a Group division of McGraw-Hill Companies, Inc. "Subsidiary" of a Person means any corporation more than 50% of the outstanding voting securities of which shall at any time be owned or controlled, directly or indirectly, by such Person or by one or more Subsidiaries of such Person or any similar business organization which is so owned or controlled. "Termination Date" means the earliest of (i) that Business Day designated by the Transferor to the Company as the Termination Date at any time following 30 days written notice to the Company, (ii) the date of termination of the commitment of the Liquidity Provider under the Liquidity Provider Agreement, (iii) the date of termination of the commitment of the Credit Support Provider under the Credit Support Agreement, (iv) the day occurring on or after a Termination Event on which the Company notifies the Transferor that the Termination Date has occurred except that in the case of the events specified in Section 7.1(e), (f) and (k) the Termination Date shall occur automatically upon the occurrence of such event without any further notice to Section 7.1, or (v) June 26, 1998, unless extended. "Termination Event" means an event described in Section 7.1. "Tranche" means a portion of the Net Investment allocated to a Tranche Period pursuant to Section 2.3. "Tranche Period" means a CP Tranche Period, a BR Tranche Period, a CD Tranche Period or a Eurodollar Tranche Period. "Tranche Rate" means the CP Rate, the Base Rate, the CD Rate or the Eurodollar Rate. "Transaction Costs" has the meaning specified in Section 8.3(a). "Transaction Documents" means, collectively, this Agreement, the Receivables Purchase Agreement, the Fee Letter, the Lock-Box Agreements, the Company Certificates, the Transfer Certificates and all of the other instruments, documents and other agreements executed and delivered by the Seller or the Transferor in connection with any of the foregoing, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time. "Transfer" means a conveyance, transfer and assignment by the Transferor to the Company of an undivided percentage ownership interest in Receivables hereunder. "Transfer Certificate" has the meaning given to it in Section 2.2(a). "Transfer Date" means, with respect to each Transfer, the Business Day on which such Transfer is made. "Transfer Price" means with respect to any Incremental Transfer, the amount paid to the Transferor by the Company as described in the Transfer Certificate. "Transferor" means IMC-Agrico Receivables Company L.L.C., a Delaware limited liability company, and its successors and permitted assigns. "Transferred Interest" means, at any time of determination, an undivided percentage ownership interest in (i) each and every then outstanding Receivable, (ii) all Related Security with respect to each such Receivable, (iii) all Collections with respect thereto, and (iv) other Proceeds of the foregoing, which undivided ownership interest shall be equal to the Percentage Factor at such time, and only at such time (without regard to prior calculations). The Transferred Interest in each Receivable, together with Related Security and Collections and Proceeds with respect thereto, shall at all times be equal to the Transferred Interest in each other Receivable, together with Related Security and Collections and Proceeds with respect thereto. To the extent that the Transferred Interest shall decrease as a result of a recalculation of the Percentage Factor, the Company shall be considered to have reconveyed to the Transferor an undivided percentage ownership interest in each Receivable, together with Related Security and Collections and Proceeds with respect thereto, in an amount equal to such decrease such that in each case the Transferred Interest in each Receivable shall be equal to the Transferred Interest in each other Receivable. "UCC" means, with respect to any state, the Uniform Commercial Code as from time to time in effect in such state. "Unused Facility Fee" means the fee payable by the Transferor to the Company pursuant to Section 2.7 hereof, the terms of which are set forth in the Fee Letter. SECTION 1.2. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. SECTION 1.3. Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding and the word "within" means "from and excluding a specified date and to and including a later specified date"." ARTICLE II PURCHASES AND SETTLEMENTS SECTION 2.1. Facility. Upon the terms and subject to the conditions herein set forth the Transferor may, at its option, convey, transfer and assign to the Company, and the Company shall accept such conveyance, transfer and assignment from the Transferor, without recourse except as provided herein, undivided percentage ownership interests in the Receivables, together with Related Security and Collections with respect thereto, from time to time. SECTION 2.2. Transfers; Company Certificate; Eligible Receivables. (a) Incremental Transfers. Upon the terms and subject to the conditions herein set forth the Transferor may, at its option, convey, transfer and assign to the Company, and the Company shall accept such conveyance, transfer and assignment from the Transferor, without recourse except as provided herein, undivided percentage ownership interests in the Receivables, together with Related Security and Collections with respect thereto (each, an "Incremental Transfer") from time to time prior to the Termination Date for an aggregate Transfer Price not to exceed the Maximum Net Investment. The Transferor shall by notice given by telefax offer to convey, transfer and assign to the Company undivided percentage ownership interests in the Receivables at least three (3) Business Days prior to the proposed date of transfer. Each such notice shall specify the desired Transfer Price (which shall be at least $1,000,000 or integral multiples of $250,000 (or to the extent that the then unused portion of the Maximum Net Investment is less than $250,000, such lesser amount) in excess thereof) and the desired date of such Incremental Transfer, together with the desired Tranche Period (or range) related thereto as required by Section 2.3. The Company shall accept such offer to convey, transfer and assign undivided percentage ownership interests by notice given to the Transferor by telephone or telefax. Each notice of proposed Transfer shall be irrevocable and binding on the Transferor and the Transferor shall indemnify the Company against any loss or expense incurred by the Company, either directly or through the Liquidity Provider Agreement as a result of any failure by the Transferor to complete such Incremental Transfer including, without limitation, any loss (including loss of anticipated profits) or expense incurred by the Company, either directly or pursuant to the Liquidity Provider Agreement, by reason of the liquidation or reemployment of funds acquired by the Company or the Liquidity Provider (including, without limitation, funds obtained by issuing commercial paper or promissory notes or obtaining deposits or loans from third parties) for the Company to fund such Incremental Transfer. Notwithstanding any other provision hereof, the Company shall have no obligation to accept any Transfer if it is unable to obtain funds therefor in the commercial paper market or under the Liquidity Provider Agreement. On the date of the initial Incremental Transfer, the Company shall deliver written confirmation to the Transferor of the Transfer Price, the Tranche Period(s) and the Tranche Rate(s) relating to such Transfer and the Transferor shall deliver to the Company the Transfer Certificate in the form of Exhibit F hereto (the "Transfer Certificate"). The Company shall indicate the amount of the initial Incremental Transfer together with the date thereof on the grid attached to the Transfer Certificate. On the date of each subsequent Incremental Transfer, the Company shall send written confirmation to the Transferor of the Transfer Price, the Tranche Period(s), the Transfer Date and the Tranche Rate(s) applicable to such Incremental Transfer. The Company shall indicate the amount of the Incremental Transfer together with the date thereof as well as any decrease in the Net Investment on the grid attached to the Transfer Certificate. The Transfer Certificate shall evidence the Incremental Transfers. Following each Incremental Transfer, the Company shall deposit to the Transferor's account at the location indicated in Section 9.3, in immediately available funds, an amount equal to the Transfer Price for such Incremental Transfer. (b) Reinvestment Transfers. On each Business Day occurring after the initial Incremental Transfer hereunder and prior to the Termination Date, the Transferor hereby agrees to convey, transfer and assign to the Company, and in consideration of Transferor's agreement to maintain at all times prior to the Termination Date a Net Receivables Balance in an amount at least sufficient to maintain the Percentage Factor at an amount not greater than the Maximum Percentage Factor, the Company hereby agrees to purchase from the Transferor undivided percentage ownership interests in each and every Receivable, together with Related Security and Collections with respect thereto, to the extent that Collections are available for such Transfer in accordance with Section 2.5, such that after giving effect to such Transfer, (i) the amount of the Company's Net Investment at the close of the Company's business on such Business Day shall be equal to the amount of the Company's Net Investment at the close of the Company's business on the Business Day immediately preceding such Business Day plus the Transfer Price of any Incremental Transfer made on such day, if any, less the aggregate amount of any Collections received and applied by the Company on such day to reduce the Net Investment pursuant to Section 2.6 or Section 2.9 and (ii) the Company's Transferred Interest in each Receivable, together with Related Security and Collections with respect thereto, shall be equal to its Transferred Interest in each other Receivable, together with Related Security and Collections with respect thereto. (c) All Transfers. Each Transfer shall constitute a purchase of undivided percentage ownership interests in each and every Receivable, together with Related Security and Collections with respect thereto, then existing, as well as in each and every Receivable, together with Related Security and Collections with respect thereto, which arises at any time after the date of such Transfer but prior to the date on which the Net Investment shall become zero and all amounts due hereunder from the Transferor shall be paid in full. The Company's aggregate undivided percentage ownership interest in the Receivables, together with Related Security and Collections with respect thereto, shall equal the Percentage Factor in effect from time to time. (d) Company Certificate. The Transferor shall issue to the Company the Company Certificate, in the form of Exhibit M, on or prior to the date hereof. (e) Percentage Factor. The Percentage Factor shall be initially computed as of the opening of business of the Collection Agent on the date of the initial Incremental Transfer hereunder. Thereafter until the Termination Date, the Percentage Factor shall be automatically recomputed as of the close of business of the Collection Agent on each day (other than a day after the Termination Date). The Percentage Factor shall remain constant from the time as of which any such computation or recomputation is made until the time as of which the next such recomputation, if any, shall be made. The Percentage Factor, as computed as of the day immediately preceding the Termination Date, shall remain constant at all times on and after such Termination Date until the date on which the Net Investment shall become zero. SECTION 2.3. Selection of Tranche Periods and Tranche Rates. (a) At all times hereafter, but prior to the occurrence of a Termination Event, the Transferor shall, subject to the Company's approval and the limitations described below, request Tranche Periods and allocate a portion of the Net Investment to each selected Tranche Period, so that the aggregate amounts allocated to outstanding Tranche Periods at all times shall equal the Net Investment. The Transferor shall give the Company irrevocable notice by telephone of the new requested Tranche Period(s) at least three (3) Business Days prior to the expiration of any then existing Tranche Period; provided, however, that the Company may select, in its discretion, any such new Tranche Period if (i) the Transferor fails to provide such notice on a timely basis or (ii) the Company determines, in its reasonable discretion, that the Tranche Period requested by the Transferor is unavailable or for any reason commercially impracticable. The Company confirms that it is its intention to allocate all or substantially all of the Net Investment to one or more CP Tranche Periods; provided that the Company may determine, from time to time, in its reasonable discretion, that funding such Net Investment by means of one or more CP Tranche Periods is impracticable for any reason. If the Liquidity Provider acquires a Purchased Interest with respect to the Receivables pursuant to the terms of the Liquidity Provider Agreement, the Liquidity Provider may exercise the right of selection granted to the Company hereby. The Tranche Rate applicable to any such Purchased Interest shall be selected by the Liquidity Provider and shall be any of the BR Rate, the CD Rate or the Eurodollar Rate (in each case as defined herein). In the case of any Tranche Period outstanding upon the occurrence of a Termination Event, such Tranche Period shall end on the date of such occurrence. (b) At all times on and after the occurrence of a Termination Event, the Company or the Liquidity Provider, as applicable, shall select all Tranche Periods and Tranche Rates applicable thereto. SECTION 2.4. Discount, Fees and Other Costs and Expenses. Notwithstanding the limitation on recourse under Section 2.1, the Transferor shall pay, as and when due in accordance with this Agreement, all fees hereunder, Discount, all amounts payable pursuant to Article VIII hereof, if any, and the Servicing Fee. On the last day of each Tranche Period the Transferor shall pay to the Company an amount equal to the discount accrued on the Company's Commercial Paper notes to the extent such notes were issued in order to fund the Transferred Interest in an amount in excess of the Transfer Price of an Incremental Transfer. The Transferor shall pay to the Company, on each day on which Commercial Paper is issued by the Company, the Dealer Fee. Discount shall accrue with respect to each Tranche on each day occurring during the Tranche Period related thereto. Nothing in this Agreement shall limit in any way the obligations of the Transferor to pay the amounts set forth in this Section 2.4. SECTION 2.5. Non-Liquidation Settlement and Reinvestment Procedures. On each day after the date of any Incremental Transfer but prior to the Termination Date and provided that no Potential Termination Event shall have occurred and be continuing, the Collection Agent shall out of the Percentage Factor of Collections received on or prior to such day and not previously applied or accounted for: (i) set aside and hold in trust for the Company (or deposit into the Collection Account if so required pursuant to Section 2.12) an amount equal to all Discount and the Servicing Fee accrued through such day and not so previously set aside or paid and (ii) apply the balance of such Percentage Factor of Collections remaining after application of Collections as provided in clause (i) of this Section 2.5 to the Transferor, for the benefit of the Company to the purchase of addi tional undivided percentage interests in each Receivable pursuant to Section 2.2(b). On the last day of each Tranche Period, from the amounts set aside as described in clause (i) of the first sentence of this Section 2.5, the Collection Agent shall deposit to the Company's account, an amount equal to the accrued and unpaid Discount for such Tranche Period and shall deposit to its account an amount equal to the accrued and unpaid Servicing Fee for such Tranche Period. As provided in Section 6.2(b), the Collection Agent shall remit to the Transferor, as soon as practicable after receipt, such portion of Collections not allocated to the Company. SECTION 2.6. Liquidation Settlement Procedures. If on the Termination Date, the Percentage Factor is greater than the Maximum Percentage Factor, then the Transferor shall immediately pay to the Company from previously received Collections, an amount equal to the amount such that, when applied in reduction of the Net Investment, will result in a Percentage Factor less than or equal to the Maximum Percentage Factor. Such amount shall be applied by the Company to the reduction of the Net Investment of Tranche Periods selected by the Company. On the Termination Date and on each day thereafter, and on each day on which a Potential Termination Event has occurred and is continuing, the Collection Agent shall set aside and hold in trust for the Company (or deposit into the Collection Account if so required pursuant to Section 2.12) the Percentage Factor of all Collections received on such day. On the Termination Date or the day on which a Potential Termination Event occurs, the Collection Agent shall deposit to the Company's account any remaining amounts set aside pursuant to Section 2.5(i) above. On the last day of each Tranche Period to occur on or after the Termination Date or during the continuance of a Potential Termination Event, the Collection Agent shall deposit to the Company's account, the amounts set aside pursuant to the preceding sentence, together with any remaining amounts set aside pursuant to Section 2.5(i) prior to the Termination Date or the day on which a Potential Termination Event occurs but not to exceed the sum of (i) the accrued Discount for such Tranche Period, (ii) the portion of the Net Investment allocated to such Tranche Period, and (iii) the aggregate of all other amounts then owed (whether due or accrued) hereunder by Transferor to the Company. On such day, the Collection Agent shall deposit to its account, from the amounts set aside pursuant to the preceding sentence which remain after payment in full of the afore mentioned amounts, the accrued Servicing Fee for such Tranche Period. If there shall be insufficient funds on deposit for the Collection Agent to distribute funds in payment in full of the aforementioned amounts, the Collection Agent shall distribute funds first, in payment of the accrued Discount, second, in payment of all fees and expenses payable to the Company hereunder, third, if the Transferor or an Affiliate of the Transferor is not the Collection Agent, to the Collection Agent's account, in payment of the Servicing Fee payable to the Collection Agent, fourth, in reduction of the Net Investment allo cated to such Tranche Period, fifth, in payment of all other amounts payable to the Company and sixth, if the Transferor or an Affiliate of the Transferor is the Collection Agent, to its or such Affiliate's account as Collection Agent, in payment of the Servicing Fee payable to the Transferor as Collection Agent. Following the date on which the Net Investment has been reduced to zero, all accrued Discount and Servicing Fees have been paid in full and all other Aggregate Unpaids have been paid in full, (i) the Collection Agent shall recompute the Percentage Factor, (ii) the Company shall be considered to have reconveyed to the Transferor any interest in the Receivables (including the Transferred Interest), (iii) the Collection Agent shall pay to Transferor any remaining Collections set aside and held by the Collection Agent pursuant to the second sentence of this Section 2.6 and (iv) the Company shall execute and deliver to the Transferor, at the Transferor's expense, such documents or instruments as are necessary to terminate the Company's interest in the Receivables. Any such documents shall be prepared by or on behalf of the Transferor. SECTION 2.7. Fees. Notwithstanding any limitation on recourse contained in this Agreement, the Transferor shall pay the following non-refundable fees: (a) On the last day of each calendar month, to the Company, the Program Fee and the Unused Facility Fee. (b) On the date of execution hereof, to the Administrative Agent, the Amendment Fee. SECTION 2.8 . Protection of Ownership Interest of the Company. (a) The Transferor agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents and take all actions as may be necessary or as the Company may reasonably request in order to perfect or protect the Transferred Interest or as are necessary to enable the Company to exercise or enforce any of its rights hereunder. Without limiting the foregoing, the Transferor will, upon the request of the Company, in order to accurately reflect this purchase and sale transaction, execute and file such financing or continuation statements or amendments thereto or assignments thereof (as permitted pursuant to Section 9.6 hereof) as may be requested by the Company and mark its master data processing records and other documents with a legend describing the purchase by the Company of the Transferred Interest. The Transferor shall, upon request of the Company, obtain such additional search reports as the Company shall request. To the fullest extent permitted by applicable law, the Company shall be permitted to sign and file continuation statements and amendments thereto and assignments thereof without the Transferor's signature. Carbon, photographic or other reproduction of this Agreement or any financing statement shall be sufficient as a financing statement. The Transferor shall neither change its name, identity or corporate structure (within the meaning of Section 9-402(7) of the UCC as in effect in the States of New York and Illinois) nor relocate its chief executive office or any office where Records are kept unless it shall have: (i) given the Company at least thirty (30) days prior notice thereof and (ii) prepared at Transferor's expense and delivered to the Company all financing statements, instruments and other documents necessary to preserve and protect the Transferred Interest or requested by the Company in connection with such change or relocation. Any filings under the UCC or otherwise that are occasioned by such change in name or location shall be made at the expense of Transferor. (b) The Collection Agent shall instruct all Obligors to cause all Collections to be deposited directly with a Lock-Box Bank. Any Lock-Box Account maintained by a Lock-Box Bank pursuant to the related Lock-Box Agreement shall be under the ownership and control of the Collateral Agent. The Collection Agent shall be permitted to give instructions to the Lock-Box Banks for so long as either a Collection Agent default or any other Termination Event has not occurred hereunder. The Collection Agent shall not add any bank as a Lock-Box Bank to those listed on Exhibit C unless such bank has entered into a Lock-Box Agreement. The Collection Agent shall not terminate any bank as a Lock-Box Bank unless the Administrative Agent shall have received fifteen (15) days' prior notice of such termination. If the Transferor or the Collection Agent receives any Collections or the Transferor is deemed to receive any Collections pursuant to Section 2.9, the Transferor or the Collection Agent, as applicable, shall immediately, but in any event within forty-eight (48) hours of receipt, remit such Collections to a Lock-Box Account. SECTION 2.9. Deemed Collections; Application of Payments. (a) If on any day the Outstanding Balance of a Receivable is either (x) reduced as a result of any defective, rejected or returned goods or services, any cash discount, credit, rebate, allowance or other dilution factor, any billing adjustment or other adjustment, or (y) reduced or canceled as a result of a setoff or offset in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), the Transferor shall be deemed to have received on such day a collection of such Receivable in the amount of such reduction or cancellation and the Transferor shall pay to the Collection Agent an amount equal to such reduction or cancellation and such amount shall be applied by the Collection Agent as a Collection in accordance with Section 2.5 or 2.6, as applicable. The Net Investment shall be reduced by the amount of such payment actually received by the Company. (b)If on any day any of the representations or warran ties in Section 3.1(d), (e), (i), (k),(l), (o), (r), (u) or (v) is no longer true with respect to a Receivable, the Transferor shall be deemed to have received on such day a Collection of such Receivable in full and the Transferor shall on such day pay to the Collection Agent an amount equal to the aggregate Percentage Factor of the Outstanding Balance of such Receivable and such amount shall be allocated to the Company and applied by the Collection Agent as a Collection allocable to the Transferred Interest in accordance with Section 2.5 or 2.6, as applicable. The Net Investment shall be reduced by the amount of such payment actually received by the Company. (c)Any payment by an Obligor in respect of any indebtedness owed by it to the Transferor shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Company, be applied as a Collection of any Receivable of such Obligor included in the Transferred Interest (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other indebtedness of such Obligor. (d)If on any day any Receivable owed by Phosphate Chemicals Export Association, Inc. is determined to be either a Delinquent Receivable or a Defaulted Receivable, the Transferor shall within two (2) Business Days thereafter pay to the Collection Agent an amount equal to the aggregate Percentage Factor of the Outstanding Balance of such Receivable and such amount shall be allocated to the Company and applied by the Collection Agent as a Collection allocable to the Transferred Interest in accordance with Section 2.5 or 2.6, as applicable. The Net Investment shall be reduced by the amount of such payment actually received by the Company. SECTION 2.10. Payments and Computations, Etc. All amounts to be paid or deposited by the Transferor or the Collection Agent hereunder shall be paid or deposited in accordance with the terms hereof no later than 1:00 p.m. (New York City time) on the day when due in immediately available funds; if such amounts are payable to the Company they shall be paid or deposited in the account indicated on the signature page hereof, until otherwise notified by the Company. The Transferor shall, to the extent permitted by law, pay to the Company upon demand, interest on all amounts not paid or deposited when due to the Company hereunder at a rate equal to 2% per annum plus the Base Rate. All computations of discount, interest and all per annum fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Any computations of amounts payable by the Transferor hereunder to the Company, the Liquidity Provider or the Credit Support Provider shall be binding absent manifest error. SECTION 2.11. Reports. Prior to the fifteenth day of each month, the Collection Agent shall prepare and forward to the Administrative Agent (i) an Investor Report as of the end of the last day of the immediately preceding month, (ii) if requested by the Company or the Administrative Agent, a listing by Obligor of all Receivables together with an aging of such Receivables and (iii) such other information as the Company or the Administrative Agent may reasonably request. SECTION 2.12. Collection Account. There shall be estab lished on the day of the initial Incremental Transfer hereunder and maintained, for the benefit of the Company, with the Collateral Agent, a segregated account (the "Collection Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Company. The Collection Agent shall remit daily within forty-eight hours of receipt to the Collection Account all Collections received with respect to any Receivables; provided, however, the Collection Agent shall be permitted to make payments to the Company on the last day of each Tranche Period instead of depositing funds into the Collection Account on a daily basis for so long as, and only for so long as no Collection Agent default and no other Termination Event has occurred hereunder. Funds on deposit in the Collection Account (other than investment earnings) shall be invested by the Collateral Agent in Eligible Investments that will mature so that such funds will be avail able prior to the last day of each successive Tranche Period following such investment. On the last day of each calendar month, all interest and earnings (net of losses and investment expenses) on funds on deposit in the Collection Account shall be retained in the Collection Account and be available to make any payments required to be made hereunder (including Discount) to the Company. On the date on which the Net Investment is zero and all amounts payable hereunder have been paid to the Company, any funds remaining on deposit in the Collection Account shall be paid to the Transferor. SECTION 2.13. Net Investment Amount. The Transferor hereby acknowledges that upon the effectiveness of the Receivables Purchase Agreement, the Net Investment will be equal to $32,536,515.31 prior to the transfers to be made pursuant to Section 2.2 hereof. The Transferor also hereby acknowledges that such amount represents the net investment in effect as of the date of termination of the Transfer and Administration Agreement dated as of October 31, 1994 between the Company and the Seller. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1. Representations and Warranties of the. The Transferor represents and warrants to the Company that: (a) Existence and Power. The Transferor is a limited liability company formed and validly existing under the laws of the State of Delaware and has all power and all material governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now con ducted where the failure to have such governmental licenses, authorizations, consents and approvals would have a material adverse effect on (i) the Transferor's busness or properties, (ii) the Transferor's ability to perform its obligations hereunder or (iii) the Company's interest in the Receivables. (b) Authorization; Contravention. The execution, delivery and performance by the Transferor of this Agreement, the Receivables Purchase Agreement, the Fee Letter, the Company Certificate and the Transfer Certificate are within the Transferor's limited liability company powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official (except as contemplated by Section 2.8), and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of formation or agreement among members (or other similar agreement) of the Transferor or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Transferor or result in the creation or imposition of any lien on assets of the Transferor or any of its Subsidiaries (except as contemplated by Section 2.8). (c) Binding Effect. Each of this Agreement, the Receivables Purchase Agreement, the Fee Letter and the Company Certificate constitutes and the Transfer Certificate upon payment by the Company of the Transfer Price set forth therein will constitute the legal, valid and binding obligation of the Transferor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors. (d) Perfection. Immediately preceding each Transfer hereunder, the Transferor shall be the owner of all of the Receivables (with the exception of the Receivables related to the Special Obligor), free and clear of all liens, encumbrances, security interests, preferences or other security arrangement of any kind or nature whatso ever. On or prior to each Transfer and each recomputation of the Transferred Interest, all financing statements and other documents required to be recorded or filed in order to perfect and protect the Transferred Interest against all creditors of and purchasers from the Transferor and the Seller will have been duly filed in each filing office necessary for such purpose and all filing fees and taxes, if any, payable in connection with such filings shall have been paid in full. (e) Accuracy of Information. To the best of its knowledge, all information heretofore furnished by the Transferor (including without limitation, the Investor Reports, any reports delivered pursuant to Section 2.11 and the Transferor's financial statements) to the Company or the Administrative Agent for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Transferor to the Company or the Administrative Agent will be, true and accurate in every material respect, on the date such information is stated or certified. (f) Tax Status. The Transferor has filed all tax returns (federal, state and local) required to be filed and has paid or made adequate provision for the payment of all taxes, assessments and other governmental charges. (g) Action, Suits. Except as set forth in Exhibit H-1, there are no actions, suits or proceedings pending or, to the knowledge of the Transferor, threatened against the Transferor or any Affiliate of the Transferor or their respective properties, in or before any court, arbitrator or other body, which question the validity of the transactions contemplated hereby and by the Receivables Purchase Agreement or which, individually or in the aggregate, could be reasonably expected to have a material adverse effect on the Transferor's ability to perform its obligations under this Agreement and the Receivables Purchase Agreement. (h) Place of Business. The chief place of business and chief executive office of the Transferor and the offices where the Transferor keeps all its Records relating to the Receivables are located at the address of the Transferor indicated in Section 9.3 hereof or such other locations notified to the Company in accordance with Section 2.8 in jurisdictions where all action required by Section 2.8 has been taken and completed. (i) Good Title. Upon each Transfer and each recomputation of the Transferred Interest, assuming that the Company takes all action required under this Agreement, the Company shall acquire a valid and perfected first priority undivided percentage ownership interest to the extent of the Transferred Interest or a first priority perfected security interest, to the extent such interests can be created under Article 9 of the UCC and perfected by the filing of financing statements, in each Receivable that exists on the date of such Transfer and recomputation and in the Related Security and Collections with respect thereto free and clear of any Adverse Claim. (j) Tradenames, Etc. As of the date hereof: (i) the Transferor has no subsidiaries or divisions; and (ii) the Transferor has, since formation, not operated under any tradenames, and, since formation, has not changed its name, merged with or into or consolidated with any other corporation or been the subject of any proceeding under Title 11, United States Code (Bankruptcy). (k) Nature of Receivables. Each Receivable (x) represented by the Transferor or the Collection Agent, so long as the Collection Agent is IMC-Agrico Company or an affiliate thereof, to be an Eligible Receivable (including in any Investor Report or other report delivered pursuant to Section 2.11 of this Agreement) or (y) included in the calculation of the Net Receivables Balance, in fact satisfies at such time the definition of "Eligible Receivables" and is an "eligible asset" as defined in Rule 3a-7 under the Investment Company Act, of 1940, as amended. (l) Coverage Requirement; Amount of Receivables. The Percentage Factor does not exceed the Maximum Percentage Factor. As of June 26, 1997, the aggregate Outstanding Balance of the Receivables in existence was $77,556,653.71 and the Net Receivable Balance was $58,765,886.42. (m) Credit and Collection Policy. Since February 20, 1997, there have been no material changes in the Credit and Collection Policy. (n) [Intentionally omitted] (o) No Termination Event. No event has occurred and is continuing and no condition exists which constitutes a Termination Event or a Potential Termination Event. (p) Not an Investment Company. The Transferor is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. (q) ERISA. The Transferor is in compliance in all material respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corporation on any of the Receivables shall exist. (r) Lock-Box Accounts. The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Exhibit C hereto (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Collateral Agent and for which Lock-Box Agreements have been executed in accordance with Section 2.8(b) and delivered to the Collection Agent). All Obligors have been instructed to make payment to a Lock-Box Account and only Collections shall be deposited into the Lock-Box Accounts. (s) Use of Proceeds. No proceeds of any Transfer will be used by the Transferor to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities and Exchange Act of 1934, as amended; (t) Bulk Sales. No transaction contemplated hereby or by the Receivables Purchase Agreement requires compliance with any bulk sales act or similar law. (u) Transfers Under Receivables Purchase Agreement. Each Receivable which has been transferred or otherwise conveyed to the Transferor by the Seller has been acquired by the Transferor from the Seller pursuant to, and in accordance with, the terms of the Receivables Purchase Agreement. (v) Preference; Voidability. The Transferor shall have given reasonably equivalent value to the Seller in consideration for the transfer to the Transferor of the Receivables and Related Security from the Seller, and each such transfer shall not have been made for or on account of an antecedent debt owed by the Seller to the Transferor and no such transfer is or may be voidable under any Section of the Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et seq.), as amended. Any document, instrument, certificate or notice delivered by the Transferor to the Company hereunder shall be deemed a representation and warranty by the Transferor. SECTION 3.2. Representations and Warranties of the Collection Agent. The Collection Agent represents and warrants to the Company that: (a) Corporate Existence and Power. The Collection Agent is a general partnership formed and validly existing under the laws of the State of Delaware and has all power and all material governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now conducted where the failure to have such governmental licenses, authorizations, consents and approvals would have a material adverse effect on (i) the Collection Agent's business or properties, (ii) the Collection Agent's ability to perform its obligations hereunder or (iii) the Company's interest in the Receivables. (b) Partnership and Governmental Authorization; Contravention. The execution, delivery and performance by the Collection Agent of this Agreement are within the Collection Agent's partnership powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official (except as contemplated by Section 2.8), and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the partnership agreement of the Collection Agent or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Collection Agent or result in the creation or imposition of any lien on assets of the Collection Agent or any of its Subsidiaries. (c) Binding Effect. This Agreement constitutes, the legal, valid and binding obligation of the Collection Agent, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors. (d) Accuracy of Information. To the best of its knowledge, all information heretofore furnished by the Collection Agent to the Transferor, the Company or the Administrative Agent for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Collection Agent to the Transferor, the Company or the Administrative Agent will be, true and accurate in every material respect, on the date such information is stated or certified. (e) Tax Status. The Collection Agent has filed all tax returns (federal, state and local) required to be filed and has paid or made adequate provision for the payment of all taxes, assessments and other governmental charges on or before the date such taxes are due, taking into account any extension of such due date. (f) Action, Suits. Except as set forth in Exhibit H-2, there are no actions, suits or proceedings pending or, to the knowledge of the Collection Agent, threatened against or affecting the Collection Agent or any Affiliate of the Collection Agent or their respective properties, in or before any court, arbitrator or other body, which question the validity of the transactions contemplated hereby or which, individually or in the aggregate, could be reasonably expected to have a material adverse effect on the Collection Agent's ability to perform its obligations hereunder. (g) Collections and Servicing. Since June 27, 1997, there has been no material adverse change in the ability of the Collection Agent to service and collect the Receivables. (h) Not an Investment Company. The Collection Agent is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. (i) ERISA. The Collection Agent is in compliance in all material respects with ERISA. SECTION 3.3. Reaffirmation of Representations and Warranties by the Transferor and Collection Agent. On each day that a Transfer is made hereunder, the Transferor, by accepting the proceeds of such Transfer, whether delivered to the Transferor pursuant to Section 2.2(a) or Section 2.5, shall be deemed to have certified that all representations and warranties described in Section 3.1 hereof are correct on and as of such day as though made on and as of such day, and provided that the Collection Agent is IMC-Agrico Company or an affiliate thereof, the Collection Agent shall be deemed to have certified that all the representations and warranties described in Section 3.2 hereof are correct on and as of such day as though made on and as of such day. Each Incremental Transfer shall be subject to the further condition precedent that prior to the date of such Transfer, the Collection Agent shall have delivered to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, a completed Investor Report dated within fourteen (14) days prior to the date of such Incremental Transfer, together with a listing by Obligor, if requested, and such additional information as may be reasonably requested by the Administrative Agent; and the Transferor shall be deemed to have represented and warranted that such conditions precedent have been satisfied. ARTICLE V CONDITIONS PRECEDENT SECTION 4.1. Conditions to Closing. On or prior to the Closing Date, the Transferor shall deliver to the Company the following documents, instruments and fees all of which shall be in a form and substance acceptable to the Company: (a) Copies of the unanimous written consents of the Board of Directors of IMC-Agrico MP, Inc., as managing partner of the Seller, and of the Policy Committee of the Seller, individually and as Operating Manager, certified by the Secretary of IMC-Agrico MP, Inc., approving the execution, delivery and performance by the Transferor of this Agreeent, the Receivables Purchase Agreement and the other Transaction Documents to be delivered by the Transferor hereunder or thereunder. (b) The Certificate of Formation of the Transferor certified by the Secretary of State or other similar official of the Transferor's jurisdiction of organization dated a date reasonably prior to the Closing Date and the Transferor's agreement among members (or other similar agreement) certified by the Secretary of IMC-Agrico MP Inc. (c) A Certificate of the Secretary of the Managing Partner of the Collection Agent substantially in the form of Exhibit L- 2 attached hereto. (d) The partnership agreement of the Collection Agent, the Certificate of Incorporation of the Managing Partner certified by the Secretary of State or other similar official of Delaware and the By- laws of the Managing Partner certified by the secretary of the Managing Partner. (e) A Good Standing Certificate for the Managing Partner issued by the Secretary of State or a similar official of Delaware and certificates of qualification as a forign corporation issued by the Secretaries of State or other similar officials of each jurisdiction when such qualification is material to the transactions contemplated by this Agreement. (f) Copies of proper financing statements (Form UCC-1), dated a date reasonably near to the date of the initial Incremental Transfer naming the Transferor as the debtor/seller in favor of the Company and showing the Collateral Agent as assignee of the secured party/purchaser or other similar instruments or documents as may be necessary or in the reasonable opinion of the Company desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Company's ownership interest in all Receivables. (g) Copies of proper financing statements (Form UCC-1), dated a date reasonably near to the date of the initial Incremental Transfer naming the Seller as the debtor/seller in favor of the Transferor as secured party/purchaser and the Collateral Agent, as assignee of the secured party or other similar instruments or documents as may be necessary or in the reasonable opinion of the Company desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Transferor's ownership interest in all Receivables. (h) Copies of proper financing statements (Form UCC-3), if any, necessary to terminate all security interests and other rights of any person in Receivables previously granted by Transferor. (i) Copies of proper financing statements (Form UCC-3), if any, necessary to terminate all security interests and other rights of any person in Receivables previously granted by the Seller. (j) Certified copies of requests for information or copies (Form UCC-11) (or a similar search report certified by parties acceptable to the Company) dated a date reasonably near the date of the initial Incremental Transfer listing all effective financing statements which name the Transferor or the Seller (under any present or previous name) as debtor and which are filed in jurisdictions in which the filings were made pursuant to items (f), (g), and (h) above together with copies of such financing statements (none of which shall cover any Receivables or Contracts). (k) Executed copies of the Lock-Box Agreements. (l) Opinions of (i) Sidley & Austin, special counsel to the Transferor, the Collection Agent and the Seller, covering certain of the matters set forth in Exhibit K hereto and certain bankuptcy matters, in each case in form and substance acceptable to the Administrative Agent and (ii) Marschall I. Smith, Esq., Vice President and General Counsel of IMC Global Inc., as to certain of the matters set forth in Exhibit K hereto, in form and substance acceptable to the Administrative Agent. (m) A computer tape setting forth all Receivables and the Outstanding Balances thereon and such other information as the Company may reasonably request. (n) An executed copy of the Fee Letter. (o) The Transfer Certificate, duly executed by the Transferor. (p) The Company Certificate, duly executed by the Transferor and appropriately completed. (q) The Amendment Fee in accordance with Section 2.7(b). (r) An Investor Report dated June 27, 1997. (s) Such other documents as the Company shall reasonably request. ARTICLE V COVENANTS SECTION 5.1. Affirmative Covenants of Transferor. At all times from the date hereof to the later to occur of (i) the Termination Date or (ii) the date on which the Company's Transferred Interest shall be equal to zero, unless the Company shall otherwise consent in writing: (a) Financial Reporting. The Transferor will maintain a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Administrative Agent: (i) Annual Reporting. (A) Within ninety (90) days after the close of each of the Seller's fiscal years, audited financial statements, prepared in accordance with generally accepted accounting principles on a consolidated and consolidating basis (consolidating statements need not be audited by such accountants) for the Seller and its Subsidiaries, in each case, including balance sheets as of the end of such period, related statements of operations, partner's or shareholder's equity and cash flows, accompanied by an unqualified audit report certified by independent certified public accountants, acceptable to the Administrative Agent, prepared in accordance with generally accepted auditing principles and any management letter prepared by said accountants. (B) Within ninety (90) days after the close of each of the Transferor's fiscal years, financial statements, reviewed by independent certified public accountants, acceptable to the Administrative Agent, in accordance with the standards of the American Institute of Certified Public Accountants for the Transferor, including balance sheets as of the end of such period, related statements of operations, partner's or shareholder's equity and cash flows, accompanied by a review report certified by such independent certified public accountants. (ii) Quarterly Reporting. Within forty-five (45) days after the close of the first three quarterly periods of each of the Transferor's and the Seller's fiscal years, for (x) the Transferor and (y) for the Seller and its Subsidiaries, in each case, consolidated and, in the case of the Seller, consolidating unaudited balance sheets as at the close of each such period and consolidated and consoliating related statements of operations, partner's or shareholder's equity and cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer of the Seller or the Operating Manager, as applicable. (iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate signed by an authorized officer of the Seller or the Operating Manager statng that no Termination Event or Potential Termination Event exists, or if any Termination Event or Potential Termination Event exists, stating the nature and status thereof and showing the computation of, and showing compliance with, each of the financial ratios and restrictions set forth in Section 5.3. (iv) Partners Statements. Promptly upon the furnishing thereof to the partners of the Seller, copies of all financial statements so furnished. (v) S.E.C. Filings. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Seller or any subsidiary files with the Securities and Exchange Commission. (vi) Notice of Termination Events or Potential Termination Events. As soon as possible and in any event within three (3) days after the occurrence of each Termination Event or each Potential Termination Event, a statement of an authorized officer of the Operating Manager setting forth details of such Termination Event or Potential Termination Event and the action which the Transferor proposes to take with respect thereto. (vii) Change in Credit and Collection Policy. Within ten (10) days after the date any material change in or amendment to the Credit and Collection Policy is made, a copy of the Credit and Collection Policy then in effect indicating such change or amendment. (viii) Credit and Collection Policy. Upon request of the Administrative Agent, a complete copy of the Credit and Collection Policy then in effect. (ix) Other Information. Such other information including non-financial information as the Administrative Agent may from time to time reasonably request with respect to the Seller, the Transferor or any Subsidiary of the foregoing. (b) Conduct of Business. The Transferor will, and will cause the Seller and each of the Seller's Subsidiaries to, (x) carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and (y) do all things necessary to remain validly existing as a domestic partnership, limited liability company or corporation, as applicable, in the State of Delaware and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted where the failure to maintain such authority would have a material adverse effect on (i) the Transferor's or Seller's business or properties, (ii) the Transferor's or Seller's ability to perform its obligations hereunder or (iii) the collectability of the Receivables. (c) Compliance with Laws. The Transferor will, and will cause the Seller and each of the Seller's Subsidiaries to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject. (d) Furnishing of Information and Inspection of Records. The Transferor will and will cause the Seller to furnish to the Company from time to time such information with respect to the Receivables as the Company may reasonably request, including, without limitation, listings identifying the Obligor and the Outstanding Balance for each Receivable. The Transferor will and will cause the Seller to at any time and from time to time during regular business hours permit the Company, or its agents or representatives, (i) to exam ine and make copies of and abstracts from all Records and (ii) to visit the offices and properties of the Transferor or the Seller, as applicable, for the purpose of examining such Records, and to discuss matters relating to Receivables or the Transferor's or the Seller's, as applicable, performance hereunder with any of the officers, directors, employees or independent public accountants of the Transferor or the Seller having knowledge of such matters. (e) Keeping of Records and Books of Account. The Transferor will and will cause the Seller to maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain, all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the daily identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Transferor will and will cause the Seller to give the Company notice of any material change in the administrative and operating procedures referred to in the previous sentence. (f) Performance and Compliance with Receivables and Contracts. The Transferor, at its expense, will and will cause the Seller to timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by the Transferor or the Seller under the Contracts related to the Receivables. (g) Credit and Collection Policies. The Transferor will and will cause the Seller to comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract. (h) Collections. The Transferor shall and shall cause the Seller to instruct all Obligors to cause all Collections to be deposited directly to a Lock-Box Account. (i) Collections Received. The Transferor shall and shall cause the Seller to, hold in trust, and deposit or mail for deposit, immediately, but in any event not later than forty-eight (48) hours of its receipt thereof, to a Lock-Box Account all Collections received from time to time by the Transferor or the Seller (including without limitation all Collections deemed to have been received by the Transferor under Section 2.9). (j) Sale Treatment. The Transferor shall report the transactions contemplated by this Agreement on its financial statements as a sale of the Transferred Interest to the Company and, to the extent such reporting is required, shall cause the Seller to report the transactions contemplated by the Receivables Purchase Agreement on its financial statements as a sale of the Receivables to the Transferor. (k) Certain Actions. Each of the Transferor and the Seller shall conduct its business and its relationships with its Affiliates in such a manner so as to comply with the facts and assumptions set forth in paragraphs 1 through 17, inclusive, of Section I of the opinion of Sidley & Austin, special counsel to the Transferor and the Seller, dated the date hereof and addressed to the Company and the Collateral Agent, covering certain bankruptcy matters. (l) Separate Business. The Transferor shall at all times (a) to the extent the Transferor's office is located in the offices of the Seller or any Affiliate of the Seller, pay fair market rent for its executive office space located in the offices of the Seller or any Affiliate of the Seller, (b) have at all times an Independent Manager who is not and has never been an employee, officer or director of the Seller or any Affiliate of the Seller or of any major creditor of the Seller or any Affiliate of the Seller and are persons who are familiar and have experience with asset securitization, (c) maintain the Transferor's books, financial statements, accounting records and other corporate documents and records separate from those of the Seller or any other entity, (d) not commingle the Transferor's assets with those of the Seller or any other entity, (e) act solely in its company name and through its own authorized manager, officers and agents, (f) make investments directly or by brokers engaged and paid by the Transferor or its agents (provided that if any such agent is an Affiliate of the Transferor it shall be compensated at a fair market rate for its services), (g) separately manage the Transferor's liabilities from those of the Seller or any Affiliates of the Seller and pay its own liabilities, including all administrative expenses, from its own separate assets, except that the Seller may pay the organizational expenses of the Transferor, and (h) pay from the Transferor's assets all obligations and indebtedness of any kind incurred by the Transferor. The Transferor shall abide by all company formalities, including the maintenance of current minute books, and the Transferor shall cause its financial statements to be prepared in accordance with generally accepted accounting principles in a manner that indicates the separate existence of the Transferor and its assets and liabilities. The Transferor shall (i) pay all its liabilities, (ii) not assume the liabilities of the Seller or any Affiliate of the Seller, (iii) not lend funds or extend credit to the Seller or any affiliate of the Seller except pursuant to the Receivables Purchase Agreement in connection with the purchase of Receivables thereunder and (iv) not guarantee the liabilities of the Seller or any Affiliates of the Seller. The Management Committee and/or the Operating Manager of the Transferor (as appropriate) shall make decisions with respect to the business and daily operations of the Transferor independent of and not dictated by any controlling entity. The Transferor shall not engage in any business not permitted by its Certificate of Formation as in effect on the Closing Date. (m) Limited Liability Company Documents. The Transferor shall only amend, alter, change or repeal Restricted Articles as defined in its Certificate of Formation with the prior written consent of the Administrative Agent. SECTION 5.2. Negative Covenants of Transferor. During the term of this Agreement, unless the Company shall otherwise consent in writing: (a) No Sales, Liens, Etc. Except as otherwise provided herein, the Transferor will not and will not permit the Seller to sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (or the filing of any financing statement) or with respect to, any inventory or goods, the sale of which will give rise to a Receivable, or any Receivable or related Contract, or upon or with respect to any account which concentrates in a Lock-Box Bank to which any Collections of any Receivable are sent, or assign any right to receive income in respect thereof. (b) No Extension or Amendment of Receivables. Except as otherwise permitted in Section 6.2, the Transferor will not and will not permit the Seller to extend, amend or otherwise modify the terms of any Receivable, or amend, modify or waive any term or condition of any Contract related thereto. (c) No Change in Business or Credit and Collection Policy. The Transferor will not and will not permit the Seller to make any material change in the character of its business or in the Credit and Collection Policy, which change would, in either case, impair the collectibility of any Receivable. (d) No Mergers, Etc. The Transferor will not and will not permit the Seller to (i) consolidate or merge with or into any other Person, or (ii) sell, lease or transfer all or substantially all of its assets to any other person. (e) Change in Payment Instructions to Obligors. The Transferor will not and will not permit the Seller to, add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or from those listed in Exhibit C hereto or make any change in its instructions to Obligors regarding payments to be made to any Lock-Box Account, unless (i) such instructions are to deposit such payments to another existing Lock-Box Account or (ii) the Administrative Agent shall have received written notice of such addition, termination or change at least 30 days prior thereto and the Administrative Agent shall have received a Lock-Box Agreement executed by each new Lock-Box Bank or an existing Lock-Box Bank with respect to each new Lock-Box Account, as applicable. (f) Deposits to Lock-Box Accounts. The Transferor will not and will not permit the Seller, to, deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections of Receivables. (g) Change of Name, Etc. The Transferor will not and will not permit the Seller to, change its name, identity or structure or its chief executive office, unless at least 10 days prior to the effective date of any such change the Transferor delivers to the Collateral Agent (i) UCC financing statements, executed by the Transferor, necessary to reflect such change and to continue the perfection of the Company's ownership interests or security interests in the Receivables and (ii) the Lock-Box Agreements and, in the case of the Lock-Box Agreements, the Lock-Box Banks necessary to reflect such change and to continue to enable the Collateral Agent to exercise its rights contained in Section 2.8. (h) Intentionally omitted. (i) Amendment to Receivables Purchase Agreement. The Transferor will not, and will not permit the Seller to, amend, modify, or supplement the Receivables Purchase Agreement or waive any provision thereof, in each case except with the prior written consent of the Administrative Agent; nor shall the Transferor take, or permit the Seller to take, any other action under the Receivables Purchase Agreement that shall have a material adverse affect on the Company or which is inconsistent with the terms of this Agreement. (j) Other Debt. Except as provided for herein, the Transferor will not create, incur, assume or suffer to exist any indebtedness whether current or funded, or any other liability other than (i) indebtedness of the Transferor representing fees, expenses and indemnities arising hereunder or under the Receivables Purchase Agreement for the purchase price of the Receivables under the Receivables Purchase Agreement, including, without limitation, the Subordinated Note and (ii) other indebtedness incurred in the ordinary course of its business in an amount not to exceed $100,000 at any time outstanding. (k) Payment to the Seller. With respect to any Receivable sold by the Seller to the Transferor, the Transferor shall, and shall cause the Seller to, effect such sale under, and pursuant to the terms of, the Receivables Purchase Agreement, including, without limitation, the payment by the Transferor (either in cash or by increase in the amount of the Subordinated Note) to the Seller of an amount equal to the purchase price for such Receivable as required by the terms of the Receivables Purchase Agreement. SECTION 5.3. Minimum Net Worth of the Transferor. During the term of this Agreement, unless the Company shall otherwise consent in writing: (a) On the Closing Date, the Transferor shall have a Net Worth of at least 10% of the Outstanding Balance of Eligible Receivables. (b) The Transferor shall make no distributions of dividends or returns of capital except to the extent that, after giving effect thereto, the Transferor shall have a Net Worth at least equal to the greater of (i) 10% of the aggregate Outstanding Balance of all Eligible Receivables shown on the Investor Report delivered with respect to the immediately preceding calendar month period or (ii) $4,000,000. SECTION 5.4. Covenants of the Collection Agent. The Collection Agent covenants to the Company and the Transferor that: (a) Compliance with Requirements of Law. The Collection Agent shall duly satisfy its obligations in all material respects in its part to be fulfilled under or in connection with each Receivable and the related Contract, will maintain in effect all material qualifications required under Requirements of Law in order to service properly each Receivable and the related Contract and will comply in all material respects with all other Requirements of Law in connection with servicing each Receivable and the related Contract the failure to comply with which would have a material adverse effect on the Company. (b) No Rescission or Cancellation. The Collection Agent shall not permit any rescission or cancellation of an Eligible Receivable except as ordered by a court of competent jurisdiction or other governmental authority or in the ordinary course of its business and in accordance with the Credit and Collection Policy. (c) Protection of Company's Rights. Except as otherwise permitted by this Agreement, the Collection Agent shall take no action, nor omit to take any action, which would impair the rights of the Company in any Receivable or the related Contract. (d) All Consents Required. All approvals, authorizations, consents, orders, or other actions of any Person or of any governmental body or official required in connection with the execution and delivery by the Collection Agent of this Agreement, the performance by the Collection Agent of the transactions contemplated by this Agreement and the fulfillment by the Collection Agent of the terms of this Agreement, have been obtained. (e) Custodian. The Collection Agent will, at its own cost and expense, (i) maintain the books and records with respect to the Accounts and the Receivables and copies of all documents relating to each Account as custodian for the Company and (ii) clearly and unambiguously mark such books and records that indicate the Receivables have been sold to the Transferor under the Receivables Purchase Agreement and to the Company, pursuant to this Agreement. (f) No Extension or Amendment of Receivables. Except as otherwise permitted in Sections 5.2 and 6.2 of this Agreement, the Collection Agent will not extend, amend or otherwise modify the terms of any Eligible Receivable, or amend, modify or waive any term or condition of any Contract related thereto except as otherwise allowed by the Credit and Collection Policy. (g) No Change in Business or Credit and Collection Policy. The Collection Agent will not make any change in the character of its business or in the Credit and Collection Policy which would in either case impair the collectibility of any material portion of the Receivables or otherwise result in a material adverse effect on the collectibility of the Receivables. (h) No Mergers, Etc. The Collection Agent will not (i) consolidate or merge with or into any other Person (except for a merger with or into any wholly-owned subsidiary, where the Collection Agent shall be the surviving entity), or (ii) sell, lease or transfer all or substantially all of its assets to any other Person. (i) Change in Payment Instructions to Obligors. The Collection Agent will not make any change in the instructions to Obligors regarding payments to be made to any Lock-Box Account, unless (i) such instructions are to deposit such payments to another existing Lock-Box Account or (ii) the Collection Agent shall have received written notice of such change at least 30 days prior thereto and the Collection Agent shall have received a Lock-Box Agreement executed by each new Lock-Box Bank or an existing Lock-Box Bank with respect to each new Lock-Box Account, as applicable. (j) Deposits to Lock-Box Accounts. The Collection Agent will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collection of Receivables. SECTION 5.5. Covenants of the Seller. The Seller hereby covenants to the Transferor, the Company and the Collection Agent that: (a) Modification Regarding Distributable Cash. The Seller will not amend or otherwise modify the definition of "Distributable Cash" or the provisions relating to thereto in its partnership agreement (including without limitation Section 5.07 thereof) without the prior written consent of the Company. (b) Fixed Charge Coverage Ratio. The Seller will keep and maintain, for a period of four consecutive fiscal quarters ending as of each fiscal quarter, a ratio of EBITDA minus Capital Expenditures to the sum of (i) cash interest payable on, and amortization of debt discount in respect of, all Indebtedness during such period plus (ii) regularly scheduled principal amounts of all Indebtedness (including current obligations owing under Capitalized Leases) payable during the period of the prior four consecutive fiscal quarters beginning on the day after such date of determination, of not less than 2.0 to 1.0. (Capitalized terms used in this Section 5.5(b) which are not defined in Article I shall have the meanings assigned thereto in Exhibit G.) ARTICLE VI ADMINISTRATION AND COLLECTIONS SECTION 6.1. Appointment of Collection Agent. The ser vicing, administering and collection of the Receivables shall be conducted by such Person (the "Collection Agent") so designated from time to time in accordance with this Section 6.1. Until the Company gives notice to the Transferor and IMC-AGRICO COMPANY of the designation of a new Collection Agent pursuant to the succeeding sentence, IMC-AGRICO COMPANY is hereby designated as, and hereby agrees to perform the duties and obligations of, the Collection Agent pursuant to the terms hereof. The Company may, upon the occurrence of a Colletion Agent default or any Termination Event designate as Collection Agent any Person (including itself) to succeed IMC-AGRICO COMPANY or any successor Collection Agent, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Collection Agent pursuant to the terms hereof. The Company may notify any Obligor of the Transferred Interest. SECTION 6.2. Duties of Collection Agent. (a) The Collection Agent shall take or cause to be taken all such action as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy. Each of the Transferor and the Company hereby appoints as its agent the Collection Agent, from time to time designated pursuant to Section 6.1, to enforce its respective rights and interests in and under the Receivables, the Related Security and the Contracts. To the extent permitted by applicable law, each of the Transferor and the Seller (to the extent not then acting as Collection Agent hereunder) hereby grants to any Collection Agent appointed hereunder an irrevocable power of attorney to take any and all steps in the Transferor's and/or the Seller's name and on behalf of the Transferor or the Seller necessary or desirable, in the reasonable determination of the Collection Agent, to collect all amounts due under any and all Receivables, including, without limitation, endorsing the Transferor's and/or the Seller's name on checks and other instruments representing Collections and enforcing such Receivables and the related Contracts. The Collection Agent shall set aside for the account of the Transferor and the Company their respective allocable shares of the Collections of Receivables in accordance with Sections 2.5 and 2.6. Neither the Collection Agent nor the Transferor may extend the maturity of Receivables except as provided in the next sentence. So long as no Termination Event shall have occurred and be continuing, the Transferor or the Collection Agent may, in accordance with the Credit and Collection Policy, adjust the Outstanding Balance of Receivables and may extend the maturity of any Defaulted Receivable in each case as the Transferor or the Collection Agent may determine to be appropriate to maximize Collections thereof; provided, however, that such adjustment shall not alter the amount of such Receivable considered as a Delinquent Receivable or a Defaulted Receivable. The Transferor and/or the Collection Agent shall also be authorized to adjust the Outstanding Balance of any Receivable to reflect reductions of the type described in the first sentence of Section 2.9(a). The Transferor shall deliver to the Collection Agent and the Collection Agent shall hold in trust for the Transferor and the Company in accordance with their respective interests, all Records which evidence or relate to Receivables or Related Security. Notwithstanding anything to the contrary contained herein, the Company shall have the absolute and unlimited right to direct the Collection Agent (whether the Collection Agent is the Transferor or any other Person) to commence or settle any legal action to enforce collection of any Receivable or to foreclose upon or repossess any Related Security. (b) The Collection Agent shall as soon as practicable following receipt thereof, turn over to the Transferor any collections of any indebtedness of any Person which is not on account of a Receiv able. If the Collection Agent is not the Transferor or the Seller or an Affiliate of the Transferor or the Seller, the Collection Agent, by giving three Business Days' prior written notice to the Company, may revise the percentage used to calculate the Servicing Fee so long as the revised percentage will not result in a Servicing Fee that exceeds 110% of the reasonable and appropriate out-of-pocket costs and expenses of such Collection Agent incurred in connection with the performance of its obligations hereunder as documented to the reasonable satisfaction of the Company. The Collection Agent, if other than the Transferor or the Seller or an Affiliate of the Transferor the Seller, shall as soon as practicable upon demand, deliver to the Seller all Records in its possession which evidence or relate to indebtedness of an Obligor which is not a Receivable. (c) On or before 90 days after the end of each fiscal year of the Collection Agent, beginning with the fiscal year ending June 30, 1997, the Collection Agent shall cause a firm of independent public accountants (who may also render other services to the Colletion Agent, the Transferor, the Seller or any Affiliate of any of the foregoing), the Business Credit Field Exam Group of NationsBank, N.A. or such other Person as may be approved by the Administrative Agent to furnish a report to the Company to the effect that they have (i) compared the information contained in the Investor Reports delivered during such fiscal year with the information contained in the Contracts and the Collection Agent's records and computer systems for such period, and that, on the basis of such examination and comparison, such firm is of the opinion that the information contained in the Investor Reports reconciles with the information contained in the Contracts and the Collection Agent's records and computer system and that the servicing of the Receivables has been conducted in compliance with this Agreement, and (ii) verified that the Receivables treated by the Collection Agent as Eligible Receivables in fact satisfied the require ments of the definition thereof contained herein, except, in each case for (a) such exceptions as such firm shall believe to be immaterial (which exceptions need not be enumerated) and (b) such other exceptions as shall be set forth in such statement. (d) Notwithstanding anything to the contrary contained in this Article VI, the Collection Agent, if not the Transferor, the Seller or any Affiliate of the Transferor or the Seller shall have no obligation to collect, enforce or take any other action described in this Article VI with respect to any Receivable that is not included in the Transferred Interest other than to deliver to the Transferor or Seller, as applicable, the Collections and documents with respect to any such Receivable as described in Section 6.2(b). SECTION 6.3. Rights After Designation of New Collection Agent. At any time following the designaion of a Collection Agent (other than the Transferor, the Seller or any Affiliate of the Transferor or the Seller) pursuant to Section 6.1: (i) The Company may direct that payment of all amounts payable under any Receivable be made directly to the Company or its designee. (ii) The Transferor shall, at the Company's request and at the Transferor's expense, give notice of the Company's ownership of Receivables to each Obligor and direct that payments be made directly to the Company or its designee. (iii) The Transferor shall, at the Company's request, (A) assemble all of the Records, and shall make the same available to the Company at a place selected by the Company or its designee, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections of Receivables in a manner acceptable to the Company and shall, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Company or its designee. (iv) The Transferor and the Seller hereby authorize the Company to take any and all steps in the Transferor's or Seller's name and on behalf of the Transferor and the Seller necessary or desirable, in the determination of the Company, to collect all amounts due under any and all Receivables, including, without limitation, endorsing the Transferor's or Seller's name on checks and other instruments representing Collections and enforcing such Receivables and the related Contracts. SECTION 6.4. Responsibilities of the Transferor and the Seller. Anything herein to the contrary notwithstanding, the Transferor shall and/or shall cause the Seller to (i) perform all of the Seller's obligations under the Contracts related to the Receivables to the same extent as if interests in such Receivables had not been sold hereunder and under the Receivables Purchase Agreement, and the exercise by the Company of its rights hereunder or the Receivables Purchase Agreement shall not relieve the Transferor or the Seller from such obligations and (ii) pay when due any taxes, including without limitation, any sales taxes payable in connection with the Receivables and their creation and satisfaction. The Company shall not have any obligation or liability with respect to any Receivable or related Contracts, nor shall it be obligated to perform any of the obligations of the Transferor or the Seller thereunder. ARTICLE VIII TERMINATION EVENTS SECTION 7.1. Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event: (a) (i) the Collection Agent shall fail to perform or observe any term, covenant, or agreement under this Agreement or other related agreements and such failure shall remain unremedied for 10 days after the earlier of (x) the date on which the Company notifies the Collection Agent thereof and (y) the date the Collection Agent knew of any such breach, or (ii) either the Collection Agent or the Transferor shall fail to make any payment or deposit to be made by it hereunder when due or the Collection Agent shall fail to observe or perform any term, covenant or agreement on the Collection Agent's part to be performed under Section 2.8(b) hereof, or (b) any representation, warranty, certification or statement made by the Transferor in this Agreement or any other Transaction Document to which it is a party or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; or (c) the Transferor or the Collection Agent shall de fault in the performance of any payment or undertaking (other than those covered by clause (a) above) (i) to be performed or observed under Sections 5.1(a)(vii), 5.1(b)(x), 5.1(f), 5.1(g), 5.1(h), 5.1(k), 5.2(a), (c), (d), (e), (g)(ii), (h) or (i) or (ii) to be performed or observed under any other provision hereof and such default in the case of this clause (ii) shall continue for ten (10) days after the earlier of (x) the date on which the Company notifies the Transferor thereof and (y) the date the Transferor knew of any such default; or (d) any Indebtedness in excess of $10,000,000 in the aggregate for the Transferor or the Seller shall be declared due and payable, or required to be prepaid (other than by a regularly scheduled payment) prior to the scheduled date of maturity thereof; or (e) any Event of Bankruptcy shall occur with respect to (i) the Transferor or the Seller, (ii) any Subsidiary of the Seller; or (f) the Company shall, for any reason, fail to have a valid and perfected first priority security interest in the Receivables; or (g) the Seller shall enter into any transaction or merger whereby it is not the surviving entity; or (h) there shall have occurred any event which materially affects the Collection Agent's ability either to collect the Receivables or to perform under this Agreement; or (i) the Liquidity Provider or the Credit Support Provider shall have given notice that an event of default has occurred and is continuing under its agreements with the Company; or (j) Intentionally Omitted; or (k) the Percentage Factor exceeds the Maximum Percentage Factor unless the Transferor reduces the Net Investment within two Business Days, bringing the Percentage Factor to less than or equal to 95% or the Percentage Factor equals or exceeds 100% at any time; or (l) the Dilution Ratio averaged for any three consecutive months exceeds 3.50%; or (m) the Loss to Liquidation Ratio averaged for any three consecutive months exceeds 1.25%; or (n) the Delinquency Ratio averaged for any three consecutive months exceeds 5.0%; or (o) Any breach of any of the covenants of the Seller set forth in Section 5.5 shall occur; or (p) the Receivables Purchase Agreement shall have terminated. SECTION 7.2. Termination. (a) If a Termination Event occurs, the Company may, by notice to the Transferor, declare all outstanding Tranche Periods to be ended and designate the Base Rate plus 2% to be applicable to the Net Investment. (b) In addition, if any Termination Event occurs the Company and the Collateral Agent shall have all of the rights and remedies provided to a secured creditor or a purchaser of accounts under the UCC by applicable law in respect thereto. ARTICLE VIII INDEMNIFICATION; EXPENSES; RELATED MATTERS SECTION 8.1. Indemnities by the Transferor. Without limiting any other rights which the Company may have hereunder or under applicable law, the Transferor hereby agrees to indemnify the Company, the Liquidity Provider and the Credit Support Provider and any permitted assigns and their respective officers, directors and employees (collectively, "Indemnified Parties") from and against any and all damages, losses, claims, liabilities, costs and expenses, including reasonable attorneys' fees (which such attorneys may be employees of the Liquidity Provider, the Credit Support Provider or the Company) and disbursements (all of the foregoing being collectively referred to as "Indemnified Amounts") awarded against or incurred by any of them arising out of or as a result of this Agreement, the other Transaction Documents, the ownership, either directly or indirectly, by the Company of the Transferred Interest or any of the other transactions contemplated hereby or thereby, excluding, however, (i) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of an Indemnified Party or (ii) recourse (except as otherwise specifically provided in this Agreement) for uncollectible Receivables or (iii) income or franchise taxes payable by any Indemnified Party on amounts received under this Agreement. Without limiting the generality of the foregoing, the Transferor shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from: (i) any representation or warranty made by the Transferor or the Seller (including, in its capacity as the Collection Agent) (or any officers of the Transfeor or the Seller (including, in its capacity as the Collection Agent)) under or in connection with this Agreement, the Receivables Purchase Agreement, any of the other Transaction Documents, any Investor Report or any other information or report delivered by the Transferor or the Collection Agent pursuant hereto, which shall have been false or incorrect in any material respect when made or deemed made; (ii) the failure by the Transferor or the Seller (including, in its capacity as the Collection Agent) to comply with any applicable law, rule or regulation with respect to any Receivable or the related Contract, or the nonconformity of any Receivable or the related Contract with any such applicable law, rule or regulation; (iii) the failure to vest and maintain vested in the Company an undivided percentage ownership interest, to the extent of the Transferred Interest, in the Receivables included in the Transferred Interest, free and clear of any Adverse Claim; (iv) the failure to file, or any delay in filing, financing statements, continuation statements, or other simi lar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable included in the Transferred Interest; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the Obligor to the payment of any Receivable included in the Transferred Interest (including, without limitation, a defense based on such Receivable or the related Contract not being the legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of merchandise or services related to such Receivable or the furnishing or failure to furnish such merchandise or services; (vi) any failure of the Seller, as Collection Agent or otherwise, to perform its duties or obligations in accordance with the provisions of Article VI; or (vii) any products liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort arising out of or in connection with merchandise or services which are the subject of any Receivable; provided, however, that if the Company enters into agreements for the purchase of interests in receivables from one or more Other Transferors, the Company shall allocate such Indemnified Amounts which are in connection with the Liquidity Provider Agreement, the Credit Support Agreement or the credit support furnished by the Credit Support Provider to the Transferor and each Other Transferor; and provided, further, that if such Indemnified Amounts are attributable to the Transferor or the Seller (including in its capacity as the Collection Agent) and not attributable to any Other Transferor, the Transferor shall be solely liable for such Indemnified Amounts or if such Indemnified Amounts are attributable to Other Transferors and not attributable to the Transferor or the Seller (including in its capacity as the Collection Agent), such Other Transferors shall be solely liable for such Indemnified Amounts. SECTION 8.2. Indemnity for Taxes, Reserves and Expenses. (a) If after the date hereof, the adoption of any Law or bank regulatory guideline or any amendment or change in the interpretation of any existing or future Law or bank regulatory guideline by any Official Body charged with the administration, interpretation or application thereof (and, in the case of a change in the interpretation of any such Law or regulatory guideline, such change has been generally accepted by institutions to which such Law or regulatory guideline is applicable), or the compliance with any directive of any Official Body (in the case of any bank regulatory guideline, whether or not having the force of Law): (i) shall subject any Indemnified Party to any tax, duty or other charge with respect to this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest, the Receivables or payments of amounts due hereunder, or shall change the basis of taxation of payments to any Indemnified Party of amounts payable in respect of this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest, the Receivables or payments of amounts due hereunder or its obligation to advance funds herewith under the Liquidity Provider Agreement or the credit support furnished by the Credit Support Provider or otherwise in respect of this Agreement, other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest or the Receivables (except for changes in the rate of general corporate, franchise, net income or other income tax imposed on such Indemnified Party by the jurisdiction in which such Indemnified Party's principal executive office is located); (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System) against assets of, deposits with or for the account of, or credit extended by, any Indemnified Party or shall impose on any Indemnified Party or on the United States market for certificates of deposit or the London interbank market any other condition affecting this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest, the Receivables or payments of amounts due hereunder or its obligation to advance funds under the Liquidity Provider Agreement or the credit support provided by the Credit Support Provider or otherwise in respect of this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest or the Receivables; or (iii) imposes upon any Indemnified Party any other expense (including, without limitation, reasonable attorneys' fees and expenses, and expenses of litigation or preparation therefor in contesting any of the foregoing) with respect to this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest, the Receivables or payments of amounts due hereunder or its obligation to advance funds hereunder, under the Liquidity Provider Agreement or the credit support furnished by the Credit Support Provider or otherwise in respect of this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interests or the Receivables, and the result of any of the foregoing is to increase the cost to such Indemnified Party with respect to this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Transferred Interest, the Receivables, the obligations hereunder, the funding of any purchases hereunder, the Liquidity Provider Agreement or the Credit Support Agreement, by an amount deemed by such Indemnified Party to be material, then, within ten (10) days after demand by the Company, the Transferor shall pay to the Company such additional amount or amounts as will compensate such Indemnified Party for such increased cost or reduction; provided, however, that such demand shall not seek additional amounts incurred earlier than the ninetieth day immediately succeeding the date of such demand. (b) If any Indemnified Party shall have determined that after the date hereof, the adoption of any applicable Law or bank regulatory guideline regarding capital adequacy, or any change therein, or any change in the interpretation thereof by any Official Body (which change has been generally accepted by institutions to which such Law or regulatory guideline is applicable), or any directive regarding capital adequacy (in the case of any bank regulatory guideline, whether or not having the force of law) of any such Official Body, has or would have the effect of reducing the rate of return on capital of such Indemnified Party (or its parent) as a consequence of such Indemnified Party's obligations hereunder or with respect hereto to a level below that which such Indemnified Party (or its parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Indemnified Party to be material, then from time to time, within ten (10) days after demand by the Company, the Transferor shall pay to the Company such additional amount or amounts as will compensate such Indemnified Party (or its parent) for such reduction; provided, however, that such demand shall not seek additional amounts incurred earlier than the ninetieth day immediately succeeding the date of such demand. (c) The Company will promptly notify the Transferor of any event of which it has knowledge, occurring after the date hereof, which will entitle an Indemnified Party to compensation pursuant to this Section. A notice by the Company claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Company may use any reasonable averaging and attributing methods. (d) Anything in this Section 8.2 to the contrary notwithstanding, if the Company enters into agreements for the acquisition of interests in receivables from one or more Other Transferors, the Company shall allocate the liability for any amounts under this Section 8.2 ("Section 8.2 Costs") to the Transferor and each Other Transferor; and provided, further, that if such Section 8.2 Costs are attributable to the Transferor or the Seller (in its capacity as the Collection Agent) and not attributable to any Other Transferor, the Transferor shall be solely liable for such Section 8.2 Costs or if such Section 8.2 Costs are attributable to Other Transferors and not attributable to the Transferor or the Seller (in its capacity as the Collection Agent), such Other Transferors shall be solely liable for such Section 8.2 Costs. SECTION 8.3 Other Costs, Expenses and Related Matters. (a) The Transferor agrees, upon receipt of a written invoice, to pay or cause to be paid, and to save the Company and the Administrative Agent harmless against liability for the payment of, all reasonable out-of- pocket expenses (including, without limitation, reasonable attorneys', accountants' and other third parties' fees and expenses, any filing fees and expenses incurred by officers or employees of the Company) incurred by or on behalf of the Company and the Administrative Agent (i) in connection with the negotiation, execution, delivery and preparation of this Agreement and any documents or instruments delivered pursuant hereto and the transactions contemplated hereby (including, without limitation, the perfection or protection of the Transferred Interest) and (ii) from time to time (a) relating to any amendments, waivers or consents under this Agreement, (b) arising in connection with the Company's or its agent's enforcement or preservation of rights (including, without limitation, the perfection and protection of the Transferred Interest under this Agreement), or (c) arising in connection with any audit, dispute, disagreement, litigation or preparation for litigation involving this Agreement (all of such amounts, collectively, "Transaction Costs"). (b) Transferor shall pay the Company on demand any Early Collection Fee due on account of the reduction of a Tranche on a day prior to the last day of its Tranche Period. SECTION 8.4. Reconveyance Under Certain Circumstances. Transferor agrees to accept the reconveyance from the Company of the Transferred Interest if the Company notifies Transferor of a material breach of any representation or warranty made or deemed made pursuant to Article III of this Agreement and such breach shall not be cured within 15 days (or, in the case of the representations and warranties in Sections 3.1(d) and 3.1(j), 3 days) of such notice. The reconveyance price shall be paid by the Transferor to the Company in immediately available funds on such 15th day (or 3rd day, if applicable) in an amount equal to the Aggregate Unpaids. ARTICLE IX MISCELLANEOUS SECTION 9.1. Term of. This Agreement shall terminate fol lowing the Termination Date when the Net Investment has been reduced to zero, all accrued Discount has been paid in full and all other Aggregate Unpaids have been paid in full; provided, however, that (i) the rights and remedies of the Company with respect to any representation and warranty made or deemed to be made by Transferor or the Collection Agent pursuant to this Agreement, (ii) the indemnification and payment provisions of Article VIII, and (iii) the agreement set forth in Section 9.9, shall be continuing and shall survive any termination of this Agreement. SECTION 9.2. Waivers; Amendments. No failure or delay on the part of the Company in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any provision of this Agreement may be amended if, but only if, such amendment is in writing and is signed by the Transferor and the Company. SECTION 9.3. Notices. Except as provided below, all communications and notices provided for hereunder shall be in writing (including bank wire, telex, telecopy or electronic facsimile transmission or similar writing) and shall be given to the recipient at its address or telecopy number set forth below or at such other address or telecopy number as such party may hereafter specify for the purposes of notice to such party. Each such notice or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and confirmation is received, (ii) if given by mail 3 Business Days following such posting, or (iii) if given by any other means, when received at the address specified in this Section. However, anything in this Agreement to the contrary notwithstanding, the Transferor hereby authorizes the Company to effect Transfers, Tranche Period and Tranche Rate selections based on telephonic notices made by any Person which the Company in good faith believes to be acting on behalf of the Transferor. The Transferor agrees to deliver promptly to the Company a written confirmation of each telephonic notice signed by an authorized representative of Transferor. However, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation differs in any material respect from the action taken by the Company, the records of the Company shall govern absent manifest error. If to the Company: Enterprise Funding Corporation c/o Merrill Lynch Money Markets Inc. World Financial Center--South Tower 225 Liberty Street New York, New York 10218 Telephone: (212) 236-7200 Telecopy: (212) 236-7584 (with a copy to the Administrative Agent) If to the Transferor: IMC AGRICO RECEIVABLES COMPANY L.L.C. 2345 Waukegan Road Suite E-200 Bannockburn, IL 60015 Telephone: Telecopy: Attention: Payment Information: NationsBank, N.A. ABA 071000152 Account 65595 Reference IMC-Agrico Receivables Company L.L.C. If to the Collection Agent or Seller: IMC-AGRICO COMPANY 2345 Waukegan Road Suite E-200 Bannockburn, IL 60015 Telephone: (847) 607-3000 Telecopy: (847) 607-3529 Attention: Vice President-Finance If to the Collateral Agent or the Administrative Agent: NationsBank, N.A. NationsBank Corporate Center NC1-007-10-01 100 North Tryon Street Charlotte, North Carolina 28255 Attention: Michelle M. Heath-- Investment Banking Telephone: (704) 386-7922 Telecopy: (704) 388-9169 SECTION 9.4. Governing Law; Submission to Jurisdiction; Integration. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES AND THE PERFECTION AND THE EFFECT OF PERFECTION OR NONPERFECTION OF ANY "SECURITY INTEREST" (AS DEFINED IN THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) GRANTED HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. THE TRANSFEROR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. The Transferor hereby irrevocably waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Nothing in this Section 9.4 shall affect the right of the Company to bring any action or proceeding against the Transferor or its property in the courts of other jurisdictions. (b) This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire Agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. SECTION 9.5. Severability; Counterpart. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 9.6. Successors and Assigns. (e) This Agreement shall be binding on the parties hereto and their respective successors and assigns; provided, however, that neither the Transferor nor the Seller may assign any of its rights or delegate any of its duties hereunder or under the Receivables Purchase Agreement or under any of the other Transaction Documents to which it is a party without the prior written consent of the Company. No provision of this Agreement shall in any manner restrict the ability of the Company to assign, participate, grant security interests in, or otherwise transfer any portion of the Transferred Interest. (f) Each of the Transferor and the Seller hereby agrees and consents to the assignment by the Company from time to time of all or any part of its rights under, interest in and title to this Agreement and the Transferred Interest to any Liquidity Provider. In addition, the Transferor hereby agrees and consents to the complete assignment by the Company of all of its rights under, interest in and title to this Agreement and the Transferred Interest to the Collateral Agent. SECTION 9.7. Waiver of Confidentiality. Each of the Transferor and the Seller hereby consents to the disclosure of any non- public information with respect to it received by the Company or the Administrative Agent (i) to any nationally recognized rating agency rating the Company's commercial paper provided such rating agencies are informed of the highly confidential nature of such information, (ii) to any of the Company, the Administrative Agent, the Liquidity Provider, the Credit Support Provider or any placement agent for the Company's Commercial Paper in relation to this Agreement, provided any such Person agrees to hold such information confidential, or any of such Person's auditors, attorneys or financial advisors provided such parties are informed of the highly confidential nature of such information, (iii) as otherwise required by applicable law or order of a court of competent jurisdiction or as requested by any regulatory authority having jurisdiction over the Company or the Administrative Agent or (iv) as requested by the Liquidity Provider, the Credit Sup port Provider or any placement agent for the Company's Commercial Paper solely as a result of a requirement of applicable law or order of a court of competent jurisdiction or solely as a result of a request by any regulatory authority having jurisdiction over any such Person. Notwithstanding the foregoing, the Company shall be permitted to disclose portfolio data regarding the Receivables to holders (and prospective holders) of its Commercial Paper provided that such information does not contain the name of the Transferor, the Seller or the Collection Agent. SECTION 9.8. Confidentiality Agreement. Each of the Transferor, the Collection Agent and the Seller hereby agrees that it will not disclose the contents of this Agreement or any other proprietary or confidential information of the Company, the Collateral Agent, the Administrative Agent, the Liquidity Provider or the Credit Support Provider to any other Person except (i) their auditors and attorneys or financial advisors (other than any commercial bank) who are in confidential relationships with the Transferor, the Collection Agent or the Seller and to any affiliates of the Transferor, the Collection Agent or the Seller and/or the Buyer and any nationally recognized rating agency, provided such auditors, attorneys, financial advisors or rating agencies are informed of the highly confidential nature of such information or (ii) as otherwise required by applicable law or order of a court of competent jurisdiction or as requested by any regulatory authority having jurisdiction over the Transferor, Collection Agent or Seller. SECTION 9.9. No Bankruptcy Petition Against the Company. Each of the Transferor, the Seller and the Collection Agent hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of all outstanding Commercial Paper or other indebtedness of the Company, it will not institute against, or join any other Person in instituting against, the Company any bankrupt cy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. SECTION 9.10. No Recourse Against Stockholders, Officers or Directors. No recourse under any obligation, covenant or agreement of the Company contained in this Agreement shall be had against Merrill Lynch Money Markets Inc. (or any affiliate thereof), or any stockholder, officer or director of the Company, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that this Agreement is solely a corporate obligation of the Company, and that no personal liability whatever shall attach to or be incurred by Merrill Lynch Money Markets Inc. (or any affiliate thereof), or the stockholders, officers or directors of the Company, as such, or any of them, under or by reason of any of the obligations, covenants or agreements of the Company contained in this Agreement, or implied therefrom, and that any and all personal liability for breaches by the Company of any of such obligations, covenants or agreements, either at common law or at equity, or by statute or constitution, of Merrill Lynch Money Markets Inc. (or any affiliate thereof) and every such stockholder, officer or director is hereby expressly waived as a condition of and consideration for the execution of this Agreement. SECTION 9.11. Characterization of the Transactions Contemplated by the Agreement. It is the intention of the parties that the transactions contemplated hereby constitute the sale of the Transferred Interest, conveying good title thereto free and clear of any Adverse Claims to the Company and that the Transferred Interest not be part of the Transferor's estate in the event of an insolvency. If, notwithstanding the foregoing, the transactions contemplated hereby should be deemed a financing, the parties intend that the Transferor shall be deemed to have granted to the Company, and the Transferor hereby grants to the Company, a first priority perfected security interest in all of the Transferor's right, title and interest in, to and under the Receivables, together with Related Security, Collections and Proceeds with respect thereto and that this Agreement shall constitute a security agreement under applicable law. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Transfer and Administration Agreement as of the date first written above. ENTERPRISE FUNDING CORPORATION, as Company By: Name: Title: IMC-AGRICO RECEIVABLES COMPANY L.L.C. as Transferor By: IMC AGRICO COMPANY, its operating manager By: IMC AGRICO MP, INC., its managing partner By: ________________________ Name: Title: IMC-AGRICO COMPANY, as Collection Agent By: IMC-AGRICO MP, INC., its managing partner By: Name: Title: Exhibit A [Form of Contract] Exhibit B [Credit and Collection Policies and Practices] The Transferor's Credit and Collection Policy or Policies and practices, relating to Contracts and Receivables, existing on the date hereof are as set forth in manuals that were delivered by the Transferor on February 20, 1997 to the Company and the receipt of which has been separately acknowledged by the Company. Exhibit C List of Lock-Box Banks and Accounts Exhibit D FORM OF LOCK-BOX AGREEMENT [Date] [Name and Address of Lock-Box Bank] Re: IMC-AGRICO COMPANY Lock-Box Account No[s]. ___________ Ladies and Gentlemen: IMC-AGRICO COMPANY ("IMC-Agrico") hereby notifies you that in connection with certain transactions involving its accounts receivable, it has transferred exclusive ownership and dominion of its lock-box account no[s]. __________ maintained with you (collectively the "Accounts") to IMC-Agrico Receivables Company L.L.C., for the benefit of NationsBank, N.A., as collateral agent (the "Collateral Agent"), and that IMC-Agrico Receivables Company L.L.C. will transfer exclusive control of the Accounts to the Collateral Agent effective upon delivery to you of the Notice of Effectiveness (as hereinafter defined). In furtherance of the foregoing, IMC-Agrico Receivables Company L.L.C. and the Collateral Agent hereby instruct you, beginning on the date of your receipt of the Notice of Effectiveness: (i) to collect the monies, checks, instruments and other items of payment mailed to the Accounts; (ii) to deposit into the Accounts all such monies, checks, instruments and other items of payment or all funds collected with respect thereto (unless otherwise instructed by the Collateral Agent); and (iii) to transfer all funds deposted and collected in the Accounts pursuant to instructions given to you by the Collateral Agent from time to time. You are hereby further instructed: (i) unless and until the Collateral Agent notifies you to the contrary at any time after your receipt of the Notice of Effectiveness, to make such transfers from the Accounts at such times and in such manner as IMC-Agrico, in its capacity as collection agent for IMC-Agrico Receivables Company L.L.C., and the Collateral Agent, shall from time to time instruct to the extent such instructions are not inconsistent with the instructions set forth herein, and (ii) to permit IMC-Agrico (in its capacity as collection agent for the IMC-Agrico Receivables Company L.L.C. and the Collateral Agent) and the Collateral Agent to obtain upon request any information relating to the Accounts, including, without limitation, any information regarding the balance or activity of the Accounts. IMC-Agrico Receivables Company L.L.C. also hereby notifies you that, beginning on the date of your receipt of the Notice of Effectiveness and notwithstanding anything herein or elsewhere to the contrary, the Collateral Agent, and not IMC-Agrico or IMC-Agrico Receivables Company L.L.C., shall be irrevocably entitled to exercise any and all rights in respect of or in connection with the Accounts, including, without limitation, the right to specify when payments are to be made out of or in connection with the Accounts. The Collateral Agent has a continuing interest in all of the checks and their proceeds and all monies and earnings, if any, thereon in the Accounts, and you shall be the Collateral Agent's agent for the purpose of holding and collecting such property. The monies, checks, instruments and other items of payment mailed to, and funds deposited to, the Accounts will not be subject to deduction, set- off, banker's lien, or any other right in favor of any person other than the Collateral Agent (except that you may set off (i) all amounts due to you in respect of your customary fees and expenses for the routine maintenance and operation of the Accounts, and (ii) the face amount of any checks which have been credited to the Accounts but are subsequently returned unpaid because of uncollected or insufficient funds). This Agreement may not be terminated at any time by IMC- Agrico Receivables Company L.L.C. or you without the prior written consent of the Collateral Agent. Neither this Agreement nor any provision hereof may be changed, amended, modified or waived orally but only by an instrument in writing signed by the Collateral Agent and IMC-Agrico Receivables Company L.L.C. You shall not assign or transfer your rights or obligations hereunder (other than to the Collateral Agent) without the prior written consent of the Collateral Agent and IMC-Agrico Receivables Company L.L.C. Subject to the preceding sentence, this Agreement shall be binding upon each of the parties hereto and their respective successors and assigns, and shall inure to the benefit of, and be enforceable by, the Collateral Agent, each of the parties hereto and their respective successors and assigns. You hereby represent that the person signing this Agreement on your behalf is duly authorized by you to so sign. You agree to give the Collateral Agent and IMC-Agrico prompt notice if the Accounts become subject to any writ, garnishment, judggent, warrant of attachment, execution or similar process. Any notice, demand or other communication required or permitted to be given hereunder shall be in writing and may be personally served or sent by facsimile or by courier service or by United States mail and shall be deemed to have been delivered when delivered in person or by courier service or by facsimile or three (3) Business Days after deposit in the United States mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, (i) the addresses of the parties hereto shall be as set forth below each party's name below, or, as to each party, at such other address as may be designated by such party in a written notice to the other party and the Collateral Agent and (ii) the address of the Collateral Agent shall be NationsBank, N.A., NationsBank Corporate Center, 100 North Tryon Street, NC1-007-10-01, Charlotte, North Carolina 28255, Attention: Michelle M. Heath, Investment Banking, or at such other address as may be designated by the Collateral Agent in a written notice to each of the parties hereto. Please agree to the terms of, and acknowledge receipt of, this notice by signing in the space provided below. The transfer of control of the Accounts, referred to in the first paragraph of this letter, shall become effective upon delivery to you of a notice (the "Notice of Effectiveness") in substantially the form attached hereto as Annex "1". Very truly yours, IMC-AGRICO COMPANY By: IMC-Agrico MP Inc., its managing partner By:_____________________________ Title:__________________________ Attention:______________________ Facsimile No.:__________________ IMC-AGRICO COMPANY RECEIVABLES COMPANY L.L.C. By: IMC-Agrico Company, its operating manager By:_____________________________ Title:__________________________ By: IMC-Agrico MP Inc., its managing partner By:_____________________________ Title:__________________________ ACKNOWLEDGED AND AGREED: [NAME OF LOCK-BOX BANK] By:________________________ Title:_____________________ Date:______________________ [Address] Attention:_________________ Facsimile No.:_____________ ANNEX 1 TO LOCK-BOX AGREEMENT [FORM OF NOTICE OF EFFECTIVENESS] DATED: ______________, 199_ TO: [Name of Lock-Box Bank] [Address] ATTN: ______________________ Re: Lock-Box Account No[s]._______ Ladies and Gentlemen: We hereby give you notice that the transfer of control of the above-referenced Lock-Box Account[s], as described in our letter agreement with you dated ________ __, 1997 is effective as of the date hereof. You are hereby instructed to comply immediately with the instructions set forth in that letter. Very truly yours, IMC-AGRICO RECEIVABLES COMPANY L.L.C. By:_____________________________ Title:__________________________ ACKNOWLEDGED AND AGREED: [NAME OF LOCK-BOX BANK] By:________________________ Title:_____________________ Date:______________________ [Address] Attention:_________________ Facsimile No.:_____________ ANNEX 2 TO LOCK-BOX AGREEMENT [FORM OF ACKNOWLEDGMENT AND AUTHORIZATION] ACKNOWLEDGMENT AND AUTHORIZATION NationsBank, N.A., as collateral agent (the "Collateral Agent"), hereby acknowledges the transfer of exclusive ownership, dominion and control of the Accounts defined in and pursuant to the foregoing letter agreement (the "Lock-Box Agreement"), executed by IMC- AGRICO RECEIVABLES COMPANY L.L.C. ("IMC-Agrico") and acknowledged by [Name of Lock-Box Bank] (the "Bank"), which transfer to the Collateral Agent of ownership and dominion of the Accounts is in effect on, and shall continue after, the date hereof and which transfer to the Collateral Agent of control of the Accounts shall be effective upon delivery to the Bank of the Notice of Effectiveness (as defined in the Lock-Box Agreement). Pursuant to the third and fourth paragraphs of the Lock-Box Agreement, the Collateral Agent hereby instructs the Bank, beginning on the date of the Notice of Effectiveness until the Collateral Agent notifies the Bank to the contrary, to accept the directions of IMC-Agrico, as collection agent for the Collateral Agent, as to the manner and timing of such payments. Very truly yours, NATIONSBANK, N.A., as Collateral Agent By:_________________________________ Name: Title: ACKNOWLEDGED AND AGREED: [NAME OF LOCK-BOX BANK] By:________________________ Title:_____________________ Date:______________________ Exhibit E Form of Investor Report Exhibit F [Transfer Certificate] TRANSFER CERTIFICATE Reference is made to the Transfer and Administration Agreement dated as of June 27, 1997 (the "Agreement") among IMC-AGRICO RECEIVABLES COMPANY, L.L.C. as transferor (in such capacity, the "Transferor"), IMC-AGRICO COMPANY as seller (in such capacity, the "Seller") and ENTERPRISE FUNDING CORPORATION (the "Company"). Terms defined in the Agreement are used herein as therein defined. The Transferor hereby conveys, transfers and assigns to the Company an undivided ownership interest in the Receivables, together with Related Security and Collections with respect thereto (each, an "Incremental Transfer"). Each Incremental Transfer by the Transferor to the Company and each reduction or increase in the Net Investment in respect of each Incremental Transfer evidenced hereby shall be indicated by the Company on the grid attached hereto which is part of this Transfer Certificate. This Transfer Certificate is made without recourse except as otherwise provided in the Agreement. This Transfer Certificate shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the undersigned has caused this Transfer Certificate to be duly executed and delivered by its duly authorized officer as of the date first above written. [ ] By Name: Title: GRID Net Investment Date of Amount of (Giving Effect Incremental Incremental to Incremental Transfer Transfer Transfer) Exhibit G Definitions of Certain Terms "Capital Expenditures" means all expenditures which in accordance with generally accepted accounting principles would be classified as capital expenditures, including without limitation, Capitalized Leases. "Capitalized Lease" means the obligations of a Person as lessee under leases that have been, or should be, characterized as capital leases in accordance with generally accepted accounting principles applied on a consistent basis. "EBITDA" means, for any period, the net earnings (or net loss) plus the sum of (i) interest expense (including amortization of debt discount), (ii) income tax expense, (iii) depreciation, amortization and depletion expense, in each case determined in accordance with generally accepted accounting principles applied on a consistent basis for such period. Exhibit H-1 List of Actions and Suits for Transferor Exhibit H-2 List of Actions and Suits for Seller Exhibit I [Reserved] Exhibit J [Reserved] Exhibit K [Form of Transferor's and Seller's Counsel Opinion] [Letterhead of Counsel] ____________, 19__ Enterprise Funding Corporation c/o Merrill Lynch Money Markets Inc. Merrill Lynch World Headquarters World Financial Center--South Tower 225 Liberty Street--8th Floor New York, New York 10080 NationsBank, N.A. as Collateral Agent 100 North Tryon Street Charlotte, North Carolina 28255 Ladies and Gentlemen: This opinion is furnished to you pursuant to Section _______ of the Transfer and Administration Agreement dated as of _________, 199_ (the "Agreement") among [TRANSFEROR], a _______ [corporation] (the "Transferor"), [SELLER], a _________[corporation], individually and as Collection Agent ("[SELLER]"), and Enterprise Funding Corporation, a Delaware corporation (the "Company"). Terms defined in the Agreement and not otherwise defined herein are used in this opinion with the meanings so defined. We have acted as counsel to the Seller and the Transferor in connection with the preparation of the Agreement, the Receivables Purchase Agreement, the other Transaction Documents and the transactions contemplated thereby. We have examined, on the date hereof, the Agreement and all Exhibits thereto, the Receivables Purchase Agreement and all Exhibits thereto, the Certificate, the Transfer Certificate delivered under the Agreement, certificates of public officials and of officers of the Transferor and the Seller and certified copies of Seller's and the Transferor's certificate of incorporation, and the Seller's partnership agreement, by-laws, the Board of Directors' resolutions authorizing Seller's and the Transferor's participation in the transactions contemplated by the Agreement and the Receivables Purchase Agreement, copies of each of the above having been delivered to you, copies of the financing statements on Form UCC-1 filed in the filing offices listed in Schedule I hereto executed by Seller, as debtor, in favor of the Transferor, and showing the Collateral Agent as the assignee of the secured party, substantially in the form attached hereto as Exhibit A (the "Seller Financing Statements") and copies of the financing statements on Form UCC-1 filed in the filing offices listed in Schedule II hereto executed by Transferor, as debtor, in favor of the Company, and showing the Collateral Agent as the assignee of the secured party, substantially in the form attached hereto as Exhibit B (the "Transferor Financing Statements"). We have also examined the closing documents delivered pursuant to the Agreement and the Receivables Purchase Agreement and copies of all such documents and records, and have made such investigations of law, as we have deemed necessary and relevant as a basis for our opinion. With respect to the accuracy of material factual matters which were not independently established, we have relied on certificates and statements of officers of Seller and the Transferor. On the basis of the foregoing, we are of the opinion that: 1. The Transferor is a corporation duly incorporated, validly existing and in good standing under the laws of _________, has the corporate power and authority to own its properties and to carry on its business as now being conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire and own the Receivables, and is duly qualified and in good standing as a foreign corporation and is authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization, except for qualifications and authorizations the lack of which, singly or in the aggregate, has not had and will not have a materially adverse affect upon the business properties of the Transferor or its ability to perform its obligations under the Transaction Documents. 2. The Seller is a partnership duly organized, validly existing and in good standing under the laws of Delaware, has the power and authority to own its properties and to carry on its business as now being conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire and own the Receivables, and is duly qualified and in good standing as a foreign partnership and is authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization, except for qualifications and authorizations the lack of which, singly or in the aggregate, has not had and will not have a materially adverse affect upon the business properties of the Seller or its ability to perform its obligations under the Agreement. 3. The Transferor has the power, corporate and other, and has taken all necessary corporate action to execute, deliver and perform the Agreement and the other Transaction Documents, each in accordance with its respective terms, and to consummate the transactions contemplated thereby. The Transaction Documents to which the Transferor is a party have been duly executed and delivered by the Transferor and when duly executed and delivered will constitute the legal, valid and binding obligations of the Transferor enforceable against the Transferor in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 4. The Seller has the power and has taken all necessary action to execute, deliver and perform the Agreement, and the other Transaction Documents which it is a party, each in accordance with its respective terms, and to consummate the transactions contemplated thereby. The Agreement, and the other Transaction Documents to which it is a party, have been duly executed and delivered by the Seller and constitute the legal, valid and binding obligations of the Transferor enforceable against the Seller in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 5. The execution, delivery and performance in accordance with their terms by the Transferor of the Agreement and the other Transaction Documents and the consummation of the transactions contemplated thereby, do not and will not (i) require (a) any governmental approval or (b) any consent or approval of any stockholder of the Transferor that has not been obtained, (ii) violate or conflict with, result in a breach of, or constitute a default under (a) the certificate of incorporation or the by-laws of the Transferor, (b) any other agreement to which the Transferor is a party or by which the Transferor or any of its properties may be bound, or (c) any applicable law, or any order, rule, or regulation applicable to the Transferor of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over the Transferor or any of its properties, or (iii) result or require in the creation or imposition of any Lien upon any of the assets, property or revenue of the Transferor other than as contemplated by the Agreement. 6. The execution, delivery and performance in accordance with their terms by the SELLER of the Receivables Purchase Agreement and the other Transaction Documents and the consummation of the transactions contemplated thereby, do not and will not (i) require (a) any governmental approval or (b) any consent or approval of any partner of the Seller that has not been obtained, (ii) violate or conflict with, result in a breach of, or constitute a default under (a) the Seller's partnership agreement (b) any other agreement to which the Seller is a party or by which the Seller or any of its properties may be bound, or (c) any applicable law, or any order, rule, or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over the Seller or any of its properties, or (iii) result or require in the creation or imposition of any Lien upon any of the assets, property or revenue of the Seller other than as contemplated by the Receivables Purchase Agreement. 7. [Except as set forth in the schedule attached hereto,] to the best of our knowledge, after due inquiry, there are not, in any court or before any arbitrator of any kind or before or by any governmental or non-governmental body, any actions, suits, proceedings or investigations, pending or threatened, (i) against the Transferor or the business or any property of the Transferor except actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, have a materially adverse affect on the Transferor, or on the ability of the Transferor to perform its respective obligations under the Agreement and the Company Certificate or (ii) relating to the Agreement or the Company Certificate. 8. [Except as set forth in the schedule attached hereto,] to the best of our knowledge, after due inquiry, there are not, in any court or before any arbitrator of any kind or before or by any governmental or non-governmental body, any actions, suits, proceedings or investigations, pending or to the best of our knowledge, after due inquiry, threatened, (i) against the Seller or the business or any property of the Seller except actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, have a Materially Adverse Effect or (ii) relating to the Receivables Purchase Agreement or any other Transaction Document. 9. The Agreement and the Transfer Certificate creates a valid "security interest" (as that term is defined in Section 1-201(37) of the Uniform Commercial Code (including the conflict of laws rules thereof) as in effect in each applicable jurisdiction (the "UCC"), including New York (the "New York UCC") and _______ (the "XYZ UCC"), under Article 9 of the New York UCC ("Security Interest") in favor of the Company in each Receivable (except that the Security Interest will attach only when the Transferor possesses rights in such Receivable). The internal laws of XYZ govern the perfection by the filing of financing statements of the Company's Security Interest in the Receivables and the proceeds thereof. The Financing Statement(s) have been filed in the filing office(s) located in XYZ listed in Schedule I hereto, which [is] [are] the only office(s) in which filings are required under the XYZ UCC to perfect the Company's Security Interest in the Receivables and the proceeds thereof, and accordingly the Company's Security Interest in each Receivable and the proceeds thereof will, on the date of the initial transfer under the Agreement, be perfected under Article 9 of the XYZ UCC. All filing fees and all taxes required to be paid as a condition to or upon the filing of the Financing Statement(s) in XYZ have been paid in full. As of the date hereof, there were no (i) UCC financing statements naming Transferor as debtor, seller or assignor and covering any Receivables or any interest therein or (ii) notices of the filing of any federal tax lien (filed pursuant to Section 6323 of the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of the Employment Retirement Insurance Act) covering any Receivable or any interest therein. The filing of the Financing Statement(s) in the filing offices listed in Schedule I will create a first priority security interest in each Receivable. Such perfection and priority will continue, provided that appropriate continuation statements are timely filed where and when required under the UCC. 10. The Receivables Purchase Agreement creates a valid "security interest" (as that term is defined in Section 1-201(37) of the Uniform Commercial Code (including the conflict of laws rules thereof) as in effect in each applicable jurisdiction (the "UCC"), including New York (the "New York UCC") and _______ (the "XYZ UCC"), under Article 9 of the New York UCC ("Security Interest") in favor of the Transferor in the Receivables and the proceeds thereof (except that the Security Interest will attach to any Receivable created after the date hereof only when the Seller possesses rights in such Receivable). The internal laws of XYZ govern the perfection by the filing of financing statements of the Transferor's Security Interest in the Receivables and the proceeds thereof. The Seller Financing Statement(s) have been filed in the filing office(s) located in XYZ listed in Schedule I hereto, which [is] [are] the only office(s) in which filings are required under the XYZ UCC to perfect the Transferor's Security Interest in the Receivables and the proceeds thereof, and accordingly the Transferor's Security Interest in each Receivable and the proceeds thereof will, on the date of the initial transfer under the Receivables Purchase Agreement, be perfected under Article 9 of the XYZ UCC. All filing fees and all taxes required to be paid as a condition to or upon the filing of the Seller Financing Statement(s) in XYZ have been paid in full. As of the date hereof, there were no (i) UCC financing statements naming the Seller as debtor, seller or assignor and covering any Receivables or any interest therein or (ii) notices of the filing of any federal tax lien (filed pursuant to Section 6323 of the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of the Employment Retirement Insurance Act) covering any Receivable or any interest therein. The filing of the Seller Financing Statement(s) in the filing offices listed in Schedule I will create a first priority security interest in each Receivable. Such perfection and priority will continue, provided that appropriate continuation statements are timely filed where and when required under the UCC. In giving the opinions in paragraph 10 and 11, we have assumed that (1) the Seller's and Transferor's chief executive office will continue to be located in _____, and (2) the Transferor and the Seller has kept and will continue to keep all of its records concerning Receivables located only in ___ and _____, respectively. The conclusions expressed in paragraph 10 and 11 are subject to the accuracy of the personnel in the filing offices referred to above with regard to the filing, indexing and recording of financing statements and notices of Liens, and to the correctness of reports to us by ____________, who performed the searches of such records and who made the filings on behalf of the Seller and Transferor in ___. In giving the opinions set forth in paragraph 10 and 11, we have assumed that all filings as appropriate in the event of a change in the name, identity or corporate structure of the debtor (or seller or assignor) named in any financing statements and all continuation statements necessary under the UCC to maintain the perfection of the Transferor's Security Interest and Company's Security Interest in the Receivables and the proceeds thereof will be duly and timely filed. In giving such opinions, we also do not express any opinion as to (a) transactions excluded from Article 9 of the UCC by virtue of Section 9- 104 of the UCC, (b) any security interest in proceeds except to the extent that the validity and perfection of any interest in proceeds (as such term is defined under the UCC) thereof that is covered by the Seller Financing Statements or the Transferor, the Financing Statements or any duly filed financing statement referred to above may be permitted by Section 9-306 of the UCC, and (c) any security interest that is terminated or released. The foregoing opinions and conclusions were given only in respect of the laws of the State of New York, the Uniform Commercial Code as in effect on the date hereof in the State of XYZ and, to the extent specifically referred to herein, the Federal laws of the United States of America. This opinion has been delivered at your request for the purposes contemplated by the Agreement. Without our prior written consent, this opinion is not to be utilized or quoted for any other purpose and no one other than you, any Liquidity Provider, Credit Support Provider and any placement agent for the Company's Commercial Paper is entitled to rely thereon. Very truly yours, Exhibit L-1 RESPONSIBLE OFFICER'S CERTIFICATE I, __________________, the undersigned ________________ of _________ (the "Transferor"), a ________ corporation, DO HEREBY CERTIFY that: 1. Attached hereto as Annex A is a true and complete copy of the Certificate of Incorporation of the Company as in effect on the date hereof. 2. Attached hereto as Annex B is a true and complete copy of the By-laws of the Company as in effect on the date hereof. 3. Attached hereto as Annex C is a true and complete copy of the resolutions duly adopted by the Board of Directors of the Company [adopted by consent] as of _________________, 199_, authorizing the execution, delivery and performance by Company of each of the documents mentioned therein, which resolutions have not been revoked, modified, amended or rescinded and are still in full force and effect. 4. The below-named persons have been duly qualified as and at all times since ________________, 199_, to and including the date hereof have been officers or representatives of the Company holding the respective offices or positions below set opposite their names are authorized to execute on behalf of the Company the below-mentioned Transfer and Administration Agreement and all other Transaction Documents (as defined in such Transfer and Administration Agreement) to which the Company is a party and the signatures below set opposite their names are their genuine signatures: Name Office Signatures [OFFICE] [OFFICE] 5. The representations and warranties of the Company contained in Section 3.1 of the Transfer and Administration Agreement dated as of March __, 1997 between the Transferor and Enterprise Funding Corporation are true and correct as if made on the date hereof.] 6. The Company is a general partner of the Transferor. WITNESS my hand and seal of the Company as of this ____ day of ________, 199_. Secretary [NAME OF COMPANY] I, the undersigned, Vice President of the Company, DO HEREBY CERTIFY that _____________________ is the duly elected and qualified Secretary of the Company and the signature above is his/her genuine signature. WITNESS my hand as of this ____ day of _______, 199_. Vice President [NAME OF COMPANY] Exhibit L-2 SECRETARY'S CERTIFICATE I, __________________, the undersigned ________________ of ___________ (the "Company"), a ________ corporation, DO HEREBY CERTIFY that: 1. Attached hereto as Annex A is a true and complete copy of the Certificate of Incorporation of the Company as in effect on the date hereof. 2. Attached hereto as Annex B is a true and complete copy of the By-laws of the Company as in effect on the date hereof. 3. Attached hereto as Annex C is a true and complete copy of the resolutions duly adopted by the Board of Directors of the Company [adopted by consent] as of _________________, 199_, authorizing the execution, delivery and performance of each of the documents mentioned therein, which resolutions have not been revoked, modified, amended or rescinded and are still in full force and effect. 4. The below-named persons have been duly qualified as and at all times since ________________, 199_, to and including the date hereof have been officers or representatives of the Company holding the respective offices or positions below set opposite their names and are authorized to execute on behalf of the Company the below-mentioned Transfer and Administration Agreement and Receivables Purchase Agreement and all other Transaction Documents (as defined in such Transfer and Administration Agreement) to which the Company is a party and the signatures below set opposite their names are their genuine signatures: Name Office Signatures [OFFICE] [OFFICE] 5. The representations and warranties of the Company contained in Section ___ of the Transfer and Administration Agreement dated as of __________, 199_ among the Company, IMG Agrico Funding Company as Transferor, Enterprise Funding Corporation, NationsBank, N.A. and certain financial institutions named therein are true and correct as if made on the date hereof.] 6. The Company is a general partner of the Transferor. WITNESS my hand and seal of the Company as of this ____ day of ________, 199_. Secretary I, the undersigned, Vice President of the Company, DO HEREBY CERTIFY that _____________________ is the duly elected and qualified Secretary of the Company and the signature above is his/her genuine signature. WITNESS my hand as of this ____ day of _______, 199_. Vice President Exhibit M [Form of Company Certificate] THIS CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE TRANSFERRED, ASSIGNED, EXCHANGED OR CONVEYED EXCEPT IN ACCORDANCE WITH THE TRANSFER AND ADMINISTRATION AGREEMENT REFERRED TO HEREIN. No. 1 One Unit [Date] Evidencing an undivided interest in a pool of accounts receivables generated from time to time in the ordinary course of business by [ ] (the "Transferor"). (Not an interest in or obligation of [ ] ) This certifies that ENTERPRISE FUNDING CORPORATION ("Enterprise") is the registered owner of a fractional undivided interest in a pool of accounts receivables pursuant to a Transfer and Administration Agreement between Enterprise and the Transferor, dated as of March __, 1997 (the "Agreement"). The Receivables consist of all accounts receivables generated under the Contracts from time to time hereafter, all monies due or to become due in payment of the Receivables and the other assets and interests as provided in the Agreement. To the extent not defined herein, capitalized terms used herein have the meanings assigned to such terms in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement, as amended from time to time, the holder hereof by virtue of the acceptance hereof assents and by which the holder hereof is bound. In the event of any inconsistency or conflict between the terms of this Certificate and the terms of the Agreement, the terms of the Agreement shall control. This Certificate represents a fractional undivided interest in the Receivables, including the right to receive Collections and other amounts at the times and in the amounts specified in the Agreement. The aggregate interest in the Receivables represented by this Certificate at any time shall equal the Percentage Factor as determined in accordance with the Agreement. IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly executed. [ ] By: Name: Title: EX-10.73 20 RECEIVABLES PURCHASE AGREEMENT EXHIBIT 10.73 RECEIVABLES PURCHASE AGREEMENT between IMC-AGRICO COMPANY as Seller and IMC-AGRICO RECEIVABLES COMPANY L.L.C. as Purchaser Dated as of June 27, 1997 RECEIVABLES PURCHASE AGREEMENT This RECEIVABLES PURCHASE AGREEMENT, dated as of June 27, 1997 (as amended, supplemented or otherwise modified and in effect from time to time, this "Agreement"), between IMC-AGRICO COMPANY, a Delaware general partnership, as seller and collection agent (the "Seller" or the "Collection Agent") and IMC-AGRICO RECEIVABLES COMPANY L.L.C., a Delaware limited liability company, as purchaser (the "Purchaser"). W I T N E S S E T H : WHEREAS, the Purchaser desires to purchase from time to time certain accounts receivable existing on the Closing Date and generated thereafter in the normal course of the Seller's business; WHEREAS, the Seller desires to sell and assign from time to time such certain accounts receivable to the Purchaser upon the terms and conditions hereinafter set forth; WHEREAS, the Collection Agent has agreed to service the ac counts receivable sold to the Purchaser by the Seller hereunder; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by and between the Purchaser and the Seller as follows: ARTICLE Numbering in use: Ctrl+1 = ARTICLE I Ctrl+5 = (i) Ctrl+2 = Section1.1 Ctrl+6 = (1) Ctrl+3 = (a) Ctrl+7 = (A) Ctrl+4 = (aa) Ctrl+8 = Section 1.1 (a) When (aa) is required, play Choose Numbering Style macro, Start Numbering at New Value, Level 3, start at 1. Then use Ctrl+4 for (aa) ARTICLE I DEFINITIONS SECTION 1.1. Definitions. All capitalized terms used herein shall have the meanings specified herein or, if not so specified, the meaning specified in, or incorporated by reference into, the Transfer Agreement, and shall include in the singular number the plural and in the plural number the singular: "Advance" shall have the meaning specified in Section 3.2(a). "Certificate" shall mean the Purchase Certificate executed by the Seller evidencing the transfer of Receivables hereunder. "Closing Date" shall mean June 30, 1997. "Company" shall mean Enterprise Funding Corporation, a Delaware corporation, as purchaser under the Transfer Agreement. "Cut-Off Date" shall mean June 27, 1997. "Eligible Receivable" shall have the meaning specified in the Transfer Agreement. "Event of Bankruptcy" shall have the meaning specified in the Transfer Agreement. "Outstanding Balance" shall have the meaning specified in the Transfer Agreement. "Purchase Date" shall have the meaning assigned in Section 3.2(b) hereof. "Purchase Discount" shall mean .65% or such other Purchase Discount as may be agreed upon by the Purchaser and Seller on or prior to the Purchase Date, which Purchase Discount shall be calculated to yield a Purchase Price which approximates the expected present value of the Receivables but allows the Purchaser a reasonable return with re spect to such Purchase. The amount of the Purchase Discount shall include an amount equal to the servicing fee to be paid to the Collection Agent by the Purchaser. "Purchase Period" shall mean, with respect to Receivables sold by the Seller to the Purchaser after the Closing Date, the period reported upon in the most recent Investor Report delivered after the Closing Date. "Purchase Price" shall have the meaning set forth in Section 3.1 hereof. "Purchaser" shall mean IMC-Agrico Receivables Company L.L.C., a Delaware limited liability company, and its successors and permitted assigns. "Receivable" shall mean, for purposes of this Agreement, the indebtedness owed to the Seller by any Obligor under a Contract whether constituting an account, chattel paper, instrument or general intangi ble, arising in connection with the sale or lease of merchandise or the rendering of services by the Seller and includes the right to payment of any Finance Charges and other obligations of such Obligor with re spect thereto. "Related Security" shall mean, with respect to any Receivable, all of the Seller's right, title and interest in, to and under: (i) all of the Seller's interest, if any, in the merchandise (including returned or repossessed merchandise), if any, the sale of which by the Seller to the relevant Obligor gave rise to such Receivable; (ii) all other security interests or liens and property subject thereto from time to time, if any, pur porting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements signed by an Obligor describing any collateral securing such Receiv able; (iii) all guarantees, indemnities, warranties, insurance (and proceeds and premium refunds thereof) or other agreements or arrangements of any kind from time to time sup porting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or other wise; (iv) all Records related to such Receivables; and (v) all Proceeds of any of the foregoing. "Relevant UCC" with respect to any state shall mean the Uni form Commercial Code as in effect in such state. "Secured Obligations" shall have the meaning set forth in Section 2.1(d) hereof. "Subordinated Note" shall have the meaning specified in Section 3.2(b). "Termination Date" shall have the meaning specified in Section 8.1. "Transfer Agreement" shall mean the Transfer and Administration Agreement, dated as of June 27, 1997, by and among IMC- Agrico Company, individually and as Collection Agent, IMC-Agrico Receivables Company L.L.C., as Transferor and Enterprise Funding Corpo ration, as such agreement may be amended, modified or supplemented from time to time. SECTION 1.2 Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the Relevant UCC, and not specifically defined herein, are used herein as defined in such Article 9. SECTION 1.3 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding." [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE II PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES SECTION 2.1. Sale. (a) Upon the terms and subject to the conditions set forth herein, the Seller hereby sells, assigns, transfers and conveys to the Purchaser, and the Purchaser hereby purchases from the Seller, on the terms and subject to the conditions specifically set forth herein, and without recourse except as otherwise provided in Article VI, all of the Seller's right, title and interest, whether now owned or hereafter acquired, in, to and under the Receiv ables outstanding on the Closing Date and thereafter owned by the Seller, through any Termination Date (but not thereafter), together with all Related Security and Collections with respect thereto and all proceeds of the foregoing. The foregoing sale, assignment, transfer and conveyance does not constitute an assumption by the Purchaser of any obligations of the Seller or any other Person to Obligors or to any other Person in connection with the Receivables or the Contracts related thereto or under any Related Security and instrument relating to the Receivables. (b) In connection with the foregoing sale, the Seller agrees to record and file on or prior to the Closing Date, at its own expense, a financing statement or statements with respect to the Receivables and the other property described in Section 2.1(a) sold by the Seller here under meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect and protect the interests of the Purchaser created hereby under the Relevant UCC against all creditors of and purchasers from the Seller, and to deliver either the originals of such financing statements or a file-stamped copy of such financing statements or other evidence of such filings to the Purchaser on the Closing Date. (c) The Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents and take all actions as may be necessary or as the Purchaser may reasonably request in order to perfect or protect the interest of the Purchaser in the Receivables purchased hereunder or to enable the Purchaser to exercise or enforce any of its rights hereunder. Without limiting the foregoing, the Seller will, in order to accurately reflect this purchase and sale transaction, execute and file such financing or continuation statements or amendments thereto or assignments thereof (as permitted pursuant hereto) as may be requested by the Purchaser, and upon the request of the Purchaser, mark its master data processing records and other documents with a legend describing the purchase by the Purchaser of the Receivables and the subsequent transfer thereof to the Company pursuant to the Transfer Agreement and stating "THE RECEIVABLES IN THESE FILES HAVE BEEN ACQUIRED BY AND CONVEYED TO IMC- AGRICO RECEIVABLES COMPANY L.L.C. (the "L.L.C.") PURSUANT TO THE RECEIVABLES PURCHASE AGREEMENT DATED AS OF JUNE 27, 1997 BETWEEN IMC- AGRICO COMPANY AND THE L.L.C., AND AN INTEREST THEREIN HAS BEEN AS SIGNED BY THE L.L.C. TO ENTERPRISE FUNDING CORPORATION PURSUANT TO THE TRANSFER AND ADMINISTRATION AGREEMENT DATED AS OF JUNE 27, 1997, AS AMENDED FROM TIME TO TIME, AMONG IMC-AGRICO RECEIVABLES COMPANY L.L.C., IMC-AGRICO COMPANY AND ENTERPRISE FUNDING CORPORATION." The Seller shall, upon request of the Purchaser, obtain such additional search reports as the Purchaser shall request. To the fullest extent permitted by applicable law, the Purchaser shall be permitted to sign and file continuation statements and amendments thereto and assignments thereof without the Seller's signature. Carbon, photographic or other reproduction of this Agreement or any financing statement shall be sufficient as a financing statement. (d) It is the express intent of the Seller and the Purchaser that the conveyance of the Receivables by the Seller to the Purchaser pursuant to this Agreement be construed as a "sale of accounts," as such term is used in Article 9 of the Relevant UCC, by the Seller to the Purchaser, which sale is absolute and irrevocable and provides the Purchaser with the full benefits of ownership of such Receivables. Fur ther, it is not the intention of the Seller and the Purchaser that such conveyance be deemed a grant of a security interest in the Receivables by the Seller to the Purchaser to secure a debt or other obligation of the Seller. However, in the event that, notwithstanding the express intent of the parties, the Receivables are construed to constitute property of the Seller, then (i) this Agreement also shall be deemed to be, and hereby is, a security agreement within the meaning of the Rele vant UCC; and (ii) the conveyance by the Seller provided for in this Agreement shall be deemed to be, and the Seller hereby grants to the Purchaser, a security interest in, to and under all of the Seller's right, title and interest in, to and under the Receivables outstanding on the Closing Date and thereafter owned by the Seller, together with all Related Security and Collections with respect thereto and all pro ceeds of the foregoing, to secure the rights of the Purchaser set forth in this Agreement or as may be determined in connection therewith by applicable law (collectively, the "Secured Obligations"). The Seller and the Purchaser shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that the security interest in the Receivables created hereby, whether deemed to be an ownership interest as intended by the parties hereto or a security interest to secure the Secured Obligations, would in each such event, be deemed to be a perfected security interest in favor of the Purchaser under applicable law and will be maintained as such throughout the term of this Agreement. SECTION 2.2. Servicing of Receivables. The servicing, administering and collection of the Receivables shall be conducted by the Seller, which hereby agrees to perform, take or cause to be taken all such action as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations and with the care and diligence which the Seller employs in servicing similar receivables for its own account, in accor dance with the Credit and Collection Policy. The Purchaser hereby ap points the Seller as its agent to enforce the Purchaser's rights and interests in, to and under the Receivables, the related Contracts, the Related Security and the Collections with respect thereto. The Seller shall hold in trust for the Purchaser, in accordance with its inter ests, all Records which evidence or relate to the Receivables, the related Contracts, Related Security, Collections and proceeds with re spect thereto. Notwithstanding anything to the contrary contained here in, from and after the occurrence of a Termination Event (as defined in the Transfer Agreement) or a Collection Agent default under the Trans fer Agreement, the Company shall have the absolute and unlimited right to terminate the Seller's servicing activities described in this Sec tion 2.2. In consideration of the foregoing, the Purchaser agrees to pay the Seller a servicing fee of 0.75% per annum on the aggregate Out standing Balance of Receivables sold, payable monthly, for its perfor mance of the duties and obligations described in this Section 2.2; provided that any such monthly payment shall be reduced by any amounts payable in such month by the Company to the Seller, in its capacity as Collection Agent pursuant to the Transfer Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (FOR CONSISTENCY PURPOSES) ARTICLE III CONSIDERATION AND PAYMENT; RECEIVABLES SECTION 3.1. Purchase Price. The Purchase Price for the Receivables and related property conveyed to the Purchaser by the Seller under this Agreement shall be a dollar amount equal to (a) for Receivables transferred by Seller on the date of the Initial Closing Date, the product of (i) the aggregate Outstanding Balance of all Receivables as of the Initial Closing Date, and (ii) one minus the then applicable Purchase Discount, and (b) for Receivables transferred by the Seller on any date thereafter, the product of (i) the aggregate Out standing Balance of the Receivables sold on such date and (ii) one minus the Purchase Discount applicable on the Purchase Date. SECTION 3.2. Payment of Purchase Price. (a) The Purchase Price for the Receivables sold on the Closing Date shall be paid (i) by payment of $49,300,000 in immediately available funds, (ii) through an advance under the Subordinated Note (such advance and any advance thereunder as contemplated by Section 3.2(b), each an "Advance") in the amount of $19,052,535.46 and (iii) the balance of the Purchase Price shall be deemed paid as a contribution to the capital of the Purchaser by the Seller of Receivables. (b) The Purchase Price for the Receivables sold by the Seller on any date after the date hereof (each, a "Purchase Date") shall be paid either (i) in cash or (ii) if Purchaser does not have sufficient cash to pay the Purchase Price, by means of (A) an Advance under the Subordinated Note or (B) with the consent of the Seller, capi tal contributed by the Seller to the Purchaser in the form of a con tribution of the additional Receivables or contribution of cash in the requisite amount or (iii) with the consent of the Seller, any combina tion of the foregoing. Any cash contributions pursuant to the immediately preceding sentence may be paid by a reduction in the Pur chase Price to be paid to the Seller on such date. In the event the Purchaser does not have sufficient cash to pay the Purchase Price due on any Purchase Date and the Seller is not willing to consent to the payment of such insufficiency by means of a capital contribution, such insufficiency shall be evidenced by the making of an Advance on such Purchase Date in an original principal amount equal to such cash short fall owed to the Seller, provided, however that no Advance shall be made if immediately thereafter the Net Worth of the Purchaser would be less than 10% of the Outstanding Balance of all Eligible Receivables as most recently calculated by the Collection Agent at such time. All Ad vances made by the Seller to the Purchaser shall be evidenced by a single subordinated note, duly executed on behalf of the Purchaser, in substantially the form of Exhibit B annexed hereto, delivered and payable to the Seller in a principal amount equal to $50,000,000 (the "Subordinated Note"). The Seller is hereby authorized by the Purchaser to endorse on the schedule attached to the Subordinated Note (or a continuation of such schedule attached thereto and made a part thereof) an appropriate notation evidencing the date and amount of each Advance, as well as the date and amount of each payment with respect thereto; provided, however, that the failure of any Person to make such a notation shall not affect any obligations of the Purchaser thereunder. Any such notation shall be conclusive and binding as to the date and amount of such Advance, or payment of principal or interest thereon, absent manifest error. (c) The terms and conditions of the Subordinated Note and all Advances thereunder shall be as follows: (i) Repayment of Advances. All amounts paid by the Purchaser with respect to the Advances shall be allocated first to the repayment of accrued interest until all such interest is paid, and then to the outstanding principal amount of the Advances. Subject to the provisions of this Agreement, the Purchaser may borrow, repay and reborrow Advances on and after the date hereof and prior to the termination of this Agreement, subject to the terms, provisions and limitations set forth herein. (ii) Interest. The Subordinated Note shall bear interest from its date on the outstanding principal balance thereof at a rate per annum equal to one month LIBOR plus one and one-quarter (1.25%) percent as published in the Money Rates Section of The Wall Street Journal. Interest on each Advance shall be computed based on the number of days elapsed in a year of 360 days and shall be payable monthly. (iii) Sole and Exclusive Remedy/Subordination. The Purchaser shall be obligated to repay Advances to the Seller only to the extent of funds available to the Purchaser after making any required payments to the Company under the Transfer Agreement and, to the extent that such payments are insufficient to pay all amounts owing to the Seller under the Subordinated Note, the Seller shall not be entitled to enforce any claim against the Purchaser for payment of such amounts unless and until such date following the Termination Date when the Net Investment has been reduced to zero. The Subordinated Note shall be fully subordinated to any rights of the Company, and its per mitted assigns pursuant to the Transfer Agreement, and shall not evi dence any rights in the Receivables. (iv) Offsets, etc. The Purchaser may offset any amount due and owing by the Seller against any amount due and owing by Pur chaser to the Seller under the terms of the Subordinated Note. SECTION 3.3. Daily and Monthly Reports. (a) On each Determination Date, the Seller shall deliver to the Purchaser a report covering the preceding Collection Period, substantially in the form of the Investor Report attached as Exhibit E to the Transfer Agree ment, showing (i) the aggregate Purchase Price of Receivables acquired or generated by the Seller in the preceding Collection Period and (ii) the aggregate Outstanding Balance of such Receivables that are Eligible Receivables as of the last day of such preceding Collection Period. (b) The Seller will provide to the Purchaser on each Busi ness Day a report of daily sales and a report of daily cash receipts. Prior to the fifteenth day of each month, the Seller will provide to the Purchaser a report which reconciles Receivables purchased by the Purchaser during the preceding calendar month and cash payments made by the Purchaser to the Seller during such month. If, as a result of the foregoing reconciliation, it is discovered that the Seller retained Collections on any day which it was not otherwise entitled to retain (whether as Purchase Price for Receivables, repayments of principal or payments of interest on the Subordinated Note, servicing compensation, returns of capital or otherwise), the Seller shall pay interest to the Purchaser on the average daily amount of the excess funds so retained by the Seller during the prior month. Such interest shall be payable on the second Business Day following receipt of the reconciliation report and shall accrue at an interest rate equal to that then payable by the Purchaser under the Subordinated Note. Prior to the Termination Date, unless Seller has received notice from the Company that the Purchaser is in default of its payment obligations under the Transfer Agreement, the Seller's interest obligation may be paid by a reduction in the Purchase Price otherwise paid by the Purchaser on such date or by a reduction in amounts otherwise owed by the Purchaser under the Subordinated Note. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Seller's Representations and Warranties. The Seller represents and warrants to the Purchaser as of the Closing Date and shall be deemed to represent and warrant as of the date of the creation of any sale of any interest in Receivables to the Purchaser pursuant to this Agreement that: (a) Corporate Existence and Power. The Seller is a general partnership formed and validly existing under the laws of the State of Delaware and has all power and all material governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now conducted where the failure to have such governmental licenses, authorizations, consents and approvals would have a material adverse effect on (i) the Seller's business or properties, (ii) the Seller's ability to perform its obligations hereunder or (iii) the Purchaser's interest in the Receivables. (b) Partnership and Governmental Authorization; Contraven tion. The execution, delivery and performance by the Seller of this Agreement are within the Seller's partnership powers, have been duly authorized by all necessary partnership action, require no action by or in respect of, or filing with, any Official Body or official thereof (except for the filing of UCC financing statements as required by this Agreement), and do not contravene, or constitute a default under, any provision of applicable law, rule or regulation or of the partnership agreement of the Seller or of any agreement, judgment, injunction, order, writ, decree or other instrument binding upon the Seller or result in the creation or imposition of any Adverse Claim on the assets of the Seller or any of its Subsidiaries (except those created by this Agreement). (c) Binding Effect. This Agreement will constitute the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bank ruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally. (d) Perfection. Immediately preceding the sale of the Re ceivables and related property pursuant to this Agreement, the Seller was the owner of all of the Receivables, free and clear of all Adverse Claims. On or prior to the date of each sale of Receivables pursuant to this Agreement, all financing statements and other documents re quired to be recorded or filed in order to perfect and protect the ownership interest of the Purchaser in and to the Receivables against all creditors of and purchasers from the Seller will have been duly filed in each filing office necessary for such purpose and all filing fees and taxes, if any, payable in connection with such filings shall have been paid in full. (e) Accuracy of Information. To the best of its knowledge, all information heretofore furnished by the Seller to the Purchaser, the Administrative Agent or the Company for purposes of or in connec tion with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Seller to the Purchas er, the Administrative Agent and the Company will be, true and accurate in every material respect, on the date such information is stated or certified. (f) Tax Status. The Seller has filed all material tax re turns (federal, state and local) required to be filed and has paid or made adequate provision for the payment of all taxes, assessments and other governmental charges on or before the date such taxes were due, taking into account any extension of such due date. (g) Action, Suits. Except as set forth in Exhibit H-2 of the Transfer Agreement, there are no actions, suits or proceedings pending or, to the knowledge of the Seller, probable of assertion, against the Seller or any Affiliate of the Seller or their respective properties, in or before any court, arbitrator or other body, which question the validity of the transactions contemplated hereby or which, individually or in the aggregate, could be reasonably expected to have a material adverse effect of the Seller's ability to perform its obliga tions under this Agreement. (h) Place of Business. The principal place of business and chief executive office of the Seller is located at 2345 Waukegan Road, Suite E-200, Bannockburn, IL 60015, and the offices where the Seller keeps all its Records, are located at the address(es) described on Exhibit C hereto or such other locations notified to the Purchaser in accordance with this Agreement in jurisdictions where all action re quired by the terms of this Agreement has been taken and completed. (i) Good Title. Upon the sale of the Receivables and relat ed property to the Purchaser pursuant to this Agreement, assuming that the Purchaser takes all action required under this Agreement, the Pur chaser shall acquire a valid and perfected first priority ownership interest in such Receivables and Related Security, which interest, to the extent such interest can be created under Article 9 of the UCC and perfected by the filing of financing statements, constitutes a valid and perfected first priority security interest in each Receivable (and in the Related Security, Collections and Proceeds with respect thereto) that exists on the date of this Agreement and in each Receivable there after owned by the Seller and in the Related Security, Collections and Proceeds with respect thereto until the Termination Date in each case free and clear of any Adverse Claim. (j) Tradenames, Etc. As of the date hereof: (i) the Seller's chief executive office is located at the address for notices set forth in Section 9.3; (ii) the Seller has only the subsidiaries and divisions listed on Exhibit D hereto; and (iii) the Seller has, within the last five (5) years, operated only under the tradenames identified in Exhibit D hereto, and, within the last five (5) years, has not changed its name, merged with or into or consolidated with any other corporation or been the subject of any proceeding under Title 11, United States Code (Bankruptcy), except as disclosed in Exhibit D hereto. (k) Nature of Receivables. Each Receivable (x) represented by the Seller to be an Eligible Receivable or (y) included in the calculation of the Net Receivables Balance, in fact satisfies at such time the definition of "Eligible Receivable" set forth in the Transfer Agreement and is an "eligible asset" as defined in Rule 3a-7 under the Investment Company Act of 1940, as amended. (l) Amount of Receivables. As of the Cut-Off Date, the aggregate Outstanding Balance of the Receivables in existence was at least $77,556,653.71. (m) Credit and Collection Policy. Since February 20, 1997, there have been no material changes in the Credit and Collection Policy. (n) Collections and Servicing. Since February 20, 1997, there has been no material adverse change in the ability of the Seller to service and collect the Receivables. (o) Not an Investment Company. The Seller is not, and is not controlled by, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provi sions of such Act. (p) ERISA. The Seller is in compliance in all material respects with ERISA and no lien in favor of the Pension Benefit Guaranty Corporation on any of the Receivables shall exist. (q) Lock-Box Accounts. The names and addresses of all the Lock-Box Banks, together with the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified in Exhibit C to the Transfer Agreement (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Administrative Agent and for which Lock-Box Agreements have been executed in accor dance with Section 2.8(b) of the Transfer Agreement and delivered to the Collateral Agent). All Obligors have been instructed to make pay ment to a Lock-Box Account and only Collections are deposited into the Lock-Box Accounts. (r) Bulk Sales. No transaction contemplated by this Agreement requires compliance with any bulk sales act or similar law. (s) Preference; Voidability. The Seller warrants that the conveyance of the applicable Receivables and Collections and Related Security to the Purchaser, and each such conveyance, shall not have been made for or on account of an antecedent debt owed by the Seller to the Purchaser and no such transfer is or may be voidable under any Section of the Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et seq.), as amended. (t) Use of Proceeds. No proceeds of any purchase hereunder will be used by the Seller to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities and Exchange Act of 1934, as amended; SECTION 4.2. Reaffirmation of Representations and Warranties by the Seller; Notice of Breach. On each sale date, the Seller, by ac cepting the proceeds of such sale, shall be deemed to have certified that all representations and warranties described in Section 4.1 are true and correct on and as of such day as though made on and as of such day. The representations and warranties set forth in Section 4.1 shall survive the conveyance of the Receivables to the Purchaser, and termina tion of the rights and obligations of the Purchaser and the Seller under this Agreement. Upon discovery by the Purchaser or the Seller of a breach of any of the foregoing representations and warranties, the party discovering such breach shall give prompt written notice to the other within three Business Days of such discovery. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE V COVENANTS OF THE SELLER SECTION 5.1. Covenants of the Seller. The Seller hereby covenants and agrees with the Purchaser that, for so long as this Agree ment is in effect, and until all Receivables have been sold to the Purchaser pursuant hereto, shall have been paid in full or written-off as uncollectible, and any amounts owed by the Seller pursuant to this Agreement have been paid in full, unless the Purchaser otherwise consents in writing, the Seller covenants and agrees as follows: (a) Conduct of Business. The Seller will, and will cause each of its Subsidiaries to, carry on and conduct its business in sub stantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic partnership in its jurisdiction of formation and will maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted. (b) Compliance with Laws. The Seller will, and will cause each of its Subsidiaries to, comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it or its properties may be subject. (c) Furnishing of Information and Inspection of Records. The Seller will furnish to the Purchaser from time to time such informa tion with respect to the Receivables as the Purchaser may reasonably re quest, including, without limitation, listings identifying the Obligor and the Outstanding Balance for each Receivable. The Seller will at any time and from time to time during regular business hours permit the Purchaser, or its agents or representatives, (i) to examine and make copies of and abstracts from all Records and (ii) to visit the offices and properties of the Seller for the purpose of examining such Records, and to discuss matters relating to Receivables or the Seller's perfor mance hereunder with any of the officers, directors, employees or inde pendent public accountants of the Seller having knowledge of such mat ters. (d) Keeping of Records and Books of Account. The Seller will maintain a system of accounting established and administered in accordance with generally accepted accounting principles, consistently applied, and will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain, all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the daily identification of each new Receivable and all Collections of and to permit the periodic identification of adjust ments to each existing Receivable). The Seller will give the Purchaser and the Administrative Agent notice of any material change in the admin istrative and operating procedures of the Seller referred to in the previous sentence. (e) Performance and Compliance with Receivables and Contracts. The Seller, at its expense, will timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Receiv ables. (f) Credit and Collection Policies. The Seller will comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Account. (g) Collections. The Seller shall instruct all Obligors to cause all Collections to be deposited directly to a Lock-Box Account. (h) Collections Received. The Seller shall hold in trust, and deposit, immediately, but in any event not later than the close of business on the second Business Day following its receipt thereof, to a Lock-Box Account all Collections received from time to time by the Seller. (i) Sale Treatment. The Seller agrees to treat this conveyance for all purposes (including, without limitation, tax and financial accounting purposes) as a sale and, to the extent any such reporting is required, shall report the transactions contemplated by this Agreement on all relevant books, records, tax returns, financial statements and other applicable documents as a sale of the Receivables to the Purchaser. (j) ERISA. The Seller shall promptly give the Purchaser written notice upon becoming aware that the Seller or any of its Subsidiaries is not in compliance in all material respects with ERISA or that any ERISA lien on any of the Receivables exists. (k) The Seller shall provide to the Purchaser all financial statements required by Section 5.l(a)(i) of the Transfer Agreement. SECTION 5.2. Negative Covenants of the Seller. During the term of this Agreement, unless the Administrative Agent and the Purchaser shall otherwise consent in writing: (a) No Sales, Liens, Etc. Except as otherwise provided herein, the Seller will not sell, assign (by operation of law or other wise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (or the filing of any financing statement) or with respect to, any inventory or goods, the sale of which will give rise to a Re ceivable, or any Receivable or related Contract, or upon or with respect to any account which concentrates in a Lock-Box Bank to which any Collections of any Receivable are sent, or assign any right to re ceive income in respect thereof. (b) No Extension or Amendment of Receivables. The Seller will not extend, amend or otherwise modify the terms of any Receivable, or amend, modify or waive any term or condition of any Account related thereto, except as provided in Sections 5.2 and 6.2 of the Transfer Agreement. (c) No Change in Business or Credit and Collection Policy. The Seller will not make any material change in the character of its business or in the Credit and Collection Policy, which change would, in either case, impair the collectibility of any Receiv able. (d) Change in Payment Instructions to Obligors. The Seller will not add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or from those listed in Exhibit C to the Transfer Agreement or make any change in its instructions to Obligors regarding payments to be made to any Lock-Box Account, unless (i) such instruc tions are to deposit such payments to another existing Lock-Box Account or (ii) the Administrative Agent shall have received written notice of such addition, termination or change at least 30 days prior thereto and the Administrative Agent shall have received a Lock-Box Agreement exe cuted by each new Lock-Box Bank or an existing Lock-Box Bank with respect to each new Lock-Box Account, as applicable. (e) Deposits to Lock-Box Accounts. The Seller will not deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections of Receivables. (f) Change of Name, Etc. The Seller will not change its name, identity or structure or its chief executive office, unless at least 10 days prior to the effective date of any such change the Seller delivers to the Purchaser and the Collateral Agent (i) such documents, instruments or agreements, including, without limitation, appropriate financing statements under the Relevant UCC, executed by the Seller necessary to reflect such change and to continue the perfection of the Purchaser's and any assignee's interest in the Receivables and (ii) new or revised Lock-Box Agreements which reflect such change and enable the Collateral Agent to exercise its rights under Section 2.8 of the Trans fer Agreement. (g) Separate Business. The Seller shall not: (i) fail to maintain separate books, financial statements, accounting records and other corporate documents from those of the Purchaser, (ii) commingle any of its assets or the assets of any of its Affiliates with those of the Purchaser, (iii) pay from its own assets any obligation or indebtedness of any kind incurred by the Purchaser, (iv) directly, or through any of its Affiliates, borrow funds or accept credit or guaranties from the Purchaser except pursuant to this Agreement in con nection with the purchase of the Receivables. (h) No Mergers, Etc. The Seller will not (i) consolidate or merge with or into any other Person, or (ii) sell, lease or transfer all or substantially all of its assets to any other person. SECTION 5.3. Indemnification. The Seller agrees to indem nify, defend and hold the Purchaser harmless from and against any and all loss, liability, damage, judgment, claim, deficiency, or expense (including interest, penalties, reasonable attorneys' fees and amounts paid in settlement) to which the Purchaser or any assignee thereof may become subject insofar as such loss, liability, damage, judgment, claim, deficiency, or expense arises out of or is based upon a breach by the Seller of its representations, warranties and covenants con tained herein, or any information certified in any schedule or certificate delivered by the Seller hereunder, being untrue in any material respect at any time. The obligations of the Seller under this Section 5.3 shall be considered to have been relied upon by the Purchaser and the Company and shall survive the execution, delivery, performance and termination of this Agreement, regardless of any inves tigation made by the Purchaser, the Company or the Administrative Agent or on behalf of any of them. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE VI REPURCHASE OBLIGATION SECTION 6.1. Mandatory Repurchase. (a) Breach of Warranty. If on any day any Receivable which has been sold by the Seller hereunder and which has been reported by the Seller as an Eligible Receivable, shall fail to meet the conditions set forth in the definition of "Eligible Receivable" (except to the extent such conditions expressly relate to an earlier date or such failure relates to the Obligor becoming subject to an Event of Bankruptcy from and after the date of sale) or for which any representa tion or warranty made herein in respect of such Receivable shall no longer be true, the Seller shall be deemed to have received on such day a Collection of such Receivable in full and shall on such day pay to the Purchaser an amount equal to the aggregate Outstanding Balance of such Receivable; provided that, prior to the Termination Date, such amount may be paid by a reduction in the Purchase Price otherwise paid to the Seller on the next occurring Purchase Date, unless the Seller has received notice from the Company that the Purchaser is required to make a payment in respect of such breach pursuant to the Transfer Agree ment. (b) Reconveyance Under Certain Circumstances. The Seller agrees that, with respect to any Receivable sold hereunder, in the event of a breach of any of the representations and warranties set forth in Sections 4.1(d), 4.1(k) or 4.1(i), the Seller shall accept the reconveyance of such Receivable upon receipt by the Seller of notice given in writing by the Purchaser and the Seller's failure to cure such breach within three (3) Business Days of such notice. In the event of a reconveyance under this Section 6.1(b), the Seller shall pay to the Purchaser in immediately available funds on such third day an amount equal to the Outstanding Balance of any such Receivable; provided that, prior to the Termination Date, such amount may be paid by a reduction in the Purchase Price paid to the Seller on the next occurring Purchase Date, unless the Seller has received notice from the Company that the Purchaser is required to make a payment in respect of such breach pursu ant to the Transfer Agreement. SECTION 6.2. Dilutions, Etc. The Seller agrees that if on any day the Outstanding Balance of a Receivable sold by the Seller here under is either (x) reduced as a result of any defective, rejected or returned merchandise or services, any discount, credit, rebate, dispute, warranty claim, repossessed or returned goods, chargeback, allowance or any billing adjustment, or (y) reduced or canceled as a result of a setoff or offset in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction) then the Seller shall be deemed to have re ceived on such day a collection of such Receivable in the amount of such reduction, cancellation or payment made by the Obligor and shall on such day pay to the Purchaser an amount equal to such reduction or cancellation; provided that, prior to the Termination Date, such amount may be paid by a reduction in the Purchase Price paid to the Seller on the next occurring Purchase Date, unless the Seller has received notice from the Company that the Purchaser is required to make a payment in re spect of such breach pursuant to the Transfer Agreement. SECTION 6.3 Repurchases of Phos-Chem Receivables. If, on any day, any Receivable originated by Phosphate Chemical Export Asso ciation, Inc. becomes a Delinquent Receivable or Defaulted Receivable, then the Seller shall, within two (2) Business Days thereafter, repurchase each such Receivable by paying to the Purchaser in immediately available funds on such second Business Day an amount equal to the product of (i) the Outstanding Balance of each such Receivable times (ii) one minus the Purchase Discount then in effect or, if less, the amount owed by the Purchaser to the Company under Section 2.9(d) of the Transfer Agreement. SECTION 6.4 No Recourse. Except as otherwise provided in this Article VI, the Purchaser's purchase and the Seller's sale, assignment, transfer and conveyance of the Receivables under this Agree ment shall be without recourse to the Seller. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE VII CONDITIONS PRECEDENT SECTION 7.1. Conditions to the Purchaser's Obligations Regarding Receivables. The obligations of the Purchaser to purchase the Receivables on the Closing date and any Purchase Date shall be subject to the satisfaction of the following conditions: (a) All representations and warranties of the Seller con tained in this Agreement shall be true and correct on the Closing Date and on each Purchase Date thereafter with the same effect as though such representations and warranties had been made on such date; (b) All information concerning the Receivables provided to the Purchaser shall be true and correct in all material respects as of the Closing Date, in the case of any Receivables existing on the Clos ing Date, or the Purchase Date, in the case of any Receivables created after the Closing Date; (c) The Seller shall have substantially performed all other obligations required to be performed by the provisions of this Agree ment; (d) The Seller shall have filed or caused to be filed the fi nancing statement(s) required to be filed pursuant to Section 2.1(b); (e) All partnership and legal proceedings and all instru ments in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Purchaser, and the Purchaser shall have received from the Seller copies of all documents (including, without limitation, records of partnership pro ceedings) relevant to the transactions herein contemplated as the Purchaser may reasonably have requested; and (f) On the Closing Date, the Seller shall deliver to the Purchaser and the Administrative Agent a Purchaser Certificate as of the Cut-Off Date. ARTICLE VIII TERM AND TERMINATION SECTION 8.1. Term. This Agreement shall commence as of the date of execution and delivery hereof and shall continue in full force and effect until the date following the earliest of (i) the date desig nated by the Purchaser or the Seller as the termination date at any time following thirty (30) day's written notice to the other (with a copy thereof to the Administrative Agent), (ii) the occurrence of the "Termination Date" under the Transfer Agreement, (iii) upon the occur rence of an Event of Bankruptcy with respect to either the Purchaser or the Seller, (iv) the close of business on the third Business Day following a conveyance of Receivables to the Purchaser for which the Purchaser does not pay the Purchase Price in accordance with the provisions hereof, or (v) the date on which either the Purchaser or the Seller becomes unable for any reason to purchase or re-purchase any Receivable in accordance with the provisions of this Agreement or defaults on its obligations hereunder, which default continues unremedied for more than thirty (30) days after written notice (any such date being a "Termination Date"); provided, however, that the termination of this Agreement pursuant to this Section 8.1 hereof shall not discharge any Person from any obligations incurred prior to such termination, including, without limitation, any obligations to make any payments with respect to the interest of the Purchaser in any Receiv able sold prior to such termination. SECTION 8.2. Effect of Termination. Following the termination of this Agreement pursuant to Section 8.1, the Seller shall not sell, and the Purchaser shall not purchase, any Receivables. No termination or rejection or failure to assume the executory obligations of this Agreement in any Event of Bankruptcy with respect to the Seller or the Purchaser shall be deemed to impair or affect the obligations pertaining to any executed sale or executed obligations, including, without limitation, pre-termination breaches of representations and warranties by the Seller or the Purchaser. Without limiting the forego ing, prior to termination, the failure of the Seller to deliver comput er records of Receivables or any reports regarding the Receivables shall not render such transfer or obligation executory, nor shall the continued duties of the parties pursuant to Article V or Section 9.1 of this Agreement render an executed sale executory. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 9.1. Amendment. This Agreement and the rights and obligations of the parties hereunder may not be changed orally, but only by an instrument in writing signed by the Purchaser and the Seller and consented to in writing by the Administrative Agent. Any reconvey ance executed in accordance with the provisions hereof shall not be con sidered amendments to this Agreement. SECTION 9.2. GOVERNING LAW; Submission to Jurisdiction. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF ANY SECURITY INTEREST CREATED HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. (b) The parties hereto hereby submit to the nonexclu sive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in The City of New York for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each party hereto hereby irrevocably waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Nothing in this Section 9.2 shall affect the right of the Purchaser to bring any other action or proceeding against the Seller or its property in the courts of other jurisdictions. SECTION 9.3. Notices. Except as provided below, all communications and notices provided for hereunder shall be in writing (including telecopy or electronic facsimile transmission or similar writing) and shall be given to the other party at its address or telecopy number set forth below or at such other address or telecopy number as such party may hereafter specify for the purposes of notice to such party. Each such notice or other communication shall be effec tive (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section 9.3 and confirmation is received, (ii) if given by mail three Business Days following such posting, postage prepaid, U.S. certified or registered, (iii) if given by overnight courier, one Business Day after deposit thereof with a national overnight courier service, or (iv) if given by any other means, when received at the address specified in this Section 9.3. (a) in the case of the Purchaser: IMC-AGRICO RECEIVABLES COMPANY L.L.C. 2345 Waukegan Road Suite E-200 Bannockburn, IL 60015 Telephone: Telecopy: (847) 607-3529 Attention: Vice-President Finance Payment Information: ABA 071000152 Account 83666 Reference IMC-Agrico Receivables Company L.L.C. with a copy to: NationsBank, N.A. NationsBank Corporate Center 100 North Tryon Street NC1-007-10-07 Charlotte, NC 28255 Attention: Michelle M. Heath Structured Finance Telephone: (704) 386-7922 Telecopy: (704) 388-9169 (b) in the case of the Seller: IMC-AGRICO COMPANY 2345 Waukegan Road Suite E-200 Bannockburn, IL 60015 Telephone: (847) 607-3000 Telecopy: (847) 607-3529 Attn: Vice President-Finance Payment Information: Nationsbank of North Carolina, N.A. ABA 071000152 Account 65595 Reference IMC-Agrico Company or, as to each party, at such other address as shall be designated by such party in a written notice to each other party. SECTION 9.4. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement or any other Transaction Document shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 9.5. Assignment. This Agreement may not be assigned by the parties hereto, except that the Purchaser may assign its rights hereunder pursuant to the Transfer Agreement to the Company, and that the Company may assign any or all of its rights to any Liquidity Provid er. The Purchaser hereby notifies (and the Seller hereby acknowledges that) the Purchaser, pursuant to the Transfer Agreement, has assigned its rights hereunder to the Company. All rights of the Purchaser here under may be exercised by the Company, its designees or assignees, to the extent of their respective rights pursuant to such assignments. SECTION 9.6. Further Assurances. The Purchaser and the Seller agree to do and perform, from time to time, any and all acts and to execute any and all further instruments required or reasonably requested by the other party more fully to effect the purposes of this Agreement, including, without limitation, the execution of any financing statements or continuation statements or equivalent documents relating to the Receivables for filing under the provisions of the Relevant UCC or other laws of any applicable jurisdiction. SECTION 9.7. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Purchaser, the Seller, the Company or the Administrative Agent, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any rights, remedies, powers and privilege pro vided by law. SECTION 9.8. Counterparts. This Agreement may be executed in two or more counterparts including telecopy transmission thereof (and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument. SECTION 9.9. Binding Effect; Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. The Company and any Liquidity Provider is intended by the parties hereto to be a third-party beneficiary of this Agreement. SECTION 9.10. Merger and Integration. Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement. This Agreement may not be modified, amended, waived or supplemented except as provided herein. SECTION 9.11. Headings. The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof. SECTION 9.12. Exhibits. The schedules and exhibits referred to herein shall constitute a part of this Agreement and are incor porated into this Agreement for all purposes. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Purchaser and the Seller each have caused this Receivables Purchase Agreement to be duly executed by their respective officers as of the day and year first above written. IMC-AGRICO COMPANY as Seller By: IMC-AGRICO MP, INC., its managing partner By: Name: Title: IMC-AGRICO RECEIVABLES COMPANY L.L.C., as Purchaser By: IMC-AGRICO COMPANY, its operating manager By: IMC-AGRICO MP, INC. its managing partner By: Name: Title: Acknowledged and agreed as of the date first above written: ENTERPRISE FUNDING CORPORATION By:_____________________________ Name: Title: EXHIBIT A [FORM OF MONTHLY REPORT] EXHIBIT B FORM OF SUBORDINATED NOTE __________________ _________ __, 199_ FOR VALUE RECEIVED, the undersigned, IMC-Agrico Receivables Company, L.L.C., a Delaware limited liability company (the "Maker"), hereby promises to pay to the order of IMC-AGRICO COMPANY (the "Pay ee"), on _________, ____ or earlier as provided for in the Receivables Purchase Agreement dated as of the date hereof between the Maker and the Payee (as such agreement may from time to time be amended, supple mented or otherwise modified and in effect, the "Receivables Purchase Agreement"), the lesser of the principal sum of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000) or the aggregate unpaid principal amount of all Advances to the Maker from the Payee pursuant to the terms of the Receivables Purchase Agreement, in lawful money of the United States of America in immediately available funds, and to pay interest from the date thereof on the principal amount hereof from time to time outstanding, in like funds, at said office, at the rate per annum set forth in the Receivables Purchase Agreement and shall be payable in arrears on the first day of each calendar month (or if any such day is not a Business Day, on the succeeding Business Day). The Maker hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The non-exercise by the holder hereof of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. All borrowings evidenced by this Subordinated Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof, or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; provided, however, that the failure of the holder hereof to make such a notation or any error in such a notation shall not in any manner affect the obligation of the Maker to make payments of principal and interest in accordance with the terms of this Subordinated Note and the Receivables Purchase Agreement. The Maker shall have the right to prepay and, subject to the limitations set forth in the Receivables Purchase Agreement, reborrow Advances made to it without penalty or premium. This Subordinated Note is the Subordinated Note referred to in the Receivables Purchase Agreement, which, among other things, contains provisions for the subordination of this Subordinated Note to the rights of certain parties under the Transfer Agreement, all upon the terms and conditions therein specified. This Note shall be governed by, and construed in accordance with, the laws of the State of New York. IMC-AGRICO RECEIVABLES COMPANY L.L.C. By: IMC-Agrico Company, its Operating Manager By: IMC-Agrico MP, Inc., its managing general partner By: Name: Title: Advances and Payments Amount of Payments Unpaid Principal Name of Person Date Advance Principal/Interest Balance of Note Making Notation ______ $____________ EXHIBIT C LOCATION OF RECORDS, PRINCIPAL PLACE OF BUSINESS, ETC. 1. 2. EXHIBIT D TRADENAMES, ETC. None EX-11.1 21 FULLY DILUTED EARNINGS PER SHARE Exhibit 11.1 EARNINGS (CHARGE) PER SHARE FULLY DILUTED COMPUTATION FOR THE YEARS ENDED JUNE 30, 1997, 1996 and 1995 (IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) At June 30, ------------------------------------- 1997 1996 1995 ---- ---- ---- Basis for computation of fully diluted earnings per share: Earnings before extraordinary item and cumulative effect of accounting change, as reported $ 204.5 $ 144.3 $ 193.3 Add interest charges on convertible debt - 7.2 7.2 Less provision for taxes - (2.8) (2.8) ---------- --------- ---------- Earnings before extraordinary item and cumulative effect of accounting change, as adjusted 204.5 148.7 197.7 Extraordinary charge - debt retirement (11.4) - (6.5) Cumulative effect of accounting change - - (5.9) ---------- ---------- ---------- Net earnings applicable to common stock $ 193.1 $ 148.7 $ 185.3 ========== ========== ========== Number of shares: Weighted average shares outstanding 94,997,786 92,796,630 91,486,778 Conversion of convertible subordinated notes into common stock - 3,621,012 3,622,048 ----------- ---------- ---------- Total common and common equivalent shares assuming full dilution 94,997,786 96,417,642 95,108,826 =========== ========== ========== Fully diluted earnings per share: Earnings before extraordinary item and cumulative effect of accounting change $ 2.15 $ 1.54 $ 2.08 Extraordinary charge - debt retirement (.12) - (.07) Cumulative effect of accounting change - - (.06) ---------- ---------- ---------- Net earnings $ 2.03 $ 1.54 $ 1.95 ========== ========== ========== This calculation is submitted in accordance with Regulation S-K item 601(b)(11). However, under APB Opinion No. 15, calculation of fully diluted earnings per share would exclude the conversion of convertible securities which would have an antidilutive effect on earnings per share for each period. EX-12 22 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 IMC Global Inc. Computation of Ratio of Earnings to Fixed Charges Fiscal Year Ended June 30, ----------------------------------------------- 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- Fixed charges: Interest charges $ 51.1 $ 64.8 $ 70.2 $ 91.2 $ 55.6 ======= ======= ======= ======= ======= Earnings: Net earnings (loss) $ 193.1 $ 144.3 $ 180.9 $ 19.2 $(127.0) Extraordinary charge 11.4 - 6.5 25.2 2.0 Cumulative effect of accounting change - - 5.9 - 47.1(1) Provision (credit) for income taxes 117.5 94.1 115.5 34.8 (39.1) Minority interest 155.4 191.5 130.4 55.6 - Interest charges 51.1 64.8 70.2 91.2 55.6 ------- ------- ------- ------- ------- Total earnings $ 528.5 $ 494.7 $ 509.4 $ 226.0 $ (61.4) ======= ======= ======= ======= ======= Ratio of earnings to fixed charges $ 10.34 $ 7.63 $ 7.26 $ 2.48 $ (1.10) ======= ======= ======= ======= ======= Ratio of earnings to fixed charges (2) $ 10.34 $ 9.16 $ 7.26 $ 2.48 $ 1.94 ======= ======= ======= ======= ======= (1) Cumulative effect of SFAS No. 109, "Accounting for Income Taxes," on July 1, 1991. (2)The ratio of earning to fixed charges for the fiscal year ended June 30, 1996 excludes a charge of $98.6 million relating to the merger of The Vigoro Corporation into a wholly-owned subsidiary of the Company. The ratio of earnings to fixed charges for the fiscal year ended June 30,1993 excludes a charge of $169.1 million relating to the settlement of litigation resulting from a May 1991 explosion at a nitroparaffins plant in Sterlington, Louisiana. EX-13.1 23 REPORT OF ARTHUR ANDERSEN LLP Exhibit 13.1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of The Vigoro Corporation: We have audited the accompanying consolidated balance sheet of The Vigoro Corporation (a Delaware corporation) and subsidiaries as of June 30, 1995, and the consolidated statements of income, changes in shareholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements of Central Canada Potash, Inc. which statements reflect total assets and net sales of 20 percent and 6 percent, respectively, in 1995 of the consolidated totals. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for that entity, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Vigoro Corporation and subsidiaries as of June 30, 1995, and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Arthur Andersen LLP Chicago, Illinois January 22, 1996 EX-21.1 24 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT Certain of IMC Global Inc.'s subsidiaries are listed below. These subsidiaries are all included in the Company's consolidated financial statements, and collectively, together with IMC Global Inc., account for more than 90 percent of consolidated net sales, earnings (loss) before income taxes, extraordinary items and cumulative effect of a change in accounting principal, and total assets. Jurisdiction of Percent Incorporation Ownership --------------- ---------- IMC Global Operations Inc. Delaware 100% IMC-Agrico Company Delaware 53.5% IMC Global Potash Holdings Inc. Delaware 100% International Minerals & Chemical (Canada) Global Limited Canada 100% The Vigoro Corporation Delaware 100% IMC AgriBusiness Inc. Delaware 100% KCL Holdings, Inc. Delaware 100% IMC Kalium Ltd. Delaware 100% IMC Central Canada Potash Inc. Delaware 100% VNH, Inc. Delaware 100% IMC Nitrogen Company Delaware 100% IMC Kalium Carlsbad Potash Company Delaware 100% IMC Kalium Canada Ltd. Canada 100% Western Ag-Minerals Company Nevada 100% A number of subsidiaries are not shown, but even as a whole they do not constitute a significant subsidiary. EX-23.1 25 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following registration statements and related prospectuses filed by IMC Global Inc. under the Securities Act of 1933 of our report dated July 23, 1997 (except Note 22, as to which the date is September 5, 1997) with respect to the consolidated financial statements of IMC Global Inc. included in this Annual Report (Form 10-K) for the year ended June 30, 1997. Commission File No. -------------------- Form S-8, No. 33-22079 Form S-8, No. 33-22080 Form S-8, No. 33-38423 Form S-8, No. 33-42074 Form S-8, No. 33-56911 Form S-8, No. 333-189 Form S-3, No. 333-04831 Form S-3, No. 333-27827 ERNST & YOUNG LLP Ernst & Young LLP Chicago, Illinois September 23, 1997 Docket No. 100397 EX-23.2 26 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form 10-K of our report dated January 22, 1996. It should be noted that we have not audited any financial statements of the company subsequent to June 30, 1995 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP Arthur Andersen LLP Chicago, IL September 23, 1997 EX-24 27 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 Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Wendell F. Bueche POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Raymond F. Bentele POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Rod F. Dammeyer POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ James M. Davidson POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Robert E. Fowler, Jr. POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Harold H. MacKay POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ David B. Mathis POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Thomas H. Roberts, Jr. POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Joseph P. Sullivan POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Richard L. Thomas POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 1997 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this 26th day of August, 1997. ______________________________ Billie B. Turner EX-27.1 28 FINANCIAL DATA SCHEDULE
5 1000 YEAR JUN-30-1997 JUN-30-1997 20,600 22,600 369,300 6,800 534,200 1,014,400 4,337,200 1,928,000 3,611,600 421,800 694,800 101,800 0 0 1,238,100 3,611,600 2,982,000 2,982,000 2,212,000 2,459,200 149,700 0 51,100 322,000 117,500 204,500 0 (11,400) 0 193,100 2.03 2.03
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