-----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, I4sFKWmwPffppzW20WOzBfpCZixIq4UrfOvHEfenjjAnfTK5b5xa8HCXW5cpwUWP nfaL3/ddl5y1Bva/4oASaw== 0000820626-99-000009.txt : 19990426 0000820626-99-000009.hdr.sgml : 19990426 ACCESSION NUMBER: 0000820626-99-000009 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 26 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMC GLOBAL INC CENTRAL INDEX KEY: 0000820626 STANDARD INDUSTRIAL CLASSIFICATION: 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: 99575796 BUSINESS ADDRESS: STREET 1: 2100 SANDERS RD CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8472729200 MAIL ADDRESS: STREET 1: 2345 WAUKEGAN ROAD - SUITE E-200 CITY: BANNOCKBURN STATE: IL ZIP: 60015-5516 FORMER COMPANY: FORMER CONFORMED NAME: IMC FERTILIZER GROUP INC DATE OF NAME CHANGE: 19920703 10-K 1 FOR YEAR ENDED 12/31/98 =============================================================================== 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 year ended December 31, 1998 Commission file number 1-9759 IMC GLOBAL INC. (Exact name of Registrant as specified in its charter) Delaware 36-3492467 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2100 Sanders Road 60062 Northbrook, Illinois (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (847) 272-9200 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - - ------------------- ----------------------------------------- Common Stock, par value $1 per share New York and Chicago Stock Exchanges Preferred Share Purchase Rights New York and Chicago Stock Exchanges Warrants to Purchase Common Stock New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by non-affiliates of the Registrant: $2,168,229,493 as of March 15, 1999. Market value is based on the March 15, 1999 closing price of Registrant's common stock as reported on the New York Stock Exchange Composite Transactions for such date. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock: 114,342,634 shares, excluding 10,738,520 treasury shares as of March 15, 1999. DOCUMENTS INCORPORATED BY REFERENCE, IN PART: Information required by Items 6, 7, 7a and 8 of Part II is incorporated by reference to the sections of the Registrant's 1998 Annual Report to Stockholders described in such Items. Information required by Items 10, 11, 12 and 13 of Part III is incorporated by reference to the sections of the Registrant's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 27, 1999. =============================================================================== 1998 FORM 10-K CONTENTS Item Page Part I: 1. Business 1 Company Profile 1 Business Unit Information 2 Factors Affecting Demand 14 Other Matters 14 Executive Officers of the Registrant 15 2. Properties 17 3. Legal Proceedings 17 4. Submission of Matters to a Vote of Security Holders 19 Part II: 5. Market for the Registrant's Common Stock and Related Stockholder Matters 19 6. Selected Financial Data 19 7. Management's Discussion and Analysis of Results of Operations and Financial Condition 20 7a. Quantitative and Qualitative Disclosures about Market Risk 20 8. Financial Statements and Supplementary Data 20 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 20 Part III: 10. Directors and Executive Officers of the Registrant 20 11. Executive Compensation 20 12. Security Ownership of Certain Beneficial Owners and Management 20 13. Certain Relationships and Related Transactions 20 Part IV: 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 21 Signatures 33 PART I. Item 1. Business.(1) COMPANY PROFILE IMC Global Inc. (the Company or IMC) is one of the world's leading producers and distributors of crop nutrients to the international agricultural community, one of the foremost manufacturers and distributors of animal feed ingredients to the worldwide industry and one of the world's leading producers of salt. The Company mines, processes and distributes potash in the United States and Canada and is the majority joint venture partner in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The Company also mines, processes and distributes salt products in the United States, Canada and Europe, including water conditioning, agricultural, industrial, consumer and road salt. In addition, the Company, through its interest in Phosphate Resource Partners Limited Partnership (PLP), participates in the exploration and production of oil & gas (Exploration Program) through its agreement with McMoRan Exploration Company (MMR), formerly McMoRan Oil & Gas Co. (MOXY). The Company's current operational structure consists of six business units corresponding to its major product lines as follows: IMC-Agrico Phosphates (phosphates), IMC Kalium (potash), IMC Salt (salt), IMC-Agrico Feed Ingredients (animal feed), IMC AgriBusiness (wholesale and retail distribution) and IMC Chemicals (soda ash and other inorganic chemicals). As a result of the pending divestitures of IMC AgriBusiness and IMC Chemicals, the future operational structure of the Company will be comprised of the following four business units: IMC- Agrico Phosphates (Phosphates), IMC Kalium (Kalium), IMC Salt (Salt) and IMC-Agrico Feed Ingredients (Feed Ingredients). IMC and PLP have a 56.5 percent and 43.5 percent, respectively, direct economic interest in IMC-Agrico over the term of the joint venture. IMC owns 51.6 percent of the outstanding PLP limited partnership units. As a result, the Company's total interest in IMC-Agrico is approximately 78.9 percent. The three major nutrients required for plant growth are phosphorus, contained in phosphate rock; potassium, contained in potash; and nitrogen. Phosphorus plays a key role in the photosynthesis process. Potassium is an important regulator of plants' physiological functions. Nitrogen is an essential element for most organic compounds in plants. These elements occur naturally in the soil but need to be replaced as crops remove them from the soil. Currently, no viable substitutes exist to replace the role of phosphate, potash and nitrogen in the development and maintenance of high-yield crops. Salt serves several high volume applications where there is either no substitute or no economical substitute. It is an essential nutrient for animal health and is used universally to season food, as a food preservative and as an additive to livestock feed products. It also is the primary material used to provide safe highways, walkways and parking lots. It is used extensively in manufacturing many chemicals where it is the most economical source of both sodium and chlorine. Another large volume application is for both industrial and consumer water conditioning where it removes other minerals and hence "softens" or conditions water. The Company believes that it is one of the most efficient North American producers of concentrated phosphates, potash, salt and animal feed ingredients. IMC's business strategy focuses on maintaining and growing its leading position as a crop nutrient, animal feed and salt producer and distributor through extensive customer service, efficient distribution and transportation as well as supplying products worldwide at competitive prices, largely by capitalizing on economies of scale and state-of-the-art technology to reduce costs. For additional information on the Company's acquisition and divestiture activity, see Note 2, "Acquisitions," Note 4, "Discontinued Operations" and Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. 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. In the fourth quarter of 1998, the Company initiated a restructuring of its operations (Restructuring Plan). One initiative of the Restructuring Plan was the combination of operating activities of Phosphates and Kalium in order to realize certain operating and staff function synergies. The following business unit information discusses Phosphates and IMC Kalium separately as they are still considered two distinct business units. The following business unit discussion should be read in conjunction with the information contained in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K. IMC-Agrico Phosphates --------------------- Net sales for Phosphates were $1,572.8 million, $1,484.8 million and $1,661.3 million for the years ended December 31, 1998, 1997 and 1996, respectively. Phosphates is a leading United States miner of phosphate rock, one of the primary raw materials used in the production of concentrated phosphates, with 20.0 million tons of annual capacity. Phosphates is also a leading United States producer of concentrated phosphates with an annual capacity of approximately four million tons of phosphoric acid (P2O5). P2O5 is an industry term indicating a product's phosphate content measured chemically in units of phosphorous pentoxide. Phosphate's concentrated phosphate products are marketed worldwide to crop nutrient manufacturers, distributors and retailers. Phosphates' facilities, which produce concentrated phosphate, are located in central Florida and Louisiana. Its annual capacity represents approximately 32 percent of total United States concentrated phosphate production capacity and approximately 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 (GMAP). 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 GMAP. The Faustina plant manufactures phosphoric acid, DAP, GMAP and ammonia. The Taft facility manufactures DAP and GMAP. Concentrated phosphate operations are managed in order to balance Phosphates' output with customer needs. Phosphates suspended phosphoric acid production at its Nichols facility in October 1998 and suspended production at its Taft facility in November 1998 in response to reduced market demands. The Taft facility subsequently resumed production in January 1999. Summarized below are descriptions of the principal raw materials used in the production of concentrated phosphates: phosphate rock, sulphur and ammonia. Phosphate Rock All six of the Company's phosphate mines and related mining operations are located in central Florida. Phosphates extracts phosphate ore through surface mining after removal of a ten to 50 foot layer of sandy overburden and then processes the ore at one of its beneficiation plants where the ore goes through washing, screening, sizing and flotation procedures designed to separate it from sands, clays and other foreign materials. Currently, four of the Company's phosphate mines are operating while one was idled in November 1998 and another was idled in January 1999. One of the operating mines will permanently close in mid-1999 pursuant to the Restructuring Plan. The present mining plan, developed in conjunction with the Restructuring Plan, anticipates the re-start of the two idle mines in the second half of 1999. The mining plan was developed to maximize the available resources, lower the cost of producing rock and manage the level of phosphate rock inventory. Phosphates' phosphate rock production volume for the years ended December 31, 1998, 1997 and 1996 totaled 20.0 million, 20.0 million and 22.5 million tons, respectively. Anticipated production in 1999 will be less than the prior years as Phosphates reduces its level of rock inventory through the temporary idling of the two mines. Although Phosphates sells phosphate rock to other crop nutrient and animal feed ingredient manufacturers, it primarily uses phosphate rock internally in the production of concentrated phosphates. Tons used internally, primarily in the manufacture of concentrated phosphates, totaled 14.8 million, 14.1 million and 14.3 million for the years ended December 31, 1998, 1997 and 1996, respectively, representing 74 percent, 70 percent and 64 percent, respectively, of total tons produced. Product shipments to customers totaled 5.0 million, 4.6 million and 6.5 million tons for the years ended December 31, 1998, 1997 and 1996, 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. Phosphates estimates its proven reserves to be 530.0 million tons of phosphate rock as of December 31, 1998. These reserves are controlled by Phosphates through ownership, long- term lease, royalty or purchase option agreements. Reserve grades range from 58 percent to 78 percent bone phosphate of lime (BPL), with an average grade of 66 percent BPL. BPL is the standard industry term used to grade the quality of phosphate rock. The phosphate rock mined by Phosphates in the last three years averaged 65 percent BPL, which management believes is typical for phosphate rock mined in Florida during this period. Phosphates estimates its reserves based upon the performance of exploration core drilling as well as technical and economic analyses to determine that reserves so classified can be economically mined at market prices estimated to prevail during the next five years. Phosphates also owns or controls phosphate rock resources in the southern extension of the central Florida phosphate district (Resources). Resources are mineralized deposits which may be economically recoverable; however, additional geostatistical analyses, including further explorations, permitting and mining feasibility studies, are required before such deposits may be classified as reserves. Based upon its preliminary analyses of these Resources, Phosphates believes that these mineralized deposits differ in physical and chemical characteristics from those historically mined by Phosphates but are similar to certain of the reserves being mined in current operations. These Resources contain estimated recoverable phosphate rock of approximately 114.0 million tons. Some of these Resources are located in what may be classified as preservational wetland areas under standards set forth in current county, state and federal environmental protection laws and regulations, and consequently, the Company's ability to mine these Resources may be restricted. Sulphur A significant portion of Phosphates' sulphur requirements is provided by the sulphur subsidiary of MMR under a supply agreement with the Company. Phosphates' remaining sulphur requirements are provided by market contracts. Ammonia Phosphates' ammonia needs are supplied by its Faustina ammonia production facility and by world suppliers, primarily under annual and multi-year contracts. Production from the Faustina plant, which has an estimated annual capacity of 560,000 tons of anhydrous ammonia, is used internally to produce certain concentrated phosphates. Sales and Marketing Domestically, Phosphates sells its concentrated phosphates to crop nutrient manufacturers, distributors and retailers. The Company also uses concentrated phosphates internally for the production of animal feed ingredients (see IMC-Agrico Feed Ingredients). Virtually all of Phosphates' export sales of phosphate crop nutrients are marketed through the Phosphate Chemicals Export Association (PhosChem), a Webb-Pomerene Act organization, which the Company administers on behalf of three other member companies. PhosChem believes that its sales represent approximately 53 percent of total United States exports of concentrated phosphates. The countries which account for the largest amount of PhosChem's sales of concentrated phosphates include China, Australia, India, Japan and Brazil. In 1998, Phosphates' exports to Asia and China were 48 percent and 27 percent, respectively, of total shipments. The table below shows Phosphates' shipments of concentrated phosphates in thousands of dry product tons, primarily DAP:
1998 1997 1996 ------------------------------------ Tons % Tons % Tons % ------------------------------------ Domestic Customers 2,373 32 2,065 29 2,350 32 Captive, to other business units 563 8 615 9 581 8 ----- --- ----- --- ----- --- 2,936 40 2,680 38 2,931 40 Export 4,377 60 4,425 62 4,451 60 ----- --- ----- --- ----- --- Total shipments 7,313 100 7,105 100 7,382 100 ===== === ===== === ===== ===
As of December 31, 1998, Phosphates had contractual commitments from non-affiliated customers for the shipment of concentrated phosphates and phosphate rock amounting to approximately 2.7 million tons and 5.2 million tons, respectively, in 1999. Competition Phosphates operates in a highly competitive global market. Among the competitors in the global phosphate crop nutrient market are domestic and foreign companies, as well as foreign government-supported producers. Phosphate crop nutrient producers compete primarily based on price and, to a lesser extent, product quality and innovation. IMC Kalium Net sales for the Kalium business unit were $700.1 million, $617.4 million and $464.8 million for the years ended December 31, 1998, 1997 and 1996, respectively. Kalium mines, processes and distributes potash in the United States and Canada. The term "potash" applies generally to the common salts of potassium. Kalium's products are marketed worldwide to crop nutrient manufacturers, distributors and retailers and are also used in the manufacture of mixed crop nutrients and, to a lesser extent, animal feed ingredients (see IMC-Agrico Feed Ingredients). Kalium's potash products are also used for ice melter and water softener regenerant (see IMC Salt). Kalium also sells potash to customers for industrial use. Kalium operates four potash mines in Canada as well as three potash mines and a solar evaporation facility in the United States. With a total capacity in excess of ten million tons of product per year, management believes that Kalium is one of the leading private-enterprise potash producers in the world. In 1998, these operations accounted for approximately 15 percent of world capacity on a K2O basis(2). Canadian Operations Kalium's four mines in Canada produce muriate of potash exclusively and are located in the province of Saskatchewan, Canada. Two potash mines are interconnected at Esterhazy, one is located at Belle Plaine and one is located at Colonsay. The combined annual capacity of these four mines is approximately eight million tons. Esterhazy and Colonsay utilize shaft mining while Belle Plaine utilizes solution mining technology. Traditional potash shaft mining takes place underground at depths of over 3,000 feet where continuous mining machines cut out the ore face and move jagged chunks of ore to conveyor belts. The ore is then crushed, moved to storage bins and then hoisted to refineries above ground. In contrast, 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 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. Kalium controls the rights to mine 323,070 acres of potash-bearing land in Saskatchewan. This land, of which 63,887 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 percent K2O. This ore is sufficient to support current operations for more than a century and will yield more than 1.4 billion tons of finished product with a K2O content of approximately 61 percent. Kalium's mineral rights in Saskatchewan consist of 123,953 acres owned in fee, 175,959 acres leased from the province of Saskatchewan and 23,158 acres leased from other parties. All leases are renewable by the Company for successive terms of 21 years. Royalties, established by regulation of the province of Saskatchewan, amounted to approximately $9.8 million, $8.2 million and $6.2 million in 1998, 1997 and 1996, respectively. Since December 1985, Kalium has experienced an inflow of water into one of its two interconnected potash mines at Esterhazy. As a result, Kalium has incurred expenditures to control the inflow, certain of which, due to their nature, have been capitalized while others have been charged to expense. Since the initial discovery of the inflow, Kalium 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, the procedures utilized to control the water inflow have proven successful to date, and the Company currently intends to continue conventional shaft mining. Despite the relative success of these measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. Kalium's underground mine operations are presently insured against business interruption and risk from catastrophic perils, including collapse, floods and other property damage with the exception of flood coverage at Esterhazy. Due to the ongoing water inflow problem at Esterhazy, underground operations at this facility are currently not insurable for water incursion problems. Like other potash producers' shaft mines, Kalium's Colonsay mine is also subject to the risks of inflow of water as a result of its shaft mining operations. In January 1988, the United States 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 ensure that such product would be sold in the United States at a price no less than "fair value." This agreement will remain in place until terminated by Commerce in accordance with applicable law. 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. See "Other Matters - Environmental Matters" for further detail. United States Operations Kalium has four United States potash facilities: the Carlsbad and the Western Ag shaft mines located in Carlsbad, New Mexico; the Hersey solution mine located in Hersey, Michigan; and the solar evaporation facility located in Ogden, Utah. The Kalium 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 and langbeinite 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 K-Mag(Registered Trademark) containing significant amounts of sulphur, potassium and magnesium, with low levels of chloride; and sulphate of potash, supplying sulphur and a high concentration of potassium with low levels of chloride. At the Carlsbad facility, Kalium mines and refines potash from 43,877 acres of reserves which are controlled under long-term leases. These reserves contain an estimated total of 155 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 10.7 million tons of concentrate from sylvinite with an average grade of 60 percent K2O and 27.0 million tons of langbeinite concentrate with an average grade of approximately 22 percent K2O. At current rates of production, management estimates that Kalium's reserves of sylvinite and langbeinite are sufficient to support operations for more than 17 years and 32 years, respectively. Pursuant to potassium mineral lease arrangements with the federal government, the State of New Mexico and other third parties, the Company paid royalties of $3.5 million, $3.3 million and $3.1 million in 1998, 1997 and 1996, respectively. Kalium commissioned a $25.0 million, 400,000 ton per year K-Mag(Registered Trademark) granulation facility at Carlsbad during 1998. This facility will convert standard grade K-Mag(Registered Trademark) into higher-priced, premium granular grade which has expanded sales opportunities. The Western Ag facility is located in Carlsbad, New Mexico, adjacent to the Kalium Carlsbad facility and has an annual capacity of 400,000 tons of double sulfate of potash magnesia which is marketed under the brand name K-Mag(Registered Trademark). The Western Ag facility mines and refines potash from 16,487 acres of reserves which are controlled under long-term leases. The reserves contain an estimated 93.8 million tons of potash mineralization in two mining beds in thicknesses ranging from eight to ten feet. At average refinery rates, these ore reserves are estimated to be sufficient to yield 13.0 million tons of concentrate from langbeinite with an average ore grade of 22 percent K2O and 9.9 million tons of sylvinite concentrate with an average ore grade of 60 percent K2O. At current rates of production, management estimates that Western Ag's langbeinite reserves are sufficient to support operations for approximately 14 years. The sylvinite reserves, which would be processed at the adjacent Carlsbad facility's refinery, are estimated by management to be sufficient to support operations for approximately nine years at the current rate of production. Kalium is in the process of making mine modifications and constructing a new state-of-the-art, world class langbeinite refinery at Carlsbad at an estimated cost of approximately $70.5 million. The new refinery will replace the current refineries at the adjacent Carlsbad and Western Ag facility locations and will increase annual capacity by approximately 35 percent, reduce costs and improve processing efficiency. The new refinery is expected to be operational in mid-1999. At Hersey, Michigan, Kalium operates a solution mining facility with annual potash production capacity of approximately 160,000 tons, and annual salt capacity of approximately 300,000 tons. The salt from this facility is marketed by Salt (see IMC Salt). At Hersey, Kalium's mineral rights consist of 1,093 acres owned in fee and 10,537 acres controlled under long-term leases. These lands contain an estimated 300.0 million tons of potash mineralization contained in two beds ranging in thickness from 14 to 30 feet. Management estimates that these reserves are sufficient to yield 62.0 million tons of concentrate from sylvinite with an average grade of 60 percent K2O. At current rates of production, management estimates that these reserves are sufficient to support operations for more than 300 years. The solar evaporation facility, located in Ogden, Utah, utilizes solar energy and nearly 40,000 acres of evaporation ponds to manufacture sulfate of potash, salt and magnesium chloride from the brines of the Great Salt Lake. This facility has the capacity to annually produce approximately 450,000 tons of sulfate of potash, 200,000 tons of magnesium chloride and over 1.0 million tons of salt. Sulfate of potash and magnesium chloride, which is primarily used for dust control, ice control and for industrial applications, is marketed by Kalium's sales force while the salt is marketed by the Salt sales force (see IMC Salt). At the Ogden facility, Kalium's mineral rights consist of 1,499 acres owned in fee and 117,244 acres controlled under long-term leases. The leases continue in effect so long as the salts are produced or the State of Utah receives a minimum royalty and rent. Management estimates that reserves are adequate to support current capacity for more than a century and yield more than 49.0 million tons of sulfate of potash product with a K2O content of approximately 50 percent. Sales and Marketing Kalium's North American potash sales are made through Kalium's sales force. North American agricultural sales are primarily to independent accounts, co-operatives and large regional buyers while non-agricultural sales are primarily to large industrial accounts and the animal feed industry. Additionally, potash is used as an ingredient in ice melter and as a water softener regenerant. Potash is sold throughout the world, with Kalium's largest amount of sales outside of North America made to China, Japan, Malaysia, Korea, Australia, New Zealand and Latin America. Potash is also used internally by IMC Salt as a major ingredient in its ice melter products. Salt also markets potash as a water softener regenerant along with its traditional salt products (see IMC Salt). Kalium's exports from Canada, except to the United States, are made through Canpotex Limited (Canpotex), an export association of Saskatchewan potash producers. Kalium's allocated share of Canpotex's exports to Asia and China were 25 percent and 11 percent, respectively. Potash exports from Carlsbad are sold through the Company's sales force. In 1998, 82 percent of the potash produced by Kalium was sold as crop nutrients, while 18 percent was sold for non-agricultural uses. The table below shows Kalium's shipments of potash in thousands of tons:
1998 1997 1996 ------------------------------------ Tons % Tons % Tons % ------------------------------------ Domestic Customers 4,706 56 5,097 57 4,076 56 Captive, to other business units 1,115 13 1,306 15 1,176 16 ----- --- ----- --- ----- --- 5,821 69 6,403 72 5,252 72 Export 2,664 31 2,538 28 2,038 28 ----- --- ----- --- ----- --- Total shipments 8,485 100 8,941 100 7,290 100 ===== === ===== === ===== ===
As of December 31, 1998, Kalium had contractual commitments from non-affiliated customers for the shipment of potash amounting to approximately 1.8 million tons in 1999. Competition Potash is a commodity available from many sources and consequently, the market is highly competitive. In addition to Kalium, there are four North American producers: two in the United States and two in Canada, some of which may have greater production capacity than Kalium. Through its participation in Canpotex, Kalium competes outside of North America with various independent potash producers and consortia and other export organizations, including state-owned organizations. 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-Agrico Feed Ingredients --------------------------- Net sales for Feed Ingredients were $164.4 million, $163.5 million and $154.6 million for the years ended December 31, 1998, 1997 and 1996, respectively. 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. In the first quarter of 1998, Feed Ingredients started construction on the expansion of its deflourinated phosphate [Multifos(Registered Trademark)] capacity at its manufacturing operations at the New Wales facility located in central Florida. The project will increase the annual capacity for Multifos(Registered Trademark) to 200,000 tons and will increase Feed Ingredients total annual production to approximately 770,000 tons. The principal production facilities of Feed Ingredients are located adjacent to, and utilize raw materials from, Phosphates' concentrated phosphate complex at New Wales. Sales and Marketing Feed Ingredients supplies phosphate and potassium-based feed ingredients for poultry and livestock to markets in North America, Latin America and Asia. Feed Ingredients sources phosphate and potassium raw materials from the Company's respective production facilities. Feed Ingredients has a strong brand position in the $1.0 billion global market with products such as Biofos(Registered Trademark), Dynafos(Registered Trademark), Multifos(Registered Trademark), Dyna-K(Registered Trademark) and Dynamate(Registered Trademark). Competition Feed Ingredients operates in a competitive global market. Major integrated producers of feed phosphates and feed grade potassium are located in the United States and Europe. Many smaller producers are located in emerging markets around the world. Many of these smaller producers are not manufacturers of phosphoric acid and are required to purchase this raw material on the open market. Competition in this global market is driven by quality, service and price. IMC Salt -------- Concurrent with the Harris Acquisition in April 1998, the Company established the Salt business unit. Net sales for Salt were $175.0 million for the partial year 1998. Salt mines, produces, processes and distributes salt in North America and Europe. The products are marketed primarily in the United States, Canada and the United Kingdom. Salt is used in a variety of applications, including as a de-icer for both highway and consumer use, an ingredient in the production of chemicals for paper bleaching and plastic production, a flavor enhancer and preservative in food, an ingredient and nutrient in animal feeds, and an essential item in both industrial and consumer water softeners. The demand for salt has historically remained relatively stable during economic cycles due to its relatively low cost and high value in a large variety of uses. However, demand in the highway de-icing market is affected by changes in winter weather. Approximately 50 percent of Salt's annual revenues are generated from December through March when highway de-icing is at its peak. Production Operations Salt has a production capacity of approximately 15.3 million tons of salt. Production activities are currently conducted at 15 facilities, six located in the United States, seven located in Canada and two located in the United Kingdom. Summarized below are the three processing methods used to produce salt. Salt utilizes all three methods. Rock Salt Mining The Company employs a drill and blast mining technique at its rock salt mines. Mining machinery moves salt from the salt face to conveyor belts where it is then crushed and screened. Salt is then hoisted to the surface where it is loaded onto shipping vessels. Mechanical Evaporation The mechanical evaporation method involves subjecting salt- saturated brine to vacuum pressure and heat to precipitate salt. The salt brine is obtained from underground salt deposits through a series of wells. The resulting product has both a high purity and a uniform physical shape. Solar Evaporation The solar evaporation method is used in areas of the world where high salinity brines are available and where weather conditions provide for a high natural evaporation rate. The brine is pumped into a series of large open ponds where sun and wind evaporate the water and crystallize the salt, which is then mechanically harvested. IMC produces solar salt at the Great Salt Lake in Utah where, at current extraction rates, management believes there are resources sufficient for over 100 years. United States Operations Salt's central and midwestern United States customer base is served by four mechanical evaporation plants, two located in Kansas, one in Tennessee as well as one in Michigan wheresalt is produced as a co-product by Kalium in its Michigan operations. The Cote Blanche, Louisiana rock salt mine serves chemical customers in the southern and western United States as well as highway de-icing customers through a series of depots located along the Mississippi and Ohio Rivers. The evaporation plants, rock salt mine and other production have a combined annual production capacity of 3.6 million tons. Salt's solar evaporation facility located in Ogden, Utah is the largest solar salt production site in the United States. This facility principally serves the western general trade markets, but also provides salt for chemical applications and highway de-icing. Production capacity is currently only limited by demand. The Company also owns and operates two salt packaging facilities in Illinois and Wisconsin which also service customers in the central and midwestern United States as well as parts of the northeastern United States. Canadian Operations Salt produces salt at seven different locations in Canada. Mechanically evaporated salt is produced at three facilities strategically located throughout Canada: Amherst, Nova Scotia in eastern Canada; Goderich, Ontario in central Canada; and Unity, Saskatchewan in western Canada. From the Goderich, Ontario rock salt mine, Salt also serves the highway de-icing market in Canada and the Great Lakes region of the United States. The Company also produces salt as a co-product from its Esterhazy, Colonsay and Belle Plaine potash facilities which serve both the general trade and the highway de-icing markets. The evaporation plants, the rock salt mine and other production facilities have a combined annual capacity of 7.4 million tons. United Kingdom Operations Salt's United Kingdom customer base is serviced by two facilities with a combined annual production capacity of 2.9 million tons. Highway de-icing customers throughout the United Kingdom are served by the Winsford rock salt mine in west central England. Also, in west central England is the Weston Point mechanical evaporation plant servicing the general trade and chemical customers in the United Kingdom as well as continental Europe. Sales and Marketing The Company separates sales of salt into three major market segments: general trade, highway de-icing and chemical. The general trade segment is Salt's largest segment and accounted for approximately 62 percent of 1998 sales. This segment includes consumer applications such as table salt, water conditioning, consumer ice control, food and meat processing, agricultural applications, including feed mixes, as well as a variety of industrial applications such as oil refining and drilling, metal processing and tanning. Salt has maintained a significant presence in the general trade business over recent years due to its strong focus on the midwestern United States region, all of Canada and the United Kingdom, its distribution network to the grocery trade and its relationships with the large distributors of water conditioning salt. In order to continue to expand its volume and profitability in the general trade segment, Salt has focused its efforts on improving its marketing programs. These programs include: (i) differentiating various brand names through promotional activities; (ii) developing an exclusive distributor network in the United States; and (iii) consolidating the product offerings to customers with products available from the Kalium business unit. The general trade market is driven by strong customer relationships. Sales in the general trade segment occur through retail channels such as grocery; building supply and hardware stores; automotive stores; feed suppliers; as well as industrial manufacturers in various industries. Distribution in the general trade segment is channeled through a direct sales force located in various parts of Salt's service territories, who sell products to distributors, dealers and end-users. The Company also maintains a network of brokers who sell table salt, consumer de-icing and water conditioning products. These brokers service wholesalers, chain grocers, retailers as well as the food service industry. Highway de-icing constitutes Salt's second largest segment, accounting for approximately 23 percent of 1998 salt sales. Principal customers are states, provinces, counties, municipalities and road maintenance contractors that purchase bulk salt for ice control on public roadways. Highway salt is sold mostly via a tendered bid contract system with price, product quality and deliverability being the primary market factors when purchasers are selecting a supplier. Winter weather variability is the most significant factor affecting salt sales for de-icing applications because mild winters reduce the need for salt used in ice and snow control. Unusually mild or harsh weather can significantly affect Salt's sales and earnings. The vast majority of North American de- icing sales are made in Canada and the northern United States where winter weather is generally harsher than in other parts of North America. The highway de-icing customer base consists of states, provinces, counties and municipalities as well as road maintenance contractors that purchase bulk salt for ice control. Contracts generally are awarded annually on the basis of tendered bids once the purchaser is assured that the minimum requirements for purity, service and delivery can be met. The bidding process eliminates the need to invest significant time and effort in marketing and advertising. Location of the source of salt and distribution outlets also play a significant role in determining a supplier. Salt's North American operations have an extensive network of approximately 80 depots for storage and distribution of highway de-icing salt. The majority of these depots are located on the Great Lakes and the Mississippi River system. The chemical segment accounted for approximately 15 percent of Salt's 1998 salt sales. Principal customers are producers of intermediate chemical products used in pulp bleaching and plastic production that do not have a captive source of brine. Distribution into the chemical market is made primarily through long-term supply agreements, which are negotiated privately. Price, service and quality of product are the major market requirements. Competition Salt has significant competition in each of the markets in which it operates. In North America, three other large, nationally recognized firms compete against Salt in production and marketing of rock, evaporated and solar salt. In addition, there are several smaller regional producers of evaporated and solar salt. In spite of the high relative cost of transportation in the distribution of salt, there are also several importers of salt. Most of these imports impact the eastern seaboard where IMC has a minimum position. In the United Kingdom, there is one other large producer of evaporated salt, several small local producers as well as some imports from continental Europe. There are two other companies that produce rock salt; one in northern England and the other in Ireland. There are no significant imports of rock salt into the United Kingdom. Salt also exports salt from the United Kingdom to Scandinavia and continental Europe and competes with many other European producers. FACTORS AFFECTING DEMAND The Company's results of operations historically have reflected the effects of several external factors which are beyond the Company's control and have in the past produced significant downward and upward swings in operating results. Revenues are highly dependent upon conditions in the North American agriculture industry and can be affected by crop failure, changes in agricultural production practices, government policies and weather. Furthermore, the Company's crop nutrients business is seasonal to the extent North American farmers and agricultural enterprises purchase more crop nutrient products during the spring and fall. The Company's salt business is seasonal and it can be highly affected by the severity of winter weather in North America and the United Kingdom. A high percentage of Salt's income is derived in the first and the fourth quarter of each year when sales of salt for de-icing is the greatest. The Company's foreign operations and investments, and any future international expansion by the Company, are subject to numerous risks, including fluctuations in foreign currency exchange rates and controls; expropriation and other economic, political and regulatory policies of local governments; and laws and policies affecting foreign trade and investment. Due to economic and political factors, customer needs can change dramatically from year to year. While management does not believe current economic conditions in Asia and Latin America will have a material adverse effect on the Company's results, there can be no assurance that a continuation of such economic conditions would not materially impact results. See Note 22, "Operating Segments," of Notes to Consolidated Financial Statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. In 1998, sales to China accounted for approximately 15 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 --------------------- Information regarding environmental matters of the Company is included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations ," of this Annual Report on Form 10-K. Employees --------- The Company had approximately 11,244 employees at December 31, 1998. The work force consisted of 4,230 salaried, 6,983 hourly and 31 temporary or part-time employees. Labor Relations --------------- The Company has 19 collective bargaining agreements with 16 international unions or their affiliated local chapters. At December 31, 1998, approximately 88 percent of the hourly work force were covered under collective bargaining agreements. Three agreements covering 43 percent of the hourly work force were negotiated during 1998. Resulting wage and benefit increases were consistent with competitive industry and community standards. Two agreements will expire during 1999 due to plant closures. The Company has not experienced a significant work stoppage in recent years and considers its employee relations to be good. EXECUTIVE OFFICERS OF THE REGISTRANT The ages and five-year employment history of the Company's executive officers as of March 15, 1999 was as follows: E. Paul Dunn, Jr. Age 45. VicePresident and Treasurer of the Company since joining the Company in May 1998. Prior to joining the Company, Mr. Dunn served as Vice President, Finance and Information Technology for GATX Terminals Corporation from 1995 to 1998. He also served as Treasurer of GATX Corporation from 1990 to 1995. Robert E. Fowler, Jr. Age 63. Chairman and Chief Executive Officer of the Company. Mr. Fowler served as Chairman, President and Chief Executive Officer of the Company from July 1, 1998 through September 30, 1998. From July 1, 1997 through June 30, 1998, he served as President and Chief Executive Officer of the Company. Mr. Fowler served as President and Chief Operating Officer of the Company from March 1996 through June 1997. He served as President and Chief Executive Officer of The Vigoro Corporation from September 1994 through February 1996 and as President and Chief Operating Officer from July 1993 to September 1994. He is a director of Anixter International, Inc. Mr. Fowler previously served as a director of The Vigoro Corporation 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 as Chairman of the Executive Committee and is a non-voting member of the Committee on Directors and Board Affairs. Phillip Gordon Age 55. Senior Vice President, General Counsel and Assistant Secretary of the Company. Mr. Gordon is a partner of Altheimer & Gray, a Chicago-based law firm he joined as an associate in 1973. C. Steven Hoffman Age 50. Senior Vice President of the Company. Mr. Hoffman served as Senior Vice President, Marketing from 1993 until 1994. John U. Huber Age 60. Senior Vice President of the Company. Mr. Huber has served as President of the IMC Kalium business unit since joining the Company in March 1996 and President of IMC-Agrico Phosphates since September 1998. 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. J. Bradford James Age 52. Senior Vice President and Chief Financial Officer of the Company since joining the Company in February 1998. Prior to joining the Company, Mr. James served as Executive Vice President of USG Corporation from 1995 through 1997 and Senior Vice President and Chief Financial Officer of USG Corporation from 1991 through 1994. B. Russell Lockridge Age 49. 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. Carolyn W. Merritt Age 52. Senior Vice President, Environment, Health and Safety of the Company. Ms. Merritt served as Vice President, Environment, Health and Safety from March 1996 to August 1998. Prior to joining the Company, Ms. Merritt served as Vice President, Environmental Affairs for The Vigoro Corporation from July 1994 to March 1996. Douglas A. Pertz Age 44. President and Chief Operating Officer of the Company. From 1995 to 1998, Mr. Pertz served as President and Chief Executive Officer of Culligan Water Technologies, Inc. From 1994 until January 1995, Mr. Pertz was Corporate Vice President and Group Executive of the Danaher Corporation. Anne M. Scavone Age 35. Vice President and 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. Robert M. Van Patten Age 53. 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. Lynn F. White Age 46. Senior Vice President, Corporate Development since October 1997. Mr. White also served as acting Chief Financial Officer of the Company from October 1997 until February 1998; and Vice President, Corporate Development from February 1997 until October 1997. Prior to joining the Company, Mr. White served in a wide array of domestic and international assignments for FMC Corporation, including General Manager of FMC Corporation's worldwide Food Ingredients Division. All of the Company's executive officers are elected annually, with the terms of the officers listed above to expire in April 1999. No "family relationships," as that term is defined in Item 401(d) of Regulation S-K, exist among any of the listed officers. Item 2. Properties. Information regarding the plant and properties of the Company is included in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Item 3. Legal Proceedings.(1) Sterlington Litigation ---------------------- In early 1998, the Company entered into a Preliminary Settlement Agreement with the plaintiffs in connection with the Louisiana class action arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. The Preliminary Settlement Agreement settles all claims that members of the class have against the Company and releases the Company from further potential liabilities based on the claims of the members of the class. In January 1999, the court held a hearing on the fairness of the Preliminary Settlement Agreement. In February 1999, the court entered a written order approving the Settlement Agreement. The Company also has settled all the known claims of individuals and entities who opted out of the Louisiana class action. Settlement of the Louisiana third-party claims is intended to resolve the Company's known potential future liabilities in connection with the Sterlington explosion. In addition, the settlement is intended to protect the Company from the remaining claims for contribution and indemnity filed by ANGUS Chemical Company and the other remaining defendants with respect to the Sterlington explosion. 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 (Court of Appeals). The Court of Appeals is expected to rule during calendar 1999. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California litigation, all proceedings have been stayed pending the decision of the Court of Appeals. FTX Merger Litigation --------------------- In August 1997, five identical class action lawsuits were filed in Chancery Court in Delaware by unitholders of PLP. Each case named the same defendants and broadly alleged that FTX and FMRP Inc. (FMRP) had breached fiduciary duties owed to the public unitholders of PLP. The Company was alleged to have aided and abetted these breaches of fiduciary duty. In November 1997, an amended class action complaint was filed with respect to all cases. The amended complaint named the same defendants and raised the same broad allegations of breaches of fiduciary duty against FTX and FMRP for allegedly favoring the interests of FTX and FTX's common stockholders in connection with the FTX Merger. The plaintiffs claimed specifically that, by virtue of the FTX Merger, the public unitholders' interests in PLP's ownership of IMC-Agrico would become even more subject to the dominant interest of the Company. The amended complaint seeks certification as a class action and an injunction against the proposed FTX Merger or, in the alternative, rescissionary damages. The defendants' moved the court to dismiss the amended complaint in November 1998. The plaintiffs have until March 1999 to file their response. IMC intends to defend this action vigorously. In May 1998, IMC and PLP (collectively, Plaintiffs) filed a lawsuit (IMC Action) in Delaware Chancery Court against certain former directors of FTX (Director Defendants), and MOXY. IMC alleges that the Director Defendants, as the directors of PLP's administrative managing general partner FTX, owed duties of loyalty to PLP and its limited partnership unitholders. IMC further alleges that the Director Defendants breached their duties by causing PLP to enter into a series of interrelated non-arm's-length transactions with MOXY, an affiliate of FTX. IMC also alleges that MOXY knowingly aided and abetted and conspired with the Director Defendants to breach their fiduciary duties. On behalf of the PLP public unitholders, IMC seeks to reform or rescind the contracts that PLP entered into with MOXY and to recoup the monies expended as a result of PLP's participation in those agreements. The Director Defendants and MOXY have filed motions to dismiss the Plaintiffs' claims. The defendants filed their briefs in support of their motions in January 1999. IMC filed its amended complaint, and its responses to the motions to dismiss in February 1999. No trial date has been scheduled. IMC intends to pursue this action vigorously. In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on behalf of himself and all other PLP unitholders against the Director Defendants, MOXY and IMC asserting the same claims that IMC asserts in the IMC Action. Because IMC and PLP had already asserted these claims, IMC has filed a motion to dismiss the Gottlieb Action. The court has not set a briefing schedule for IMC's motion to dismiss. IMC intends to defend this action vigorously. Other ----- In the ordinary course of its business, the Company is and will from time to time be involved in legal proceedings of a character normally incident to its business. The Company believes that its potential liability in any such pending or threatened proceedings will not have a material adverse effect on the financial condition or results of operations of the Company. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months ended December 31, 1998. PART II. Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters. COMMON STOCK PRICES AND DIVIDENDS
Quarter ---------------------------------- 1998 First Second Third Fourth ------------------------------------------------------------- Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $39.500 $39.125 $30.375 $27.312 Low 28.562 29.375 17.812 18.125 Quarter ---------------------------------- 1997 First Second Third Fourth ------------------------------------------------------------- Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $42.500 $39.375 $37.250 $37.625 Low 33.125 33.125 31.375 29.625
The Company's common stock is traded on the New York Stock Exchange and the Chicago Stock Exchange under the symbol IGL. As of March 15, 1999, the Company had 114,342,634 shares of common stock outstanding, excluding 10,738,520 treasury shares. Common stock prices are from the composite tape for New York Stock Exchange issues as reported in The Wall Street Journal. As of March 15, 1999, the number of registered holders of common stock as reported by the Company's registrar was 11,404. However, an indeterminable number of stockholders beneficially own shares of the Company's common stock through investment funds and brokers. For the year ended December 31, 1998, the Company paid cash dividends of $36.6 million. Item 6. Selected Financial Data. For information related to the years 1994 through 1998 contained under the heading "Five Year Comparison," reference is made to page 79 of the Company's 1998 Annual Report to Stockholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 28 through 44 of the Company's 1998 Annual Report to Stockholders. Item 7a.Quantitative and Qualitative Disclosures about Market Risk. Reference is made to "Market Risk" of "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on page 37 of the Company's 1998 Annual Report to Stockholders. Item 8. Financial Statements and Supplementary Data. Reference is made to the Company's Consolidated Financial Statements and Notes thereto appearing on pages 46 through 77 of the Company's 1998 Annual Report to Stockholders, together with the report thereon of Ernst & Young LLP dated January 28, 1999, appearing on page 45 of such Annual Report and the information contained under the heading "Quarterly Results (unaudited)" appearing on page 73 of such Annual Report. 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. The information contained under the headings "The Annual Meeting--Election of Directors" and "Beneficial Ownership of Common Stock--Section 16(a) Beneficial Ownership Reporting Compliance" included in the Company's definitive Proxy Statement for the 1999 Annual Meeting of Stockholders and the information contained under the heading "Executive Officers of the Registrant" in Part I, Item 1 hereof is incorporated herein by reference. Item 11. Executive Compensation. The information under the heading "Executive Compensation" included in the Company's definitive Proxy Statement for the 1999 Annual Meeting of Stockholders is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information under the heading "Beneficial Ownership of Common Stock" included in the Company's definitive Proxy Statement for the 1999 Annual Meeting of Stockholders is incorporated herein by reference. 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. The information under the headings "Executive Compensation" and "Transactions with Principal Stockholders, Directors and Executive Officers" included in the Company's definitive Proxy Statement for the 1999 Annual Meeting of Stockholders is incorporated herein by reference. PART IV. Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8- K. (1) Consolidated financial statements filed as part of this report are listed under Part II, Item 8 of this Annual Report on Form 10-K. (2) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (3) The exhibits listed in the following index have previously been filed with the Securities and Exchange Commission or are being filed as part of this report. Incorporated Filed with Exhibit Herein by Electronic No. Description Reference to Submission - - ----------------------------------------------------------------------- 3.1 Restated Certificate of Company's Report Incorporation, as amended on Form 8-K dated November 1, 1994 3.2 Certificate of Amendment to Exhibit 3.2 to Restated Certificate of the June 30, 1997 Incorporation, dated Annual Report October 20, 1994 on Form 10-K 3.3 Certificate of Amendment to Exhibit 3.2 to Restated Certificate of the Company's Incorporation, dated Registration October 23, 1995 Statement on Form 8-A/A-1 dated January 12, 1996 3.4 Certificate of Amendment Exhibit 3.4 to to Restated Certificate of the June 30, 1997 Incorporation, dated Annual Report on March 1, 1996 Form 10-K 3.5 Certificate of Merger dated Exhibit 3.5 to December 22, 1997 the December 31, 1997 Annual Report on Form 10-K 3.6 Certificate of Amendment to Exhibit 4.6 to Restated Certificate of the Company's Incorporation dated Registration January 6, 1998 Statement on Form S-3 dated January 20, 1999 3.7 Amended and Restated By-Laws Exhibit 3.6 to the December 31, 1997 Annual Report on Form 10-K 3.8 Rights Agreement dated June 21, Company's Report 1989, amended as of August 17, on Form 8-A/A 1995, with The First National dated Bank of Chicago (including the September 7, 1995 Shareholder Rights Plan) 4.1 Indenture, dated as of July 17, Exhibit 4.1 to 1997, between IMC Global Inc. the Company's and The Bank of New York, Report on Form relating to the issuance of 8-K dated 6.875% Senior Debentures due July 23, 1997 July 15, 2007; 7.30% Senior Debentures due January 15, 2028; and 6.55% Senior Notes due January 15, 2005 4.2 Indenture, dated as of August 1, Exhibit 4.10 to 1998, between IMC Global Inc. the Company's and The Bank of New York, Form S-3, dated relating to the issuance of September 16, 6.625% Notes due 2001; 7.40% 1998 Notes due 2002; 7.625% Notes due 2005; 6.50% Notes due 2003; and 7.375% Debentures due 2018 4.3 Warrant Agreement dated December X 22, 1997, between IMC Global Inc. and American Stock Transfer & Trust Company 10.1 Agreement dated June 27, 1985, Exhibit 10.6 to supplementing, amending and the Company's continuing Potash Resource Registration Payment Agreement dated Statement on October 15, 1979, between Form S-1, Mallinckrodt and the Province (Amendment No. 2), of Saskatchewan (No. 33-22914) 10.2 Mining and Processing Agreement Exhibit 10.7 to dated January 31, 1978, between the Company's Potash Corporation of Registration Saskatchewan Inc. and Statement on International Minerals & Chemical Form S-1, (Canada) Global Limited (No. 33-17091) 10.3* Management Incentive Compensation Exhibit 10.17 to Program, as amended through the Company's July 1, 1996 Registration Statement on Form S-1, (No. 33-17091) 10.4* Amendment to Management Incentive Exhibit 10.6 to Compensation Program the June 30, 1997 Annual Report on Form 10-K 10.5* 1996 Long-Term Performance Exhibit 10.77 to Incentive Plan the Company's September 30, 1996 Form 10-Q 10.6* 1988 Stock Option & Award Plan, Exhibit 10.8 to as amended and restated the June 30, 1997 Annual Report on Form 10-K 10.7* 1994 Stock Option Plan for Exhibit 4(a) to Non-Employee Directors the Company's Registration Statement on Form S-8, (No. 33-56911) 10.8* Retirement Plan for Salaried Exhibit 10.9 to Employees, as amended through the June 30, 1995 November 1, 1994, and as Annual Report on currently in effect Form 10-K 10.9* Supplemental Benefit Plan Exhibit 10.12 to the Company's Registration Statement on Form S-1, (No. 33-17091) 10.10* Supplemental Executive Exhibit 10.7 to Retirement Plan, as amended the Company's through June 30, 1992, and as Registration currently in effect Statement on Form S-1, (No. 33-17091) 10.11* Investment Plan for Salaried Exhibit 10.12 to Employees, as amended through the June 30, 1995 July 1, 1994, and as currently Annual Report on in effect Form 10-K 10.12* Management Compensation and Exhibit 10.12 to Benefit Assurance Program, as the June 30, 1995 amended through August 17, 1995 Annual Report on Form 10-K 10.13* Form of Trust Agreement with Exhibit 10.33 to Wachovia Bank & Trust Co., the June 30, 1992 N.A., as amended through August Annual Report on 15, 1991 Form 10-K 10.14* Form of Contingent Employment Exhibit 10.18 to Agreement dated the June 30, 1995 September 1, 1995, with Officers Annual Report on of Corporation Form 10-K 10.15* Form of "Gross Up" Agreement Exhibit 10.20 to dated September 1, 1995, with the June 30, 1995 Officers of Corporation, as Annual Report on amended Form 10-K 10.16* Directors' Retirement Service Exhibit 10.54 Plan Effective July 1, 1989 to the June 30, 1992 Annual Report on Form 10-K 10.17* Amendment Number 2 to Exhibit 10.44 to Investment Plan for Salaried the Company's Employees effective Registration March 1, 1988 and restated Statement on effective January 1, 1992 Form S-4, (No. 33-49795) 10.18* First Amendment, dated Exhibit 10.45 to July 2, 1991, to form of the Company's Contingent Employment Agreement Registration with Officers of Corporation Statement on Form S-4, (No. 33-49795) 10.19* Amendment, dated July 2, 1991, Exhibit 10.46 to to Form of "Gross Up" Agreement the Company's with Officers of Corporation Registration Statement on Form S-4, (No. 33-49795) 10.20* Consulting Agreement, dated Exhibit 10.48 to July 19, 1993, between the Company's Wendell F. Bueche and Registration IMC Global Inc. Statement on Form S-4, (No. 33-49795) 10.21* Amendment and Extension Exhibit 10.49 to Agreement, dated as of the June 30, 1995 June 15, 1995, to Employment Annual Report on Agreement dated as of Form 10-K April 15, 1993 and Consulting Agreement dated as of July 19, 1993, between Wendell F. Bueche and IMC Global Inc. 10.22* Non-competition Agreement Exhibit 10.71 to dated as of March 1, 1996 the June 30, 1996 between IMC Global Inc., Annual Report on IMC Global Operations Inc. Form 10-K and C. Steven Hoffman 10.23* Non-competition Agreement Exhibit 10.72 to dated as of February 29, 1996 the June 30, 1996 between IMC Global Inc. and Annual Report on Robert E. Fowler, Jr. Form 10-K 10.24* Non-competition Agreement Exhibit 10.26 to dated as of March 1, 1996 the June 30, 1997 between IMC Global Inc. and Annual Report on John U. Huber Form 10-K 10.25* Non-competition Agreement Exhibit 10.27 to dated as of March 1, 1996 the June 30, 1997 between IMC Global Inc. and Annual Report on Robert M. Van Patten Form 10-K 10.26* Transition Bonus Agreement Exhibit 10.73 to dated as of March 1, 1996 the June 30, 1996 between IMC Global Inc., Annual Report on IMC Global Operations Inc. Form 10-K and Marschall I. Smith 10.27* The Vigoro Corporation Exhibit 10.74 to Severance Plan, as amended the June 30, 1996 Annual Report on Form 10-K 10.28* The IMC Global Inc. Severance Exhibit 10.75 to Plan the June 30, 1996 Annual Report on Form 10-K 10.29 Suspension Agreement Exhibit 10.17 to concerning Potassium Chloride the Company's from Canada among the U.S. Registration Department of Commerce and Statement on the signatory purchasers/ Form S-1, exporters of potassium (No. 33-17091) chloride from Canada dated January 7, 1988 10.30 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 Improvement Trust Fund of Form S-1, the State of Florida, the (No. 33-17091) Department of Natural Resources of the State of Florida and Mallinckrodt 10.31 Sulphur Joint Operating Exhibit 10.40 to Agreement dated as of the June 30, 1990 May 1, 1988, among Annual Report on Freeport-McMoRan Resource Form 10-K Partners, IMC Global Operations Inc. and Felmont Oil Corporation 10.32 Oil/Gas Operating Agreement Exhibit 10.41 to dated as of June 5, 1990, the June 30, 1990 among Freeport-McMoRan Annual Report on Resource Partners, IMC Form 10-K Global Operations Inc. and Felmont Oil Corporation 10.33 Agreement in Principle dated Exhibit 10.43 to September 7, 1990, with the June 30, 1990 Mallinckrodt Annual Report on Form 10-K 10.34 Agreement dated as of Exhibit 10.41 to September 12, 1990, with the June 30, 1990 Mallinckrodt Annual Report on Form 10-K 10.35 Memorandum of Agreement as Exhibit 10.51 to of December 21, 1990, amending the June 30, 1991 Mining and Processing Agreement Annual Report on of January 31, 1978, between Form 10-K Potash Corporation of Saskatchewan Inc. and International Minerals & Chemical (Canada) Global Limited 10.36 Division of Proceeds Agreement Exhibit 10.52 to dated December 21, 1990, between the June 30, 1991 Potash Corporation of Annual Report on Saskatchewan Inc. and Form 10-K International Minerals & Chemical (Canada) Global Limited 10.37 Contribution Agreement dated Exhibit 10.55 to April 5, 1993 between the Company's Freeport-McMoRan Resource March 31, 1993 Partners, Limited Partnership Form 10-Q/A and IMC Global Operations Inc. (Amendment No. 1) filed on May 19, 1993 10.38 Form of Partnership Agreement, Exhibit 10.29 to dated as of July 1, 1993, as the June 30, 1995 further amended and restated Annual Report on as of May 26, 1995, between Form 10-K IMC-Agrico GP Company, Agrico Limited Partnership and IMC-Agrico MP Inc., including definitions 10.39 Form of Parent Agreement, Exhibit 10.30 to dated as of July 1, 1993, as the June 30, 1995 further amended and restated Annual Report on as of May 26, 1995, between Form 10-K IMC Global Operations Inc., Freeport-McMoRan Resource Partners, Limited Partnership, Freeport-McMoRan Inc. and IMC-Agrico Company 10.40 Amendment, Waiver and Consent, Exhibit 10.31 to dated May 26, 1995, among IMC the June 30, 1995 Global Inc.; IMC Global Annual Report on Operations Inc.; IMC-Agrico GP Form 10-K Company; IMC-Agrico MP, Inc.; IMC-Agrico Company; Freeport- McMoRan Inc.; Freeport-McMoRan Resource Partners, Limited Partnership; and Agrico, Limited Partnership 10.41 Agreement and Plan of Complete Exhibit 10.32 to Liquidation and Dissolution, the June 30, 1995 dated May 26, 1995, among IMC Annual Report on Global Operations Inc., Form 10-K IMC-Agrico GP Company, and IMC-Agrico MP, Inc. 10.42 Sterlington Settlement Exhibit 10.58 to Agreement between IMC the Company's Global Inc., ANGUS Chemical March 31, 1993 Company and Industrial Risk Form 10-Q/A Insurers dated April 1, 1993 (Amendment No. 1) filed on May 19, 1993 10.43 First Amendment to Exhibit 10.59 to Contribution Agreement, the Company's Report dated as of July 1, 1993, on Form 8-K dated between Freeport-McMoRan July 16, 1993 Resource Partners, Limited Partnership and IMC Global Operations Inc. 10.44 Loan Agreement, dated as of Exhibit 10.64 to December 1, 1991, between IMC the Company's Global Operations Inc. and Registration the Polk County Industrial Statement on Development Authority (Florida) Form S-4, (No. 33-49795) 10.45 Amended and Restated Exhibit 10.65 to Unconditional Guaranty, dated the Company's as of December 1, 1991 of IMC Registration Global Inc. with respect to Statement on Polk County Industrial Form S-4 Development Authority (Florida) (No. 33-49795) Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A 10.46 Supplemental Loan Agreement, Exhibit 10.66 to dated as of January 1, 1992, the Company's between IMC Global Operations Registration Inc. and the Polk County Statement on Industrial Development Authority Form S-4, (Florida) (No. 33-49795 10.47 Second Supplemental Loan Exhibit 10.67 to Agreement, dated as of the Company's June 30, 1993, between IMC Registration Global Operations Inc. and Statement on the Polk County Industrial Form S-4, Development Authority (No. 33-49795) (Florida) 10.48 Amendment to Guaranty, dated Exhibit 10.68 to June 30, 1993, with respect to the Company's Polk County Industrial Registration Development Authority Statement on (Florida) Industrial Form S-4, Development Revenue Bonds (No. 33-49795) (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A and 1992 Tax-Exempt Series A 10.49 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 "Authority") and The Bank of Form S-4, New York, as Trustee (the "IRB (No. 33-49795) Trustee") relating to the Industrial Development Revenue Bonds (IMC Global Operations Inc. Project) 1991 Tax-Exempt Series A (the "Series 1991 Bonds") 10.50 Supplemental Indenture of Trust, Exhibit 10.70 to dated as of January 1, 1992, the Company's between the Authority and the Registration IRB Trustee, relating to the Statement on Industrial Development Revenue Form S-4, Bonds (IMC Global Operations (No. 33-49795) Inc. Project) 1992 Tax-Exempt Series A (the "Series 1992 Bonds") 10.51 Second Supplemental Indenture Exhibit 10.71 to of Trust, dated as of June 30 the Company's 1993, between the Authority and Registration the IRB Trustee, relating to Statement on the Series 1991 Bonds and the Form S-4, Series 1992 Bonds (No. 33-49795) 10.52 Agreement Under the Parent Exhibit 10.63 Agreement, dated as of to 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 10.53 Amendment and Agreement Under Exhibit 10.64 the Partnership Agreement, to the Company's dated as of January 23, 1996, December 31, 1995 by and among IMC-Agrico GP Form 10-Q Company; Agrico, Limited Partnership; IMC-Agrico MP, Inc.; IMC Global Operations Inc. and IMC-Agrico Company 10.54 Second Amended and Restated Exhibit 10.67 to Related Party Guaranty, dated the June 30, 1997 as of February 28, 1996 by Annual Report on IMC Global Inc. and The Vigoro Form 10-K Corporation, a Delaware corporation, in favor of The Prudential Insurance Company of America 10.55 Five-Year Credit Agreement, Exhibit 10.1 dated as of December 15, 1997 to the Company's among IMC Global Inc., a Report on Delaware corporation, as Form 8-K dated borrower, the financial December 22, 1997 institutions parties thereto, Morgan Guaranty Trust Company of New York, as Administrative Agent, Royal Bank of Canada, as Documentation Agent, The Chase Manhattan Bank and NationsBank, N.A., as Co-Syndication Agents, J.P. Morgan Securities Inc., as Arranger, and NationsBanc Montgomery Securities, Inc. and Royal Bank of Canada, as Co-Arrangers 10.56 Amendment No. 1, dated X March 23, 1998, to Five-Year Credit Agreement dated December 15, 1997 10.57 Amendment No. 2 dated X December 14, 1998, to Five-Year Credit Agreement dated December 15, 1997 10.58 Amendment No. 3, dated X December 31, 1998 to Five-Year Credit Agreement dated December 15, 1997 10.59 364-Day Credit Agreement, dated X as of December 14, 1998, as amended, among IMC Global Inc., a Delaware corporation, as borrower, the banks, managing agents and co-agents listed therein 10.60 Five-Year Credit Agreement, Exhibit 10.57 to dated as of December 22, 1997 the December 31, 1997 among International Minerals & Annual Report on Chemical (Canada) Global Limited Form 10-K and IMC Kalium Canada Ltd., as borrowers, the Company, and Royal Bank of Canada, as Agent 10.61 Amendment No. 1, dated X March 31, 1998 , to Five-Year Credit Agreement, dated as of December 22, 1997 10.62 Amendment No. 2, dated X August 31, 1998 , to Five-Year Credit Agreement, dated as of December 22, 1997 10.63 Amendment No. 3, dated X December 16, 1998 , to Five-Year Credit Agreement, dated as of December 22, 1997 10.64 Amendment No. 4, dated X December 31, 1998 , to Five-Year Credit Agreement, dated as of December 22, 1997 10.65 Transfer and Administration Exhibit 10.72 to Agreement, dated as of the June 30, 1997 June 27, 1997, among IMC-Agrico Annual Report on Receivables Company L.L.C., Form 10-K IMC-Agrico Company and Enterprise Funding Corporation, a Delaware corporation 10.66 Receivables Purchase Agreement Exhibit 10.73 to between IMC-Agrico Company as the June 30, 1997 Seller and IMC-Agrico Annual Report on Receivables Company L.L.C. as Form 10-K Purchaser, dated as of June 27, 1997 10.67 Amendment Number 1 to Transfer Exhibit 10.60 to and Administration Agreement the December 31, 1997 and Receivables Purchase Annual Report on Agreement among IMC-Agrico Form 10-K Receivables Company L.L.C., IMC-Agrico Company and Enterprise Funding Corporation, a Delaware corporation 10.68 Amendment Number 2 to Transfer X and Administration Agreement and Receivables Purchase Agreement among IMC-Agrico Receivables Company L.L.C., IMC-Agrico Company and Enterprise Funding Corporation, a Delaware corporation 10.69 Bill of Sale and Assignment X of Assets by and between IMC-Agrico Receivables Company L.L.C., dated September 30, 1998 10.70 Registration Rights Agreement Exhibit 99.6 to dated as of March 1, 1996 among the Company's IMC Global Inc. and certain March 31, 1996 former stockholders of The Form 10-Q Vigoro Corporation 10.71* Employment Agreement dated Exhibit 10.62 to as of January 29, 1998 between the December 31, IMC Global Inc. and 1997 Annual Report Robert E. Fowler, Jr. On Form 10-K 10.72 364-Day Credit Agreement Exhibit 10.1 to dated as of April 1, 1998 the Company's among IMC Global Inc. and Report on the Banks listed therein Form 8-K dated August 14, 1998 10.73 Amendment No. 1, dated X December 31, 1998 to 364-Day Credit Agreement dated April 1, 1998 10.74 Revolving Loan Agreement, X dated as of December 18, 1998, as amended, among Harris Chemical Europe Ltd., Namsco (UK) Ltd.; Salt Union Limited; IMC Global Inc.; IMC Inorganic Chemicals, Inc.; Chase Manhattan plc and Chase Manhattan International Limited 10.75 Amendment No. 1, dated January 15, X 1999 to Revolving Loan Agreement dated December 18, 1998 10.76 Facility Agreement, dated as X of September 23, 1998, among The First National Bank of Chicago, Penrice Soda Products Pty Ltd., Penrice Holdings Pty and IMC Global Australia Pty Ltd. And IMC Global Inc. 10.77 Facility Agreement, dated as of X September 23, 1998, among Banque Nationale de Paris, The First National Bank of Chicago, Penrice Soda Products Pty Ltd., Penrice Holdings Pty and IMC Global Australia Pty Ltd. and IMC Global Inc. 10.78 Facility Agreement, dated as X of September 23, 1998, among Rabo Australia Limited, The First National Bank of Chicago, Penrice Soda Products Pty Ltd., Penrice Holdings Pty and IMC Global Australia Pty Ltd. and IMC Global Inc. 10.79* Employment Agreement dated Exhibit 10.1 to as of September 15, 1998 the Company's between IMC Global Inc. and September 30, 1998 Douglas A. Pertz Form 10-Q 10.80* 1998 Stock Option Plan for Exhibit 10.7 to non-employee Directors the Company's Report on Form 8-K dated May 14, 1998 10.81 Non-competition Agreement X dated as of August 1, 1998 between IMC Global Inc. and Robert M. Van Patten 10.82 Severance Agreement dated X as of March 19, 1998 between IMC Global Inc. and J. Bradford James 10.83 Severance Agreement dated X as of August 1, 1998 between IMC Global Inc. and Robert M. Van Patten 12 Ratio of Earnings to Fixed Charges X 13 The portions of IMC Global X Inc.'s 1998 Annual Report to Stockholders which are specifically incorporated by reference 21 Subsidiaries of the Registrant X 23 Consent of Independent Auditors X 24 Power of Attorney X 27 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 Items 5 and 7 dated October 28, 1998 A report under Items 5 and 7 dated November 17, 1998 A report under Item 5 dated December 31, 1998 as amended under Items 5 and 7 on January 13, 1999 A report under Item 5 dated January 6, 1999 A report under Items 2 and 7 dated January 7, 1999 which amended a report dated April 1, 1998 (c) EXHIBITS See exhibit index listed at Item 14(a)(3) hereof. (d) Financial statements and schedules and summarized financial information of 50 percent or less owned persons are omitted as none of such persons are individually, or in the aggregate, significant under the tests specified in Regulation S-X under Article 3.09 of general instructions to the financial statements. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMC GLOBAL INC. (Registrant) /s/ Robert E. Fowler, Jr. ------------------------- Robert E. Fowler, Jr. Chairman and Chief Executive Officer Date: March 29, 1999 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: /s/ Robert E. Fowler, Jr. Chairman and Chief March 29, 1999 Robert E. Fowler, Jr. Executive Officer (principal executive officer) /s/ Douglas A. Pertz President, Chief Operating March 29, 1999 Douglas A. Pertz Officer and Director (principal operating officer) /s/ J.Bradford James Senior Vice President and March 29, 1999 J. Bradford James Chief Financial Officer (principal financial officer) /s/ Anne M. Scavone Vice President and March 29, 1999 Anne M. Scavone Controller (principal accounting officer) * Director March 29, 1999 - - ----------------------- Wendell F. Bueche * Director March 29, 1999 - - ----------------------- Raymond F. Bentele * Director March 29, 1999 - - ----------------------- Rod F. Dammeyer * Director March 29, 1999 - - ----------------------- James M. Davidson * Director March 29, 1999 - - ----------------------- Harold H. MacKay * Director March 29, 1999 - - ----------------------- David B. Mathis * Director March 29, 1999 - - ----------------------- Donald F. Mazankowski * Director March 29, 1999 - - ----------------------- Joseph P. Sullivan * Director March 29, 1999 - - ----------------------- Richard L. Thomas * Director March 29, 1999 - - ----------------------- Billie B. Turner *By: /s/ Rose Marie Williams Rose Marie Williams Attorney-in-fact - - ---------------------------- (1) All statements, other than statements of historical fact contained within this Form 10-K constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions in the agricultural industry or in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company's products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and change in trade, monetary and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal, including environmental, and administrative proceedings involving the Company; the completion of the Company's Year 2000 program; and the other risk factors reported from time to time in the Company's Securities and Exchange Commission reports. (2) Since the amount of potassium in the common salts of potassium varies, the industry has established a common standard of measurement by defining a product's potassium content, or grade, in terms of equivalent percentages of potassium oxide (K2O). A K2O equivalent of 60 percent, 50 percent and 22 percent is the customary minimum standard for muriate of potash, sulphate of potash and double sulphate of potash magnesia products, respectively. EX-4.3 2 WARRANT AGREEMENT EXHIBIT 4.3 WARRANT AGREEMENT This Warrant Agreement dated as of December 22, 1997 (the "Agreement") between IMC GLOBAL INC., a Delaware corporation (the "Company"), and American Stock Transfer & Trust Company, a New York corporation, as warrant agent (the "Warrant Agent"). RECITALS WHEREAS, the Company proposes to issue and deliver its warrant certificates (the "Warrant Certificates") evidencing warrants (the "Warrants") to purchase up to an aggregate of 8,421,363 shares of its Common Stock (as defined below) to holders (the "Warrant Recipients") of the common stock, par value $.01 per share, of Freeport-McMoRan Inc. ("FTX") in connection with the Agreement and Plan of Merger dated as of August 26, 1997 (the "Merger Agreement") between the Company and FTX; and WHEREAS, each Warrant will entitle the registered holder thereof to purchase one share of Common Stock (as defined below) at the Exercise Price (as defined below); In consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the Holders, the Company and the Warrant Agent each agrees as follows: Section 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Affiliate" of any person means any person directly or indirectly controlling or controlled by or under direct or indirect common control with such person. For purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Business Day" means any day other than a Saturday, a Sunday or a day on which the New York Stock Exchange, banking institutions or trust companies in the City of New York are authorized or obligated by law or executive order to close. "Common Stock" means the Common Stock, $1.00 par value per share, of the Company, and any other capital stock of the Company into which the Common Stock may be converted or reclassified or that may be issued in respect of, in exchange for, or in substitution of, the Common Stock by reason of any stock splits, stock dividends, distributions, mergers, consolidations or other like events. "Company" shall have the meaning set forth in the preamble to this Agreement or its successors and assigns. "Current Market Value" shall have the meaning set forth in Section 8(e) of this Agreement. "Effective Time" means December 22, 1997. "Exercise Date" shall mean, as to any Warrants, the date on which the Warrant Agent shall have received both (a) the Warrant Certificate representing such Warrants, with the Exercise Forms therein duly executed by the Holder thereof or his attorney duly authorized in writing, and (b) payment in cash, or by official bank check or certified check made payable to the Company, of an amount in lawful money of the United States of America equal to the applicable Exercise Price (as defined below). "Exercise Price" means the purchase price per share of Common Stock to be paid upon the exercise of a Warrant in accordance with the terms hereof, which price shall initially be $44.50 per share, subject to adjustment from time to time pursuant to Section 8 hereof. "Expiration Date" means December 22, 2000. "Holder" means, with respect to any Warrant Certificate, the person in whose name such Warrant Certificate is registered upon the books to be maintained by the Warrant Agent pursuant to Section 3 hereof. "Merger Agreement" shall have the meaning set forth in the first Recital to this Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Register" shall have the meaning set forth in Section 3(a) of this Agreement. "Warrant Agent" shall have the meaning set forth in the preamble to this Agreement or the successor or successors of such Warrant Agent duly appointed in accordance with the terms hereof. "Warrant Certificates" shall have the meaning set forth in the first Recital to this Agreement. "Warrant Recipients" shall have the meaning set forth in the first Recital to this Agreement. "Warrants" shall have the meaning set forth in the first Recital to this Agreement. Section 2. The Warrant Certificates. (a) Upon issuance, each Warrant Certificate shall evidence one or more Warrants. The Warrant Certificates shall be in registered form only and substantially in the form attached hereto as Exhibit A. The Warrant Certificates shall be dated the date on which they are countersigned by the Warrant Agent and may have such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with applicable laws, rules or regulations including any rule or regulation of any securities exchange on which the Warrants may be listed. (b) Warrant Certificates substantially in the form of Exhibit A hereto and evidencing Warrants to purchase an aggregate of up to 8,421,363 shares of Common Stock (subject to adjustment pursuant to Section 8) shall be executed, on or after the date of this Agreement, by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall thereupon countersign and deliver such Warrant Certificates upon the order and at the direction of the Company. The names and addresses of the Warrant Recipients shall be specified by the Company pursuant to a list of Warrant Recipients provided to the Warrant Agent by the Company, which shall consist of the names of those Persons who were stockholders of record of FTX as of the Effective Time, subject only to the elimination of the names of any such Persons as are only entitled to receive a payment in lieu of a fractional Warrant in accordance with the terms of the Merger Agreement. The Warrant Agent is hereby authorized to countersign and deliver Warrant Certificates as required by this Section 2(b) or by Section 3(b), 4(f) or 6 hereof. The Warrant Certificates shall be executed on behalf of the Company by any of its duly authorized officers, either manually or by facsimile signature printed thereon, and shall be dated the date of issuance. The Warrant Agent shall countersign the Warrant Certificates either manually or by facsimile signature printed thereon, and the Warrant Certificates shall not be valid for any purpose until so countersigned. In case any duly authorized officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company. Section 3. Registration, Exchange and Transfer of Warrants. (a) The Warrant Agent shall keep at the principal corporate trust office of the Warrant Agent, specified in or pursuant to Section 4(e), a register (the "Register") in which , subject to such regulations as the Company may reasonably prescribe, the Warrant Agent shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates as herein provided. (b) At the option of the Holder, Warrant Certificates may be exchanged at such office and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates that the Holder making the exchange is entitled to receive; provided, however, that the Company shall not be required to issue and deliver Warrant Certificates representing fractional warrants. (c) Each Warrant Certificate issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligation of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement as the Warrant Certificates surrendered for such registration of transfer or exchange. (d) Each Warrant Certificate surrendered for registration of transfer or exchange shall (if so required by the Company or the Warrant Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing. (e) No service charge shall be made for any registration of transfer or exchange of Warrant Certificates. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates. (f) Each Warrant Certificate when duly endorsed in blank shall be negotiable and when a Warrant Certificate shall have been so endorsed, the Holder thereof may be treated by the Company, the Warrant Agent and all other persons dealing therewith as the sole and absolute owner thereof for any purpose and as the person solely entitled to exercise the rights represented thereby or to request the Warrant Agent to record the transfer thereof on the Register any notice to the contrary notwithstanding; but until such transfer on such Register, the Company and the Warrant Agent may treat the Holder thereof as the owner for all purposes. Section 4. Exercise Price, Payment of the Exercise Price, Duration and Exercise of Warrants Generally. (a) Each Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the Holder thereof, upon payment of the Exercise Price and subject to the provisions of this Agreement, to receive one share of Common Stock for each whole Warrant represented thereby, subject to adjustment as herein provided, upon payment of the Exercise Price for each of such shares. (b) A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date and the Person entitled to receive shares of Common Stock upon exercise of the Warrant shall be treated as the holder of such Common Stock as of the close of business on the Exercise Date. As soon as practicable on or after the Exercise Date, the Warrant Agent shall notify the Company, and the Warrant Agent shall, within five Business Days of the Exercise Date, deliver or cause to be delivered to or upon any written order of any Holder appropriate evidence of ownership of any shares of Common Stock issuable upon exercise of the Warrants or other securities or property (including any cash) to which the Holder is entitled hereunder, subject to Section 5. All funds received upon the exercise of Warrants shall be deposited by the Warrant Agent for the account of the Company, unless otherwise instructed in writing by the Company. (c) Subject to the terms and conditions set forth herein, the Warrants shall be exercisable from time to time by the Holder thereof at any time on or prior to the Expiration Date. (d) The Warrants shall terminate and become void as of 5:00 P.M. (New York City time) on the Expiration Date and all rights of the Holder of the Warrant Certificate evidencing such Warrant under this Agreement or otherwise shall cease. (e) Subject to Sections 5 and 9 hereof, in order to exercise a Warrant, the Holder thereof must surrender the Warrant Certificate evidencing such Warrant, with one of the forms on the reverse of or attached to the Warrant Certificates duly executed (with signature guaranteed), to the Warrant Agent at its office at 40 Wall Street, New York, New York 10005, or at such other address as the Warrant Agent may specify in writing to the Holders at their respective addresses specified in the Register, together with payment-in-full of the Exercise Price thereof. (f) The Warrants evidenced by a Warrant Certificate shall be exercisable either as an entirety or, from time to time, for part only of the number of whole Warrants evidenced thereby. If fewer than all of the Warrants evidenced by a Warrant Certificate are exercised at any time, the Warrant Certificate representing such Warrants shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not exercised shall be issued by the Company. The Warrant Agent shall countersign the new Warrant Certificate, register it in such name or names as may be directed in writing by the Holder and deliver the new Warrant Certificate to the person or persons entitled to receive the same. Section 5. Payment of Taxes. The Company will pay all documentary, stamp or similar taxes or other governmental charges, if any, attributable to the issuance of the Warrants or the issuance of Common Stock upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or other governmental charge which may be payable in respect of any transfer involved in the issue or delivery of any Warrant Certificates or certificates for Common Stock issued upon the exercise of Warrants in a name other than that of the Holder of such Warrants, and the Company shall not register any such transfer or issue any such certificate until such tax or governmental charge, if required, shall have been paid. Section 6. Mutilated or Missing Warrant Certificates. If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) the Company and the Warrant Agent receive evidence to their satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is delivered to the Company and the Warrant Agent (in the case of destruction, loss or theft) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and the Warrant Agent shall countersign and deliver, in exchange for any such mutilated Warrant Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants. Upon the issuance of any new Warrant Certificate under this Section 6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and other expenses in connection therewith. Every new Warrant Certificate executed and delivered pursuant to this Section 6 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section 6 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed, lost or stolen Warrant Certificates. Section 7. Reservation of Common Stock for Issuance on Exercise of Warrants; Listing; Registration. (a) The Company will at all times reserve and keep available, free from preemptive rights, and out of its authorized but unissued Common Stock, solely for the purpose of issuance upon exercise of Warrants as herein provided, such number of shares of Common Stock as shall then be issuable upon exercise of all outstanding Warrants. The Company covenants that all shares of Common Stock which shall be issuable upon exercise of the Warrants shall, upon issue in accordance with the terms of this Agreement, be duly and validly issued and fully paid and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof and that upon issuance such shares shall be listed on each national securities exchange on which any other shares of outstanding Common Stock are then listed. (b) The Company covenants that if any Common Stock to be reserved for the purpose of exercise of the Warrants hereunder require registration with, or approval of, any governmental authority under any federal or state securities law before such securities may be validly issued or delivered upon such exercise, or freely transferred by the holder thereof after such exercise, as expeditiously as reasonably possible, it shall endeavor to secure such registration or approval and shall use its reasonable efforts to obtain appropriate approvals under state "blue sky" securities laws. Section 8. Adjustments. The Exercise Price and the number of shares of Common Stock issuable upon exercise of each whole Warrant shall be subject to adjustment from time to time as follows: (a) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications. If the Company shall (i) pay a dividend in shares of Common Stock or make any other distribution with respect to its Common Stock in shares of Common Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its outstanding Common Stock into a smaller number of shares, or (iv) issue any shares of Common Stock in a reclassification of the Common Stock (including any such reclassification in connection with a merger, consolidation or other business combination in which the Company is the continuing corporation), then the number of shares of Common Stock issuable upon exercise of each Warrant immediately prior to the record date for such dividend or distribution or the effective date of such subdivision or combination shall be adjusted so that the Holder of each Warrant shall thereafter be entitled to receive the kind and number of shares of Common Stock or other securities or property (including cash) of the Company that such Holder would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this Section 8(a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. (b) Rights; Options; Warrants. If the Company shall issue rights, options, warrants or convertible or exchangeable securities (other than a convertible or exchangeable security subject to Section 8[a]) to all holders of its Common Stock ("Additional Options"), entitling them to subscribe for or purchase Common Stock at a price per share that is lower (at the record date for such issuance) than the Current Market Value per share of Common Stock, the Exercise Price of each Warrant shall be adjusted by multiplying such price by a fraction, of which the numerator shall be (i) the number of shares of Common Stock outstanding on the record date established for the issuance of the Additional Rights, Options plus the number of shares of Common Stock that the aggregate consideration received (upon issuance of such additional shares upon exercise of such Additional Options) would purchase at the Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the record date established for the issuance of such Additional Options plus the number of additional shares of Common Stock issuable upon exercise of the Additional Options. Such adjustment shall be made whenever such rights, options, warrants or convertible or exchangeable securities are issued, and shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such rights, options, warrants or convertible or exchangeable securities. Any adjustment to the number of shares of Common Stock issuable upon exercise of all Warrants then outstanding made pursuant to this Section 8(b) shall be allocated among the Warrants then outstanding on a pro rata basis. (c) Issuance of Common Stock at Lower Values. If the Company shall, in a transaction to which Section 8(b) is inapplicable, issue or sell shares of Common Stock, or rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock, at a price per share of Common Stock (determined in the case of such rights, options, warrants or convertible or exchangeable securities, by dividing (A) the total amount receivable by the Company in consideration of the issuance and sale of such rights, options, warrants or convertible or exchangeable securities, plus the total consideration, if-any, payable to the Company upon exercise, conversion or exchange thereof, by (B) the total number of shares of Common Stock covered by such rights, options, warrants or convertible or exchangeable securities) that is lower than the then Current Market Value per share of the Common Stock in effect immediately prior to such sale or issuance, then the Exercise Price of each Warrant shall be adjusted by multiplying such Exercise Price by a fraction, of which the numerator shall be (i) the number of shares of Common Stock outstanding on the record date established for the issuance of such rights, options, or warrants plus the number of shares of Common Stock which the aggregate consideration received (upon exercise of such rights, options or warrants) would purchase at the Current Market Price, and the denominator of which shall be the number of shares of Common Stock outstanding on the record date established for the issuance of such rights, options or warrants plus the number of additional shares of Common Stock issuable upon exercise thereof. Such adjustment shall be made successively whenever any such sale or issuance is made. In case the Company shall issue and sell shares of Common Stock or rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock for a consideration consisting, in whole or in part, of property other than cash or its equivalent, then in determining the price per share of Common Stock and the "consideration" receivable by or payable to the Company for purposes of the first sentence of this Section 8(c), the Board of Directors of the Company shall determine, in good faith, the fair value of such property. In case the Company shall issue and sell rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock, together with one or more other securities as part of a unit at a price per unit, then in determining the "price per share of Common Stock" and the "consideration" receivable by or payable to the Company for purposes of the first sentence of this Section 8(c), the Board of Directors of the Company shall determine, in good faith, the fair value of the rights, options, warrants or convertible or exchangeable securities then being sold as part of such unit. Any adjustment to the number of shares of Common Stock issuable upon exercise of all Warrants then outstanding made pursuant to this Section 8(c) shall be allocated among each Warrant then outstanding on a pro rata basis. The provisions of this Section 8(c) shall not apply (i) to shares issued pursuant to an employee stock option plan or similar plan providing for options or other similar rights to purchase shares of Common Stock, (ii) to issuances pursuant to incentive bonus plans or (iii) to shares issued in payment or settlement of any other equity- related award to employees. (d) Expiration of Rights, Options and Conversion Privileges. Upon the expiration of any rights, options, warrants or conversion or exchange privileges that have previously resulted in an adjustment hereunder, if any thereof shall not have been exercised, the Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Warrant shall, upon such expiration, be readjusted and shall thereafter, upon any future exercise, be such as they would have been had they been originally adjusted (or had the original adjustment not been required, as the case may be) as if (i) the only shares of Common Stock so issued were the shares of Common Stock, if any, actually issued or sold upon the exercise of such rights, options, warrants or conversion or exchange rights and (ii) such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise plus the consideration, if any, actually received by the Company for issuance, sale or grant of all such rights, options, warrants or conversion or exchange rights whether or not exercised; provided, however, that no such readjustment shall have the effect of increasing the Exercise Price by an amount, or decreasing the number of shares issuable upon exercise of each Warrant by a number, in excess of the amount or number of the adjustment initially made in respect of the issuance, sale or grant of such rights, options, warrants or conversion or exchange rights. (e) Current Market Value. For the purposes of any computation under this Section 8 or under Section 7(b), the Current Market Value per share of Common Stock at the date herein specified shall be deemed to be the average of the daily market prices of the Common Stock for the 20 consecutive trading days immediately preceding the day as of which "Current Market Value" is being determined. The market price for each such trading day shall be the closing price, regular way, on such day, or if no sale takes place on such day, the average of the closing bid and asked prices on such day. (f) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc. If the Company (i) consolidates with or merges into any other corporation and is not the continuing or surviving corporation of such consolidation or merger, or (ii) permits any other corporation to consolidate with or merge into the Company and the Company is the continuing or surviving corporation but, in connection with such consolidation or merger, the Common Stock is converted into or exchanged for stock or other securities of any other corporation or cash or any other assets, or (iii) transfers all or substantially all of its properties and assets to any other corporation, or (iv) effects a capital reorganization or reclassification of the capital stock of the Company in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or assets with respect to or in exchange for Common Stock, then, and in each such case, proper provision shall be made so that, upon the basis and upon the terms and in the manner provided in this subsection (f), each Holder, upon the exercise of each Warrant at any time after the consummation of such consolidation, merger, transfer, reorganization or reclassification, shall be entitled to receive (at the aggregate Exercise Price in effect for all shares of Common Stock issuable upon such exercise immediately prior to such consummation as adjusted to the time of such transaction), in lieu of shares of Common Stock issuable upon such exercise prior to such consummation, the stock and other securities, cash and assets to which such Holder would have been entitled immediately prior to the record date for such dividend or distribution or the effective date of such consolidation, merger, transfer, reorganization or reclassification. (g) De Minimis Adjustments. Except as provided in Section 8(c) with reference to adjustments required by such Section 8(c), no adjustment in the Exercise Price shall be required unless such adjustment would result in an increase or decrease of such Exercise Price by at least one percent (1%); provided, however, that any adjustments which by reason of this Section 8(h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one- thousandth of a share. (h) Notice of Adjustment. Whenever the number of shares of Common Stock or other stock or property issuable upon the exercise of each Warrant is adjusted, as herein provided, the Company shall promptly give written notice (signed by the Chief Financial Officer or Chief Executive Officer) to the Warrant Agent of such adjustment or adjustments and shall cause the Warrant Agent promptly to mail by first class mail, postage prepaid, to each Holder notice of such adjustment or adjustments and shall deliver to the Warrant Agent a certificate of a firm of independent public accountants selected by the Board of Directors of the Company (who may be the regular accountants employed by the Company) setting forth the adjusted Exercise Price, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. The Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or responsibility with respect to any such certificate, except to exhibit the same from time to time to any Holder desiring an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the number of shares of Common Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value (or the kind or amount) of any shares of Common Stock or other stock or property which may be issuable on exercise of the Warrants. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other common stock or property upon the exercise of any Warrant. (i) Statement on Warrants. Irrespective of any adjustment in the number or kind of shares issuable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may continue to express the same number and kind of shares as are stated in the Warrants initially issuable pursuant to this Agreement. Section 9. Fractional Shares of Common Stock on Exercise of the Warrants. The Company shall not be required to issue fractional shares of Common Stock on exercise of the Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full shares of Common Stock that shall be issuable upon such exercise thereof shall be computed on the basis of the aggregate number of shares of Common Stock acquirable on exercise of the Warrants so presented. If any fraction of a share of Common Stock would, except for the provisions of this Section 9, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall pay an amount in cash calculated by it in accordance with Section 8(e) to be equal to the then Current Market Value multiplied by such fraction computed to the nearest whole cent. The Holders, by their acceptance of the Warrant Certificates, expressly waive any and all rights to receive any fraction of a share of Common Stock or a stock certificate representing a fraction of a share of Common Stock. Section 10. No Stock Rights. Prior to the exercise of the Warrants, no Holder of a Warrant Certificate, as such, shall be entitled to vote or be deemed the holder of shares of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon any Holder of a Warrant Certificate, as such, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, to exercise any preemptive right, to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise. Section 11. The Warrant Agent. (a) The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the terms and conditions herein set forth, by all of which the Company and the Holders of Warrants, by their acceptance thereof, shall be bound. No implied duties or obligations shall be read into this Agreement against the Warrant Agent. The Warrant Agent shall not by countersigning Warrant Certificates or by any other act hereunder be deemed to make any representation as to validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon) or of any securities or other property delivered upon exercise of any Warrant, or as to the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant. The Warrant Agent shall not have any duty to calculate or determine any adjustments with respect either to the kind and amount of shares or other securities or any property receivable by Holders upon the exercise or tender of Warrants required from time to time, and the Warrant Agent shall have no duty or responsibility in determining the accuracy or correctness of any such calculation, other than to apply any adjustment, notice of which is given by the Company to the Warrant Agent to be mailed to the Holders in accordance with Section 8(i). The Warrant Agent shall not (i) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted by it in good faith on the belief that any Warrant Certificate or any other documents or any signatures are genuine or properly authorized, (ii) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates, or (iii) be liable for any act or omission in connection with this Agreement except for its own negligence or willful misconduct. The Warrant Agent is hereby authorized to accept instructions with respect to the performance of its duties hereunder from any officer of the Company and to apply to any such officer for instructions (which instructions will be promptly given in writing when requested) and the Warrant Agent shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with the instructions of any such officer, except for its own negligence or willful misconduct, but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such or may require such further or additional evidence as it may deem reasonable. (b) The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or in connection with this Agreement. (c) The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement. (d) The Company agrees to pay to the Warrant Agent compensation for all services rendered by it hereunder as the Company and the Warrant Agent may agree from time to time, and to reimburse the Warrant Agent for reasonable expenses and disbursements incurred in connection with the execution and administration of this Agreement (including the reasonable compensation and the expenses of its counsel), and further agrees to indemnify the Warrant Agent for, and to hold it harmless against any loss, liability or expense incurred without gross negligence or bad faith on its part, arising out of or in connection with the acceptance and administration of this Agreement, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. (e) The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell and deal in any of the Warrants or other securities of the Company or its Affiliates or become pecuniarily interested in transactions in which the Company or its Affiliates may be interested, or contract with or lend money to the Company or its Affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. (f) Anything in this Agreement to the contrary notwithstanding, in no event shall the Warrant Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to loss of profits), even if the Warrant Agent has been advised of the form of action. Section 12. Resignation and Removal of Warrant Agent; Appointment of Successor. (a) No resignation or removal of the Warrant Agent and no appointment of a successor warrant agent shall become effective until the acceptance of appointment by the successor warrant agent provided herein. The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent's own negligence, bad faith or willful misconduct) after giving written notice to the Company. The Company may remove the Warrant Agent upon written notice, and the Warrant Agent thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. Upon such resignation or removal, the Company shall appoint in writing a new warrant agent. If the Company shall fail to make such appointment within a period of 60 days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then a Holder may apply to any court of competent jurisdiction for the appointment of a new warrant agent. Any new warrant agent, whether appointed by the Company or by such a court, shall be a corporation doing business under the laws of the United States or any State thereof, in good standing and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new warrant agent shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such warrant agent prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a Federal or state supervising or examining authority. After acceptance in writing of such appointment by the new warrant agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall give notice thereof to the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section, however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the appointment of a new warrant agent, as the case may be. (b) Any corporation into which the Warrant Agent or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Warrant Agent or any new warrant agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Warrant Agent, shall be a successor Warrant Agent under this Agreement without any further act, provided that such corporation (i) would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 12(a) or (ii) is a wholly owned subsidiary of the Warrant Agent. Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be mailed first-class mail, postage prepaid) to each Holder at such Holder's last address as shown on the Register. Section 13. Money and Other Property Deposited with the Warrant Agent. Any moneys, securities or other property that at any time shall be deposited on behalf of the Company with the Warrant Agent pursuant to this Agreement shall be and are hereby assigned, transferred and set over to the Warrant Agent in trust for the purpose for which such moneys, securities or other property shall have been deposited; but such moneys, securities or other property need not be segregated from other funds, securities or other property except to the extent required by law. Section 14. Consolidations and Mergers of the Company and Sales, Leases and Conveyances Permitted Subject to Certain Conditions. (a) The Company may consolidate with, or sell, lease or convey all or substantially all of its assets to, or merge with or into any other corporation, provided that in any such case, either the Company shall be the continuing corporation, or the successor corporation shall be a corporation organized and existing under the laws of the United States of America or a State thereof and such successor corporation shall expressly assume the obligations of the Company hereunder. (b) In case of any such consolidation, merger, sale, lease or conveyance and upon any such assumption by the successor corporation, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein, and the predecessor corporation, except in the event of a lease, shall be relieved of any further obligation under this Agreement and the Warrants. Section 15. Notices. (a) Except as otherwise provided in Section 15(b), any notice, demand or delivery authorized by this agreement shall be sufficiently given or made when mailed if sent by first-class mail, postage prepaid, addressed to any Holder at such Holder's address shown on the Register and to the Company or the Warrant Agent as follows: If to the Company: IMC Global Inc. 2100 Sanders Road Northbrook, Illinois 60062 Attention: Marschall I. Smith Senior Vice President and General Counsel with a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attention: Thomas A. Cole Larry A. Barden If to the Warrant Agent: American Stock Transfer & Trust Company 40 Wall Street New York, New York 10005 Attention: Corporate Trust Department or such other address as shall have been furnished to the party giving or making such notice, demand or delivery. (b) Any notice required to be given by the Company to the Holders shall be made by mailing by registered mail, return receipt requested, to the Holders at their respective addresses shown on the Register. The Company hereby irrevocably authorizes the Warrant Agent, in the name and at the expense of the Company, to mail any such notice upon receipt thereof from the Company. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given when mailed, whether or not the Holder receives the notice. Section 16. Amendments. (a) The Company may from time to time supplement or amend this Agreement without the consent of any Holder, in order to (i) cure any ambiguity or correct or supplement any provision herein that may be defective or inconsistent with any other provision herein or (ii) add to the covenants and agreements of the Company for the benefit of the Holders, or surrender any rights or powers reserved to or conferred upon the Company in this Agreement. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this section, the Warrant Agent shall join with the Company in the execution and delivery of any such supplemental agreements unless it affects the Warrant Agent's own rights, duties or immunities hereunder in which case such party may, but shall not be required to, join in such execution and delivery. (b) With the consent of the registered holders of at least a majority in number of the Warrants at the time outstanding, the Company and the Warrant Agent may at any time and from time to time by supplemental agreement or amendment add any provisions to or change in any manner or eliminate any of the provisions of this Agreement or of any supplemental agreement or modify in any manner the rights and obligations of the Warrant holders and of the Company; provided, however, that no such supplemental agreement or amendment shall, without the consent of the registered holder of each outstanding Warrant affected thereby: (1) alter the provisions of this Agreement so as to affect adversely the terms upon which the Warrants are exercisable; or (2) reduce the number of Warrants outstanding the consent of whose holders is required for any such supplemental agreement or amendment. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this section, the Warrant Agent shall join with the Company in the execution and delivery of any such supplemental agreements unless it affects the Warrant Agent's own rights, duties or immunities hereunder in which case such party may, but shall not be required to, join in such execution and delivery. Section 17. Persons Benefiting. This Agreement shall be binding upon and inure to the benefit of the Company and the Warrant Agent, and their respective successors, assigns, beneficiaries, executors and administrators, and each registered Holder of the Warrants. Nothing in this Agreement is intended or shall be construed to confer upon any person, other than the Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or claim under or by reason of this Agreement or any part hereof. Section 18. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument. Section 19. Surrender of Certificates. Any Warrant Certificate surrendered for exercise or purchase or otherwise acquired by the Company shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall be promptly canceled by such Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall deliver such canceled Warrant Certificates to the Company. Section 20. Termination of Agreement. This Agreement shall terminate and be of no further force and effect on the earliest of (a) the Expiration Date or (b) the date on which all of the Warrants have been exercised, except that the provisions of Sections 11 and 13 shall continue in full force and effect after such termination date. Section 21. Governing Law. This Agreement and each Warrant issued hereunder and all rights arising hereunder shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officer thereunto duly authorized as of the date first above written. IMC GLOBAL INC. By: /s/ Marschall Smith Name: Marschall I. Smith Title: Senior Vice President AMERICAN STOCK TRANSFER & TRUST COMPANY as Warrant Agent By: /s/ Paula Caroppoli Name: Paula Caroppoli Title: Vice President EXHIBIT A FORM OF FACE OF WARRANT CERTIFICATE WARRANTS TO PURCHASE COMMON STOCK OF IMC GLOBAL INC. Certificate for Warrants CUSIP No. ------- This certifies that , or registered assigns, is the registered holder of the number of Warrants set forth above (the "Warrants"). Each Warrant entitles the holder thereof (a "Holder"), subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from IMC Global Inc., a Delaware corporation (the "Company"), one share of Common Stock, par value $l.00 per share, of the Company ("Common Stock"), at the exercise price (the "Exercise Price") of $44.50 per share, subject to adjustment upon the occurrence of certain events. This Warrant Certificate shall terminate and become void as of the close of business on December 22, 2000; provided, however, that if the last day for the exercise of the Warrants shall not be a Business Day, then the Warrants may be exercised on the next succeeding Business Day (as defined in the Warrant Agreement) following the Expiration Date. This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of December 22, 1997 (the "Warrant Agreement"), between the Company and American Stock Transfer & Trust Company, as warrant agent (the "Warrant Agent", which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Warrant Agent and the Holders of the Warrants. As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants are immediately exercisable. At 5:00 P.M. (New York City time) on the Expiration Date, each Warrant not exercised prior thereto shall terminate and become void and of no value; provided, however, that if the last day for the exercise of the Warrants shall not be a Business Day, then the Warrants may be exercised until 5:00 P.M. (New York City time) on the next succeeding Business Day following the Expiration Date. The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each whole Warrant are subject to adjustment as provided in the Warrant Agreement. In order to exercise a Warrant, the registered holder hereof must surrender this Warrant Certificate at the office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, together with any required payment in full of the Exercise Price then in effect or the share(s) of Common Stock as to which the Warrant(s) represented by this Warrant Certificate are submitted for exercise, all subject to the terms and conditions hereof and of the Warrant Agreement. Any such payment of the Exercise Price shall be in cash or by certified or official bank check payable to the order of the Company. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of Common Stock upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or other governmental charge which may be payable in respect of any transfer involved in the issue or delivery of any Warrant Certificates or certificates for Common Stock issued upon the exercise of Warrants in a name other than that of the registered Holder of such Warrants, and the Company shall not register any such transfer or issue any such certificate until such tax or governmental charge, if required, shall have been paid. This Warrant Certificate and all rights hereunder are transferable by the registered holder hereof, in whole or in part, on the register of the Company, upon surrender of this Warrant Certificate for registration of transfer at the principal corporate trust office of the Warrant Agent maintained for such purpose in the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by the Holder hereof, or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such holder a new Warrant Certificate or Certificates with respect to any portion not so transferred; provided, however, that the Company shall not be required to issue and deliver Warrant Certificates representing fractional warrants. No service charge shall be made for any registration of transfer or exchange of the Warrant Certificates, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement. All terms used in this Warrant Certificate that are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. Copies of the Warrant Agreement are on file at the office of the Warrant Agent and may be obtained by writing to the Warrant Agent at the following address: 40 Wall Street, New York, New York 10005, Attention: Corporate Trust Department. This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent. Dated: , ----------------- ----- IMC GLOBAL INC. By: ----------------------------- Name: Title: Countersigned: AMERICAN STOCK TRANSFER & TRUST COMPANY as Warrant Agent By: ----------------------------- Authorized Officer FORM OF REVERSE OF WARRANT CERTIFICATE EXERCISE SUBSCRIPTION FORM (To be executed only upon exercise of Warrants) To: IMC Global Inc. The undersigned irrevocably exercises of the Warrants for the purchase of one share per Warrant (subject to adjustment) of Common Stock, par value $l.00 per share, of IMC Global Inc. represented by this Warrant Certificate hereof and herewith makes payment of $ (such payment being in cash or by certified or official bank check payable to the order of IMC Global Inc.), representing the Exercise Price for such Warrants so exercised. On the terms and conditions specified in this Warrant Certificate and the Warrant Agreement therein referred to, the undersigned hereby surrenders this Warrant Certificate and all right, title and interest therein to and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at the address specified below and delivered thereto. Date: , ----------- ------ ----------------------------------- (Signature of Owner) ----------------------------------- (Street Address) ----------------------------------- (City) (State)(Zip Code) Signature Guaranteed by: ----------------------------------- Securities and/or check to be issued to: Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: Any unexercised Warrants evidenced by the within Warrant Certificate to be issued to: Please insert social security or identifying number: Name: Street Address: City, State and Zip Code: FORM OF ASSIGNMENT FOR VALUE RECEIVED the undersigned registered holder of the within Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by the within Warrant Certificate not being assigned hereby) all of the right of the undersigned under the within Warrant Certificate, with respect to the number of whole Warrants set forth below: Social Security or other identifying Name of number of Number of ASSIGNEES Address Assignee(s) Warrants and does hereby irrevocably constitute and appoint____________________ ___________________________ the undersigned's attorney to make such transfer on the books of _____________________ maintained for that purpose, with full power of substitution in the premises. Date: , 19 -------------- ---- ----------------------------------- (Signature of Owner)( ) ----------------------------------- (Street Address) ----------------------------------- (City) (State)(Zip Code) Signature Guaranteed by: ------------------------------------ ::ODMA\PCDOCS\CHICAGO4\428147\9 EX-10.56 3 AMENDMENT NO. 1 TO FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.56 [EXECUTION COPY] AMENDMENT NO. I TO FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of March 23, 1998 among IMC Global Inc. (the "Borrower"), the Banks listed on the signature pages hereof (the "Banks"), Royal Bank of Canada, as Documentation Agent, The Chase Manhattan Bank and NationsBank, N.A., as Co-Syndication Agents, and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Administrative Agent"). W I T N E S S E T H: WHEREAS, the parties hereto have heretofore entered into a Five-Year Credit Agreement dated as of December 15, 1997 (the "Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement as specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. (a) Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. 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 Agreement shall from and after the date hereof refer to the Agreement as amended hereby. (b) The following definitions are added to Section 1.01 in their appropriate alphabetical positions: "Existing Harris Debt" means Debt of Harris Chemical North America, Inc., a Delaware corporation, under its outstanding $250,000,000 10.25% Senior Secured Discount Notes and its outstanding $335,000,000 10.75% Senior Subordinated Notes. "Harris Chemical Acquisition" means the merger of Harris Chemical Group with and into IMC Merger Sub Inc., a wholly-owned Subsidiary of the Company, with Harris Chemical Group as the successor thereto, expected to be consummated on or about March 31, 1998 pursuant to that certain Agreement and Plan of Merger, dated December 11, 1997, by and among the Company, IMC Merger Sub Inc. and Harris Chemical Group. "Harris Chemical Group" means Harris Chemical Group, Inc., a Delaware corporation. SECTION 2. Mergers and Sale of Assets. (a) The word "and" appearing immediately before clause (iv) in Section 5.07(b) is hereby deleted. (b) The following clause (v) is added to the proviso in Section 5.07(b): "and (v) the sale of assets acquired in or as a direct result of the Harris Chemical Acquisition." SECTION 3. Debt of Subsidiaries. (a) The following language is added to the first parenthetical in Section 5.10 immediately following the word "excluding": "(a) Existing Harris Debt at any time until the earlier of (x) November 1, 1998 and (y) the repurchasing or prepayment of such Debt by the Company or by any such Subsidiary of the Company (but not any refinancing thereof) and (b)" (b) The percentage "20%" in Section 5.10 is hereby changed to "25%". SECTION 4. Pricing. (a) Effective retroactively from and after December 15, 1997 (i) the proviso in the first paragraph of the Pricing Schedule is deleted and (ii) the definition of "Conversion Date" is deleted. (b)On the later of (i) the date this Amendment becomes effective in accordance with Section 8 hereof and (ii) March 31, 1998, the Borrower shall pay to the. Administrative Agent for the account of the Banks accrued amounts payable as a result of Section 4(a). SECTION 5. Existing Letters of Credit. On the date that the Harris Chemical Acquisition is consummated, each existing letter of credit issued on behalf of certain Subsidiaries of Harris Chemical Group by an Issuing Bank (as defined in the Agreement) shall, subject to the satisfaction of the applicable terms and conditions set forth in the Agreement, be deemed to be a Letter of Credit issued at the request of the Company under the terms of the Agreement, and shall from and after such date be governed by the provisions of the Agreement as fully as if the same had been issued pursuant thereto on such date. SECTION 6. Representations and Warranties. The Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto: (a) no Default has occurred and is continuing; and (b) each representation and warranty of the Borrower set forth in the Agreement is true and correct as though made on and as of such date. SECTION 7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 8. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Administrative Agent shall have received (i) duly executed counterparts hereof signed by the Borrower and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party) and (ii) if satisfaction of subsection (i) of this Section 8 occurs after March 31, 1998, receipt by the Administrative Agent of the amount due pursuant to Section 4 hereof IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC. By: Eric T. Martinez Name: Eric T. Martinez Title: Assistant Treasurer 2100 Sanders Road Northbrook, IL 60062 Attention: Eric Martinez Assistant Treasurer Telecopy number:847-205-4930 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Individually and as Administrative Agent By: /s/ Douglas Maher Name: Douglas Maher Title: Vice President 60 Wall Street New York, NY 10260 Attention: Loan Department Telex number: 177615 MGT Telecopy number:(212) 648-5023 THE CHASE MANHATTAN BANK, Individually and as Co- Syndication Agent By /s/ James H. Ramage Name: James H. Ramage Title: Vice President NATIONSBANK, N.A., Individually and as Co-Syndication Agent By /s/ Wallace W. Harris, Jr. Name: Wallace W. Harris, Jr. Title: Vice President ROYAL BANK OF CANADA, Individually and as Documentation Agent By /s/ Gordon McArthur Name: Gordon McArthur Title: Manager CREDIT AGRICOLE INDOSUEZ, Individually and as Managing Agent By /s/ Katherine L. Abbott Name: Katherine L. Abbott Title: First Vice President By /s/ David Bouhl Name: David Bouhl, FVP Title: Head of Corporate Banking, Chicago HARRIS TRUST AND SAVINGS BANK, Individually and as Managing Agent By /s/ Julie K. Hossack Name: Julie K. Hossack Title: Vice President THE BANK OF MONTREAL Individually and as Managing Agent By /s/ Michael P. Sassos Name: Michael P. Sassos Title: Director THE FIRST NATIONAL BANK OF CHICAGO, Individually and as Co-Agent By T. Thomas Cheng Name: T. Thomas Cheng Title: First Vice President THE NORTHERN TRUST COMPANY, Individually and as Co-Agent By /s/ Michelle M. Teteak Name: Michelle M. Teteak Title: Vice President ABN-AMRO BANK N.V. By /s/ James R. Morgan Name: James R. Morgan Title: Group Vice President By /s/ Scott J. Albert Name: Scott J. Albert Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ G. Burton Queen Name: G. Burton Queen Title: Managing Director BANQUE NATIONALE DE PARIS By /s/ Frederick H. Moryl, Jr. Name: Frederick H. Moryl, Jr. Title: Senior Vice President and Manager, Corporate THE BANK OF NEW YORK By /s/ John M. Lokay, Jr. Name: John M. Lokay, Jr. Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH By /s/ Hajime Watanabe Name: Hajime Watanabe Title: Deputy General Manager FIRST UNION NATIONAL BANK By ------------------------ Name: Title: COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By /s/ Ian Reece Name: IAN REECE Title: Senior Credit Officer By /s/ Hans F. Breukhoven Name: Hans F. Breukhover Title: Vice President. THE SAKURA BANK, LIMITED By /s/ Yoshikazu Nagura Name: Yoshikazu Nagura Title: Vice President STANDARD CHARTERED BANK By /s/ Kristina McDavid Name: Kristina McDavid Title: Vice President By /s/ Francois P. Dorival-Bordes Name: Francois P. Dorival-Bordes Title: Vice President SUNTRUST BANK, ATLANTA By /s/ Brian M. Davis Name: Brian M. Davis Title: A.V.P. By /s/ Gregory L. Cannon Name: Gregory L. Cannon Title: Vice President. THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By Name: ------------------------ Title: MARINE MIDLAND BANK By Name: ------------------------ Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED By Name: ------------------------ Title: EX-10.57 4 AMENDMENT NO. 2 TO FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.57 [CONFORMED COPY] AMENDMENT NO. 2 TO FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of December 14, 1998 to the Five-Year Credit Agreement dated as of December 15, 1997 (as amended by Amendment No. 1 to Five-Year Credit Agreement dated as of March 23, 1998, the "Agreement") among IMC Global Inc. (the "Borrower"), the Banks listed on the signature pages hereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Administrative Agent"). W I T N E S S E T H : WHEREAS, the parties hereto desire to amend the Agreement as specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. (a) Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. 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 Agreement shall from and after the date hereof refer to the Agreement as amended hereby. SECTION 2. Amendments to Definitions. Section 1.01 of the Agreement is amended by inserting, in their appropriate alphabetical position, the following definitions: "IMC Inorganic Chemicals Inc." means IMC Inorganic Chemicals Inc., a Delaware corporation, formerly known as Harris Chemical Group Inc. "PLP" means Phosphate Resource Partners Limited Partnership, a Delaware limited partnership, and its successors. SECTION 3. Amendment to Borrowings Condition. Section 3.02 of the Agreement is amended by amending and restating subparagraph (d) thereof in its entirety as follows: (d) the fact that the representations and warranties (other than (i) the representation and warranty set forth in Section 4.04(b) in the case of a Borrowing which does not result in an increase in the sum of the aggregate outstanding principal amount of the Loans and the aggregate Letter of Credit Liabilities, (ii) the representation and warranty set forth in Section 4.04(a) and (iii) the representations and warranties set forth in Section 4.12 in the case of a Borrowing after December 31, 2000) of the Borrower and, if the Borrower is not the Company, of the Company contained in this Agreement shall be true on and as of the date of such Borrowing or issuance of such Letter of Credit. SECTION 4. Amendment to Representations and Warranties. Article 4 of the Agreement is amended by adding a new Section 4.12 immediately after Section 4.11 thereof, to read in its entirety as follows: SECTION 4.12. Year 2000. Any reprogramming required to permit the proper functioning, in and following year 2000, of (a) the Company's computer systems and (b) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Company's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to the Company of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Company and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit the Company to conduct its business without Material Adverse Effect. SECTION 5. Amendment to Debt of Subsidiaries Covenant. Section 5. 10 of the Agreement is amended and restated in its entirety as follows: SECTION 5.10. Debt of Subsidiaries. Total Debt of all Subsidiaries (excluding Debt (i) of a Subsidiary owing to the Company, (ii) of a Subsidiary owing to a Substantially-Owned Consolidated Subsidiary, (iii) of an Eligible Subsidiary under this Agreement, (iv) of PLP in an aggregate principal amount not exceeding $300,000,000 outstanding on December 15, 1997 (but not any refinancing thereof), (v) of Harris Chemical North America, Inc. and its Subsidiaries arising out of the Argus Utilities sale-leaseback transaction in an aggregate principal amount not exceeding $71,000,000, or (vi) of IMC Inorganic Chemicals Inc., formerly known as Harris Chemical Group Inc., and its Subsidiaries in an aggregate principal amount not exceeding UK50,000,000) will not at any date exceed 25% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to such date). For purposes of this Section any preferred stock of a Consolidated Subsidiary (other than the Series E Preferred Stock) held by a Person other than the Company or a Substantially- Owned Consolidated Subsidiary shall be included, at the higher of its voluntary or involuntary liquidation value, in the "Debt" of such Consolidated Subsidiary. SECTION 6. Representations and Warranties. The Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto: (a) no Default has occurred and is continuing; and (b) each representation and warranty of the Borrower set forth in the Agreement is true and correct as though made on and as of such date. SECTION 7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 8. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Administrative Agent shall have received duly executed counterparts hereof signed by the Borrower and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Administrative Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC. By /s/ E. Paul Dunn Jr. Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Robert Bottamedi Title: Vice President THE CHASE MANHATTAN BANK By /s/ James H. Ramage Title: Vice President NATIONSBANK, N.A. By /s/ G. Burton Queen Title: Managing Director ROYAL BANK OF CANADA By /s/ Gordon MacArthur Title: Manager CREDIT AGRICOLE INDOSUEZ By /s/ David Bouhl Title: F.V.P., Head of Corporate Banking, Chicago By /s/ Katherine L. Abbott Title: First Vice President HARRIS TRUST AND SAVINGS BANK By /s/ Julie Hossack Title: Vice President THE BANK OF MONTREAL By /s/ Ian M. Plester Title: Director THE FIRST NATIONAL BANK OF CHICAGO By /s/ Robert G. Sperhac Title: Vice President THE NORTHERN TRUST COMPANY By /s/ Michelle M. Teteak Title: Vice President ABN-AMRO BANK N.V. By /s/ Scott J. Albert Title: Vice President By /s/ Steven M. Buehler Title: Assistant Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ G. Burton Queen Title: Managing Director BANQUE NATIONALE DE PARIS By /s/ Arnaud Collin du Bocage Title: Executive Vice President and General Manager THE BANK OF NEW YORK By /s/ John M. Lokay. Jr. Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH By /s/ Hajime Watanabe Title: Deputy General Manager FIRST UNION NATIONAL BANK By /s/ Kristen M. Denning Title: Assistant Vice President COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By /s/ W. Jeffrey Vollack Title: Senior Credit Officer and Senior Vice President By /s/ Michiel V.M. Van der Voort Title: Vice President THE SAKURA BANK, LIMITED, CHICAGO BRANCH By Title: STANDARD CHARTERED BANK By /s/ Francois Dorival-Bordes Title: Senior Vice President By /s/ Kristina McDavid Title: Vice President SUNTRUST BANK, ATLANTA By /s/ Michel A. Odermatt Title: Vice President By /s/ F. Steven Parrish Title: Vice President THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By Title: MARINE MIDLAND BANK By /s/ Steve Trepiccione Title: Vice President - Officer #9435 THE INDUSTRIAL BANK OF JAPAN, LIMITED By /s/ Walter R. Wolff Title: Joint General Manager MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By /s/ Robert Bottamedi Title: Vice President EX-10.58 5 AMENDMENT NO. 3 TO FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.58 CONFORMED COPY AMENDMENT NO. 3 TO FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of December 31, 1998 to the Five-Year Credit Agreement dated as of December 15, 1997 (as amended by Amendment No. 1 to Five-Year Credit Agreement dated as of March 23, 1998 and Amendment No. 2 to the Five-Year Credit Agreement dated as of December 14, 1998, (the "Credit Agreement") among IMC Global Inc., the Banks listed on the signature pages hereof (the "Banks") and Morgan Guaranty Trust Company of New York, as Administrative Agent (the "Administrative Agent"). The parties hereto agree as follows: SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. 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 Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby. SECTION 2. Amendment of Section 5.12. Calculations of the Leverage Ratio shall (i) exclude the pretax nonrecurring charges not in excess of $325,000,000 incurred by the Company in, and reflected in the Company's consolidated statement of income for, the fiscal year ended December 31, 1998 and (ii) disregard classification of the Company's Agribusiness unit as a discontinued operation. SECTION 3. Representations of Company. The Company represents and warrants that (i) the representations and warranties of the Company set forth in Article 4 of the Credit Agreement will be true on and as of the Amendment Effective Date and (ii) no Default will have occurred and be continuing on such date. SECTION 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 5. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 6. Effectiveness. This Amendment shall become effective as of the date hereof on the date when the following conditions are met (the "Amendment Effective Date"): (a) the Administrative Agent shall have received from each of the Borrower and the Required Banks a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof, and (b) the Administrative Agent shall have received an amendment fee for the account of each Bank which shall have timely signed and delivered a counterpart hereof in accordance with clause (a) in an amount equal to 0.05% of such Bank's Commitment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC. By /s/ E. Paul Dunn, Jr. Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Robert Bottamedi Title: Vice President THE CHASE MANHATTAN BANK By /s/ James H. Ramage Title: Vice President NATIONSBANK, N.A. By /s/ G. Burton Queen Title: Managing Director ROYAL BANK OF CANADA By /s/ Gordon MacArthur Title: Manager CREDIT AGRICOLE INDOSUEZ By /s/ Katherine L. Abbott Title: First Vice President By /s/ David Bouhl Title: F.V.P., Head of Corporate Banking Chicago HARRIS TRUST AND SAVINGS BANK By /s/ Julie K. Hossack Title: Vice President THE BANK OF MONTREAL By /s/ Ian M. Plester Title: Director THE FIRST NATIONAL BANK OF CHICAGO By /s/ Kenneth J. Fatur Title: Vice President THE NORTHERN TRUST COMPANY By /s/ Michelle M. Teteak Title: Vice President ABN-AMRO BANK N.V. By /s/ Scott J. Albert Title: Vice President By /s/ Darin P. Fischer Title: Assistant Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ G. Burton Queen Title: Managing Director BANQUE NATIONALE DE PARIS By /s/ Arnaud Collin du Bocage Title: Executive Vice President and General Manager THE BANK OF NEW YORK By /s/ John M. Lokay. Jr. Title: Vice President THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH By /s/ Hajime Watanabe Title: Deputy General Manager FIRST UNION NATIONAL BANK By /s/ Kristen M. Denning Title: Assistant Vice President COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By Title: By Title: STANDARD CHARTERED BANK By /s/ Francois Dorival-Bordes Title: Senior Vice President By /s/ Kristina McDavid Title: Vice President SUNTRUST BANK, ATLANTA By /s/ Michel A. Odermatt Title: Vice President By /s/ Patrick M. Kotora Title: Banking Officer THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By /s/ Nobuyasu Fukatsu Title: Manager MARINE MIDLAND BANK By /s/ Steve Trepiccione Title: Vice President - Officer #9435 THE INDUSTRIAL BANK OF JAPAN, LIMITED By /s/ Walter Wolff Title: Joint General Manager Senior Vice President EX-10.59 6 364-DAY CREDIT AGREEMENT EXHIBIT 10.59 [COMPOSITE CONFORMED COPY AS AMENDED BY AMENDMENT NO. 1] $350,000,000 364-DAY CREDIT AGREEMENT dated as of December 14, 1998 among IMC Global Inc., The Banks, Managing Agents and Co-Agents Listed Herein, and Morgan Guaranty Trust Company of New York, as Administrative Agent J.P. Morgan Securities Inc., Arranger TABLE OF CONTENTS Page ARTICLE 1 Definitions Section 1.01. Definitions 1 Section 1.02. Accounting Terms and Determinations . 13 Section 1.03. Types of Borrowings . . . . . . . . . 13 ARTICLE 2 The Credits Section 2.02. Notice of Committed Borrowings 15 Section 2.03. Bid Rate Borrowings . . . . . . . . . 16 Section 2.04. Notice to Banks; Funding of Loans . . 20 Section 2.05. Registry; Notes . . . . . . . . . . . 21 Section 2.06. Maturity of Loans . . . . . . . . . . 21 Section 2.07. Interest Rates. . . . . . . . . . . . 21 Section 2.08. Facility Fees . . . . . . . . . . . . 23 Section 2.09. Optional Termination or Reduction of Commitments 23 Section 2.10. Method of Electing Interest Rates . . 23 Section 2.11. Scheduled Termination of Commitments. 25 Section 2.12. Optional Prepayments. . . . . . . . . 25 Section 2.13. General Provisions as to Payments . . 26 Section 2.14. Funding Losses. . . . . . . . . . . . 26 Section 2.15. Computation of Interest and Fees. . . 27 Section 2.16. Regulation D Compensation . . . . . . 27 Section 2.17. Foreign Costs . . . . . . . . . . . . 28 ARTICLE 3 Conditions Section 3.01. Effectiveness 28 Section 3.02. Borrowings. . . . . . . . . . . . . . 29 Section 3.03. First Borrowing by Each Eligible Subsidiary 30 ARTICLE 4 Representations and Warranties Section 4.01. Corporate Existence and Power 31 Section 4.02. Corporate and Governmental Authorization; No Contravention 31 Section 4.03. Binding Effect. . . . . . . . . . . . 31 Section 4.04. Financial Information . . . . . . . . 31 Section 4.05. Litigation. . . . . . . . . . . . . . 32 Section 4.06. Compliance with Laws. . . . . . . . . 32 Section 4.07. Environmental Matters . . . . . . . . 33 Section 4.08. Taxes . . . . . . . . . . . . . . . . 33 Section 4.09. Subsidiaries. . . . . . . . . . . . . 33 Section 4.10. Regulatory Restrictions on Borrowing. 33 Section 4.11. Full Disclosure . . . . . . . . . . . 34 Section 4.12. Year 2000 . . . . . . . . . . . . . . 34 ARTICLE 5 Covenants Section 5.01. Information 35 Section 5.02. Payment of Obligations. . . . . . . . 37 Section 5.03. Maintenance of Property; Insurance. . 37 Section 5.04. Conduct of Business and Maintenance of Existence 37 Section 5.05. Compliance with Laws. . . . . . . . . 38 Section 5.06. Inspection of Property, Books and Records 38 Section 5.07. Mergers and Sales of Assets . . . . . 38 Section 5.08. Use of Proceeds . . . . . . . . . . . 39 Section 5.09. Negative Pledge . . . . . . . . . . . 39 Section 5.10. Debt of Subsidiaries. . . . . . . . . 40 Section 5.11. Transactions with Affiliates. . . . . 41 Section 5.12. Leverage Ratio. . . . . . . . . . . . 41 ARTICLE 6 Defaults Section 6.01. Events of Default 42 Section 6.02. Notice of Default . . . . . . . . . . 45 ARTICLE 7 The Administrative Agent Section 7.01. Appointment and Authorization 45 Section 7.02. Administrative Agent and Affiliates . 45 Section 7.03. Action by Administrative Agent. . . . 45 Section 7.04. Consultation with Experts . . . . . . 45 Section 7.05. Liability of Administrative Agent . . 45 Section 7.06. Indemnification . . . . . . . . . . . 46 Section 7.07. Credit Decision . . . . . . . . . . . 46 Section 7.08. Successor Administrative Agent. . . . 46 Section 7.09. Administrative Agent's Fees . . . . . 47 Section 7.10. Other Agents. . . . . . . . . . . . . 47 ARTICLE 8 Change in Circumstances Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair 47 Section 8.02. Illegality. . . . . . . . . . . . . . 48 Section 8.03. Increased Cost and Reduced Return . . 48 Section 8.04. Taxes . . . . . . . . . . . . . . . . 50 Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans 52 Section 8.06. Substitution of Bank. . . . . . . . . 53 ARTICLE 9 Representations and Warranties of Eligible Subsidiaries Section 9.01. Corporate Existence and Power 54 Section 9.02. Corporate and Governmental Authorization; Contravention 54 Section 9.03. Binding Effect. . . . . . . . . . . . 54 Section 9.04. Taxes . . . . . . . . . . . . . . . . 54 ARTICLE 10 Guaranty Section 10.01. The Guaranty 55 Section 10.02. Guaranty Unconditional . . . . . . . 55 Section 10.03. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances 56 Section 10.04. Waiver by the Company. . . . . . . . 56 Section 10.05. Subrogation. . . . . . . . . . . . . 56 Section 10.06. Stay of Acceleration . . . . . . . . 57 ARTICLE 11 Miscellaneous Section 11.01. Notices. 57 Section 11.02. No Waivers . . . . . . . . . . . . . 57 Section 11.03. Expenses; Indemnification. . . . . . 57 Section 11.04. Sharing of Set-offs. . . . . . . . . 58 Section 11.05. Amendments and Waivers . . . . . . . 59 Section 11.06. Successors and Assigns . . . . . . . 59 Section 11.07. Collateral . . . . . . . . . . . . . 61 Section 11.08. Confidentiality. . . . . . . . . . . 61 Section 11.09. Governing Law; Submission to Jurisdiction 61 Section 11.10. Counterparts; Integration. . . . . . 62 Section 11.11. Waiver of Jury Trial . . . . . . . . 62 PRICING SCHEDULE EXHIBIT A - Note EXHIBIT B - Form of Bid Rate Quote Request EXHIBIT C - Form of Invitation for Bid Rate Quotes EXHIBIT D - Form of Bid Rate Quote EXHIBIT E-1 - Opinion of Special Counsel for the Company EXHIBIT E-2 - Opinion of General Counsel of the Company EXHIBIT F - Opinion of Davis Polk & Wardwell, Special Counsel for the Administrative Agent EXHIBIT G - Assignment and Assumption Agreement EXHIBIT H - Form of Election to Participate EXHIBIT I - Form of Election to Terminate EXHIBIT J - Matters to be covered in Opinion of Counsel for Eligible Subsidiary EXHIBIT K - Form of Notice of Borrowing EXHIBIT L - Form of Notice of Interest Rate Election EXHIBIT M - Form of Extension Agreement 364-DAY CREDIT AGREEMENT 364-DAY CREDIT AGREEMENT dated as of December 14, 1998 among IMC GLOBAL INC., the BANKS, MANAGING AGENTS and CO-AGENTS listed on the signature pages hereof, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent. The parties hereto agree as follows: ARTICLE 1 Definitions Section 1.01. Definitions. The following terms, as used herein, have the following meanings: "Acquisition" means an acquisition by the Company or any of its Consolidated Subsidiaries of a company, a division, a location or a line of business or of all or substantially all of the assets of any of the foregoing. "Administrative Agent" means Morgan Guaranty Trust Company of New York in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. "Administrative Questionnaire" means, with respect to each Bank, the administrative questionnaire in the form submitted to such Bank by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Company) duly completed by such Bank. "Affiliate" means (i) any Person that directly, or indirectly through one or more intermediaries, controls the Company (a "Controlling Person") or (ii) any Person (other than the Company or a Subsidiary) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to vote 10% or more of any class of voting securities of a Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agrico" means IMC-Agrico Company, a Delaware general partnership, and its successors. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its Bid Rate Loans, its Bid Rate Lending Office. "Approved Officer" means the president, the chief financial officer, the treasurer, a vice president, an assistant treasurer or the controller of the Company or such other representative of the Company as may be designated by any one of the foregoing with the consent of the Administrative Agent. "Assignee" has the meaning set forth in Section 11.06(c). "Bank" means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 11.06(c), each substitute financial institution which becomes a Bank pursuant to Section 2.01(b) and their respective successors. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. "Base Rate Loan" means a Committed Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. "Bid Rate (General)" has the meaning set forth in Section 2.03(d). "Bid Rate (General) Auction" means a solicitation of Bid Rate Quotes setting forth Bid Rates (General) pursuant to Section 2.03. "Bid Rate (General) Loan" means a loan made or to be made by a Bank pursuant to a Bid Rate (General) Auction. "Bid Rate (Indexed) Auction" means a solicitation of Bid Rate Quotes setting forth Bid Rate (Indexed) Margins based on the London Interbank Offered Rate pursuant to Section 2.03. "Bid Rate (Indexed) Loan" means a loan made or to be made by a Bank pursuant to a Bid Rate (Indexed) Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)). "Bid Rate (Indexed) Margin" has the meaning set forth in Section 2.03(d). "Bid Rate Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Bid Rate Lending Office by notice to the Company and the Administrative Agent; provided that any Bank may from time to time by notice to the Company and the Administrative Agent designate separate Bid Rate Lending Offices for its Bid Rate (Indexed) Loans, on the one hand, and its Bid Rate (General) Loans, on the other hand, in which case all references herein to the Bid Rate Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. "Bid Rate Loan" means a Bid Rate (Indexed) Loan or a Bid Rate (General) Loan. "Bid Rate Quote" means an offer by a Bank to make a Bid Rate Loan in accordance with Section 2.03. "Borrower" means the Company or any Eligible Subsidiary, as the context may require, and their respective successors, and "Borrowers" means all of the foregoing. References to "the Borrower" in connection with any Loan are to the Borrower to which such Loan is or is to be made. As the context may permit, the terms "Borrower" and "Borrowers" include the Company in its capacity as guarantor of the obligations of the other Borrowers hereunder. "Borrowing" has the meaning set forth in Section 1.03. "Co-Agent" means each Bank designated as a Co-Agent on the signature pages hereof, in its capacity as co-agent in respect of this Agreement. "Commitment" means (i) with respect to each Bank listed on the signature pages hereof, the amount set forth opposite the name of such Bank on the signature pages hereof, and (ii) with respect to each Assignee or substitute financial institution which becomes a Bank pursuant to Section 11.06(c) or 2.01(b), the amount of the Commitment thereby assumed by it, in each case as such amount may from time to time be reduced pursuant to Section 2.09 or 11.06(c) or increased pursuant to Section 11.06(c) or 2.01(b). "Committed Loan" means a Loan made by a Bank pursuant to Section 2.01(a); provided that, if any loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Committed Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Company" means IMC Global Inc., a Delaware corporation, and its successors. "Consolidated Net Worth" means at any date the consolidated shareholders' equity of the Company and its Consolidated Subsidiaries determined as of such date (other than any amount attributable to stock which is required to be redeemed or is redeemable at the option of the holder, if certain events or conditions occur or exist or otherwise). "Consolidated Subsidiary" means, for any Person at any date, any Subsidiary or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date; unless otherwise specified "Consolidated Subsidiary" means a Consolidated Subsidiary of the Company. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and similar items arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all non-contingent obligations (and, for purposes of Section 5.09 and the definition of Material Financial Obligations, all contingent obligations) of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (vi) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, provided that the amount of such Debt treated as Debt of such Person solely pursuant to this clause (vi) shall not exceed the greater of the book value or the fair market value of the collateral, and (vii) all Debt of others Guaranteed by such Person. For purposes of clause (v) above, a reimbursement obligation in respect of a letter of credit or similar instrument is contingent unless and until there shall have been a drawing under such letter of credit or instrument. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Derivatives Obligations" of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City or Chicago are authorized by law to close. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Administrative Agent. "Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. "Election to Participate" means an Election to Participate substantially in the form of Exhibit H hereto. "Election to Terminate" means an Election to Terminate substantially in the form of Exhibit I hereto. "Eligible Subsidiary" means any Substantially-Owned Consolidated Subsidiary of the Company as to which an Election to Participate shall have been delivered to the Administrative Agent and as to which an Election to Terminate shall not have been delivered to the Administrative Agent. Each such Election to Participate and Election to Terminate shall be duly executed on behalf of such Consolidated Subsidiary and the Company in such number of copies as the Administrative Agent may request. The delivery of an Election to Terminate shall not affect any obligation of an Eligible Subsidiary theretofore incurred. The Administrative Agent shall promptly give notice to the Banks of the receipt of any Election to Participate or Election to Terminate. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Administrative Agent. "Euro-Dollar Loan" means a Committed Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election. "Euro-Dollar Margin" means a rate per annum determined in accordance with the Pricing Schedule. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07(b) on the basis of a London Interbank Offered Rate. "Euro-Dollar Reference Banks" means the principal London offices of Morgan Guaranty Trust Company of New York, Royal Bank of Canada, The Chase Manhattan Bank and Bank of America. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.16. "Events of Default" has the meaning set forth in Section 6.01. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Morgan Guaranty Trust Company of New York (or its successor as Administrative Agent) on such day on such transactions as determined by the Administrative Agent. "Fixed Rate Loans" means Euro-Dollar Loans or Bid Rate Loans (excluding Bid Rate (Indexed) Loans bearing interest at the Base Rate) or any combination of the foregoing. "Group of Loans" means at any time a group of Loans consisting of (i) all Loans to a single Borrower which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans to a single Borrower having the same Interest Period at such time, provided that, if a Committed Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been if it had not been so converted or made. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person, provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Harris Chemical Acquisition" means, collectively, the merger of Harris Chemical Group with and into IMC Merger Sub Inc., a wholly-owned Subsidiary of the Company, with Harris Chemical Group as the survivor thereof, pursuant to the certain Agreement and Plan of Merger, dated December 11, 1997, by and among the Company, IMC Merger Sub, Inc. and Harris Chemical Group, and the acquisition, directly or indirectly, by the Company of all of the outstanding shares of Harris Chemical Australia Pty Limited pursuant to the Sale and Purchase Agreement made as of December 11, 1997 among Prudential Asset Management Asia Limited, DGHA Persons and Trusts named therein, Search Investment NV, Harris Chemical Australia Pty Limited, Marsupial L.L.C., Marsupial-II L.L.C., Soda Ash (L) BHD, Manager Shareholders named therein and the Company. "Harris Chemical Group" means Harris Chemical Group Inc., a Delaware corporation. "IMC Inorganic Chemicals Inc." means IMC Inorganic Chemicals Inc., a Delaware corporation, formerly known as Harris Chemical Group, Inc. "Indemnitee" has the meaning set forth in Section 11.03(b). "Interest Period" means: (1) with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in an applicable Notice of Interest Rate Election and ending one, two, three or six, or, if deposits of a corresponding maturity are available to each Bank in the London interbank market, nine or twelve, months thereafter, as the Borrower may elect in such notice; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Dollar Business Day of a calendar month; (2) with respect to each Bid Rate (Indexed) Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of months thereafter (but not less than one month) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Dollar Business Day of a calendar month; and (3) with respect to each Bid Rate (General) Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and provided further that any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge or security interest, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a Committed Loan or a Bid Rate Loan and "Loans" means Committed Loans or Bid Rate Loans or any combination of the foregoing. "London Interbank Offered Rate" has the meaning set forth in Section 2.07(b). "Managing Agent" means each Bank designated as a Managing Agent on the signature pages hereof, in its capacity as managing agent in respect of this Agreement. "Material Adverse Effect" means (i) a material adverse effect on the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, or (ii) an adverse effect on the rights and obligations of the Banks and the Administrative Agent hereunder and under the Notes which a Bank could reasonably deem material. "Material Financial Obligations" means a principal or face amount of Debt and/or payment or collateralization obligations in respect of Derivatives Obligations of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Material Subsidiary" means, at any date, (i) any Subsidiary having (x) at least 5% of the total consolidated assets of the Company and its Consolidated Subsidiaries (determined as of the last day of the fiscal quarter of such Person most recently ended on or prior to such date) or (y) at least 5% of Consolidated EBITDA (as defined in Section 5.12) for the four consecutive fiscal quarters most recently ended on or prior to such date or (ii) collectively, any one or more Subsidiaries having (x) at least 10% of the total consolidated assets of the Company and its Consolidated Subsidiaries (determined as of the last day of the fiscal quarter of such Persons most recently ended on or prior to such date) or (y) at least 10% of Consolidated EBITDA for the four consecutive fiscal quarters most recently ended on or prior to such date. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group either (i) is then making or accruing an obligation to make contributions or (ii) has within the preceding five plan years made contributions, including for these purposes any Person which was at the time such contribution was made a member of the ERISA Group. "Notes" means promissory notes of the Borrower, in the form required by Section 2.05, evidencing the obligation of the Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Bid Rate Borrowing (as defined in Section 2.03(f)), in either case in substantially the form of Exhibit K. "Notice of Interest Rate Election" has the meaning set forth in Section 2.10(a). "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 11.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "PLP" means Phosphate Resource Partners Limited Partnership, a Delaware limited partnership, and its successors. "Pricing Schedule" means the schedule annexed hereto denominated as such. "Prime Rate" means the rate of interest publicly announced by Morgan Guaranty Trust Company of New York in New York City from time to time as its Prime Rate. Each change in the Prime Rate shall be effective from and including the day such change is publicly announced. "Quarterly Payment Date" means the last Domestic Business Day of each March, June, September and December. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the aggregate unpaid principal amount of the Loans. "Revolving Credit Period" means the period from and including the Effective Date to but not including the Termination Date. "S&P" means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. "Series E Preferred Stock" means the shares of preferred stock of the Vigoro Corporation, a Delaware corporation and wholly-owned Subsidiary of the Company, par value $100 per share, designated Series E. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "Substantial Assets" means assets sold or otherwise disposed of in a single transaction or a series of related transactions representing 25% or more of the consolidated assets of the Company and its Consolidated Subsidiaries, taken as a whole. "Substantially-Owned Consolidated Subsidiary" means any Consolidated Subsidiary at least 80% of the Voting Stock of which is at the time directly or indirectly owned by the Company; provided that Agrico shall be deemed a Substantially-Owned Consolidated Subsidiary for so long as it is a Consolidated Subsidiary. "Termination Date" means December 13, 1999 or such later date to which the Revolving Credit Period shall have been extended pursuant to Section 2.01(b), or, if any such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA (or other applicable standard), exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. Section 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent in all material respects (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks, and the parties hereto agree to enter into negotiations in good faith in order to amend such provisions in a credit-neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating the financial condition and performance of the Company and its Consolidated Subsidiaries shall be the same after such changes as if such changes had not been made. Section 1.03. Types of Borrowings. The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to a single Borrower pursuant to Article 2 on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Fixed Rate Borrowing" is a Euro-Dollar Borrowing or a Bid Rate Borrowing (excluding any such Borrowing consisting of Bid Rate (Indexed) Loans bearing interest at the Base Rate), and a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a "Bid Rate Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). ARTICLE 2 The Credits Section 2.01. Commitments to Lend. (a) During the Revolving Credit Period, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to any Borrower pursuant to this subsection (a) from time to time in amounts such that the aggregate principal amount of Committed Loans by such Bank at any one time outstanding to all Borrowers shall not exceed the amount of its Commitment. Each Borrowing under this subsection (a) shall be in an aggregate principal amount of $10,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, any Borrower may borrow under this subsection (a), repay or, to the extent permitted by Section 2.12, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection (a). (b) The Revolving Credit Period may be extended, in the manner set forth in this subsection 2.01(b), in each case for a period of 364 days from the Termination Date then in effect. If the Company wishes to request an extension of the Revolving Credit Period, it shall give written notice to that effect to the Administrative Agent not less than 45 nor more than 90 days prior to such Termination Date then in effect, whereupon the Administrative Agent shall promptly notify each of the Banks of such notice. Each Bank shall respond to such request, whether affirmatively or negatively, within 30 days; provided that no such response shall be due more than 30 days prior to the Termination Date then in effect. If a Bank or Banks respond negatively or fail to timely respond to such request, but such non-extending Bank(s) have Commitment(s) totaling less than 33-1/3% of the aggregate amount of the Commitments, the Company shall, until the third Domestic Business Day prior to the Termination Date then in effect, have the right, with the assistance of the Administrative Agent, to seek a mutually satisfactory substitute financial institution or financial institutions (which may be one or more of the Banks) to assume the Commitment(s) of such non-extending Bank(s). Not later than the third Domestic Business Day prior to the Termination Date then in effect, the Company shall, by notice to the Banks through the Administrative Agent, either (i) terminate, effective on the Termination Date then in effect, the Commitment(s) of such non-extending Bank(s), whereupon the aggregate amount of such Commitment(s) shall be assumed by a substitute financial institution or financial institutions on the Termination Date then in effect, (ii) withdraw its request for an extension of the Revolving Credit Period, or (iii) so long as no Event of Default shall have occurred and be continuing, terminate, effective on the Termination Date then in effect, the Commitment(s) of any such non-extending Bank(s) which shall not be assumed by a substitute financial institution or financial institutions on the Termination Date then in effect, whereupon the aggregate Commitment(s) shall be permanently reduced by the aggregate amount of such non-extending Bank(s)'s Commitment(s)as of the Termination Date then in effect. The failure of the Company to timely take the actions contemplated by the preceding sentence shall be deemed a withdrawal of its request for an extension whether or not notice to such effect is given. So long as Banks having Commitment(s)totaling not less than 66-2/3% of the aggregate amount of the Commitment(s) shall have responded affirmatively to such a request, and such request is not withdrawn in accordance with the preceding sentence, then, subject to receipt by the Administrative Agent of counterparts of an Extension Agreement in substantially the form of Exhibit M duly completed and signed by each of the Administrative Agent, the Company and each Bank electing to extend the Revolving Credit Period, the Revolving Credit Period shall be extended for the period specified above. Section 2.02. Notice of Committed Borrowings. The Borrower shall give the Administrative Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (a) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing, (b) the aggregate amount of such Borrowing, (c) whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or a Euro-Dollar Rate; and, (d) in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. Section 2.03. Bid Rate Borrowings. (a) The Bid Rate Option. In addition to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set forth in this Section, request the Banks to make offers to make Bid Rate Loans to the Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. (b) Bid Rate Quote Request. When a Borrower wishes to request offers to make Bid Rate Loans under this Section, it shall transmit to the Administrative Agent by telex or facsimile transmission a Bid Rate Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 11:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a Bid Rate (Indexed) Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of a Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective) specifying: (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day, (ii) the aggregate amount of such Borrowing, which shall be $10,000,000 or a larger multiple of $1,000,000, (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and (iv) whether the Bid Rate Quotes requested are to set forth a Bid Rate (Indexed) Margin or a Bid Rate (General). The Borrower may request offers to make Bid Rate Loans for more than one Interest Period in a single Bid Rate Quote Request. (c) Invitation for Bid Rate Quotes. Promptly upon receipt of a Bid Rate Quote Request, the Administrative Agent shall send to the Banks by telex or facsimile transmission an Invitation for Bid Rate Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Bid Rate Quotes offering to make the Bid Rate Loans to which such Bid Rate Quote Request relates in accordance with this Section. (d) Submission and Contents of Bid Rate Quotes. (i) Each Bank may submit a Bid Rate Quote containing an offer or offers to make Bid Rate Loans in response to any Invitation for Bid Rate Quotes. Each Bid Rate Quote must comply with the requirements of this subsection (d) and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) 10:00 A.M. (New York City time) on the proposed date of Borrowing, in the case of a Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective); provided that Bid Rate Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) 1:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) 9:45 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Bid Rate (General) Auctions. Subject to Articles 3 and 6, any Bid Rate Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (ii) Each Bid Rate Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Bid Rate Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000 and (y) may not exceed the principal amount of Bid Rate Loans for each Interest Period for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Bid Rate Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a Bid Rate (Indexed) Auction, the margin above or below the applicable London Interbank Offered Rate (the "Bid Rate (Indexed) Margin") offered for each such Bid Rate Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of a Bid Rate (General) Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Bid Rate (General)") offered for each such Bid Rate Loan, and (E) the identity of the quoting Bank. A Bid Rate Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Bid Rate Quotes. (iii) Any Bid Rate Quote shall be disregarded if: (A) it is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection 2.03(d)(ii); (B) it contains qualifying, conditional or similar language beyond that contemplated by Exhibit D (other than a qualification or condition as to minimum amount); (C) it proposes terms other than or in addition to those set forth in the applicable Invitation for Bid Rate Quotes; or (D) it arrives after the time set forth in subsection 2.03(d)(i). (e) Notice to Borrower. The Administrative Agent shall promptly but in no event later than (i) 5:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (ii) 10:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of a Bid Rate (General) Auction (or, in either case such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective) notify the Borrower of the terms (x) of any Bid Rate Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Bid Rate Quote that amends, modifies or is otherwise inconsistent with a previous Bid Rate Quote submitted by such Bank with respect to the same Bid Rate Quote Request. Any such subsequent Quote shall be disregarded by the Administrative Agent unless such subsequent Quote is submitted solely to correct a manifest error in such former Quote. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Loans for which offers have been received for each Interest Period specified in the related Bid Rate Quote Request, (B) the respective principal amounts and Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Bid Rate Loans for which offers in any single Bid Rate Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 11:00 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) the proposed date of Borrowing, in the case of an Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective), the Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Bid Rate Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Bid Rate Quote in whole or in part; provided that: (i) the aggregate principal amount of each Bid Rate Borrowing may not exceed the applicable amount set forth in the related Bid Rate Quote Request, (ii) the principal amount of each Bid Rate Borrowing must be $10,000,000 or a larger multiple of $1,000,000, and (iii) acceptance of offers may only be made on the basis of ascending Bid Rate (Indexed) Margin or Bid Rates (General), as the case may be. (g) Allocation by Administrative Agent. If offers are made by two or more Banks with the same Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Rate Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Bid Rate Loans shall be conclusive in the absence of manifest error. Section 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. (b) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address specified in or pursuant to Section 11.01. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Administrative Agent will make the funds so received from the Banks available to the Borrower at the Administrative Agent's aforesaid address not later than 2:30 P.M. (New York City time) on the date of such Borrowing. (c) Unless the Administrative Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Administrative Agent such Bank's share of such Borrowing, the Administrative Agent may assume that such Bank has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.04 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Administrative Agent, such Bank and, if such Bank shall not have made such payment within two Domestic Business Days of demand therefor, the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. (d) The failure of any Bank to make the Loan to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make a Loan on the date of such Borrowing, but no Bank shall be responsible for the failure of any other Bank to make a Loan to be made by such other Bank. Section 2.05. Registry; Notes. (a) The Administrative Agent shall maintain a register (the "Register") on which it will record the Commitment of each Bank, each Loan made by such Bank and each repayment of any Loan made by such Bank. Any such recordation by the Administrative Agent on the Register shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers' obligations hereunder. (b) Each Borrower hereby agrees that, promptly upon the request of any Bank at any time, such Borrower shall deliver to such Bank a duly executed Note, in substantially the form of Exhibit A hereto, payable to the order of such Bank and representing the obligation of such Borrower to pay the unpaid principal amount of the Loans made to such Borrower by such Bank, with interest as provided herein on the unpaid principal amount from time to time outstanding. (c) Each Bank shall record the date, amount and maturity of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and each Bank receiving a Note pursuant to this Section, if such Bank so elects in connection with any transfer or enforcement of any Note, may endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of the Borrowers hereunder or under the Notes. Such Bank is hereby irrevocably authorized by the Borrowers so to endorse any Note and to attach to and make a part of any Note a continuation of any such schedule as and when required. Section 2.06. Maturity of Loans. (a) Each Committed Loan shall mature, and the principal amount thereof shall be due and payable (together with accrued and unpaid interest thereon), on the Termination Date. (b) Each Bid Rate Loan included in any Bid Rate Borrowing shall mature, and the principal amount thereof shall be due and payable (together with accrued and unpaid interest thereon), on the last day of the Interest Period applicable to such Borrowing. Section 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable quarterly in arrears on each Quarterly Payment Date, at maturity and, with respect to the principal amount of any Base Rate Loan converted to a Euro-Dollar Loan, on the date such Base Rate Loan is so converted. Any overdue principal of or overdue interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Loan of such Euro-Dollar Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. If any Euro-Dollar Reference Bank does not furnish a timely quotation, the Administrative Agent shall determine the relevant interest rate on the basis of the quotation furnished by the remaining Euro-Dollar Reference Bank(s) or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. (c) Any overdue principal of or overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Loan at the date such payment was due and (ii) the Base Rate for such day. (d) Subject to Section 8.01(a), each Bid Rate (Indexed) Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(b) as if each Euro-Dollar Reference Bank were to participate in the related Bid Rate (Indexed) Borrowing ratably in proportion to its Commitment) plus (or minus) the Bid Rate (Indexed) Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Bid Rate (General) Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Bid Rate (General) quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or overdue interest on any Bid Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. (e) The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be presumptively correct in the absence of manifest error. Section 2.08. Facility Fees. (a) The Company shall pay to the Administrative Agent for the account of each Bank a facility fee at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) from and including the earlier of the date hereof and the Effective Date to but excluding the date of termination of the Commitments in their entirety, on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including such date of termination to but excluding the date the Loans shall be repaid in their entirety, on the daily average aggregate outstanding principal amount of the Loans. (b) Accrued fees under this Section shall be payable quarterly in arrears on each Quarterly Payment Date and upon the date of termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). Section 2.09. Optional Termination or Reduction of Commitments. The Company may, upon notice to the Administrative Agent not later than 11:00 A.M. (New York City time) on any Domestic Business Day, (i) terminate the Commitments at any time, if no Loans are outstanding at such time (after giving effect to any contemporaneous prepayment of the Loans in accordance with Section 2.12) or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $1,000,000 the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans. Section 2.10. Method of Electing Interest Rates. (a) The Loans included in each Committed Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8 and the last sentence of this subsection (a)), as follows: (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. Each such election shall be made by delivering a notice in substantially the form of Exhibit L (a "Notice of Interest Rate Election") to the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such notice applies, and the remaining portion to which it does not apply, are each $10,000,000 or any larger multiple of $1,000,000. (b) Each Notice of Interest Rate Election shall specify: (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection 2.10(a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Fixed Rate Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term "Interest Period". (c) Promptly after receiving a Notice of Interest Rate Election from the Borrower pursuant to subsection 2.10(a) above, the Administrative Agent shall notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Interest Rate Election is timely received prior to the end of an Interest Period for any Group of Loans, the Borrower shall be deemed to have elected that such Group of Loans be converted to Base Rate Loans as of the last day of such Interest Period. (d) An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section shall not constitute a "Borrowing" subject to the provisions of Section 3.02. Section 2.11. Scheduled Termination of Commitments. The Commitments shall terminate on the Termination Date, and any Loans then outstanding (together with accrued and unpaid interest thereon) shall be due and payable on such date. Section 2.12. Optional Prepayments. (a) Subject in the case of any Fixed Rate Borrowing to Section 2.14, the Borrower may (i) upon notice to the Administrative Agent not later than 11:00 A.M. (New York City time) on any Domestic Business Day prepay on such Domestic Business Day any Group of Base Rate Loans or any Bid Rate Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a) and (ii) upon at least three Euro-Dollar Business Days' notice to the Administrative Agent not later than 11:00 A.M. (New York City time) prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Group or Borrowing. (b) Except as provided in subsection 2.12(a), the Borrower may not prepay all or any portion of the principal amount of any Bid Rate Loan prior to the maturity thereof. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. Section 2.13. General Provisions as to Payments. (a) Each payment of principal of, and interest on, the Loans and of fees hereunder shall be made not later than 2:30 P.M. (New York City time) on the date when due, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address referred to in Section 11.01. The Administrative Agent will promptly distribute to each Bank its ratable share of each such payment received by the Administrative Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Bid Rate Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due from such Borrower to the Banks hereunder that such Borrower will not make such payment in full, the Administrative Agent may assume that such Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that such Borrower shall not have so made such payment, each Bank shall repay to the Administrative Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Administrative Agent, at the Federal Funds Rate. Section 2.14. Funding Losses. If a Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Euro-Dollar Loan is converted to a Base Rate Loan or continued as a Euro-Dollar Loan for a new Interest Period (pursuant to Article 2, 6, 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or if a Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or 2.12(c) (other than by reason of a default by the Bank demanding payment hereunder), such Borrower shall reimburse each Bank within 15 days after written demand from such Bank for any resulting loss or reasonable expense incurred by it (or by an existing or prospective Participant in the related Loan, but not to exceed the loss and expense which would have been incurred by such Bank had no participations been granted by it), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of profit or margin for the period after any such payment or conversion or failure to borrow, prepay, convert or continue, provided that such Bank shall have delivered to such Borrower a certificate setting forth in reasonable detail the calculation of the amount of such loss or expense, which certificate shall be presumptively correct in the absence of manifest error. Section 2.15. Computation of Interest and Fees. Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Section 2.16. Regulation D Compensation. In the event that a Bank is required to maintain reserves of the type contemplated by the definition of "Euro-Dollar Reserve Percentage", such Bank may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such Bank at a rate per annum determined by such Bank up to but not exceeding the excess of (i) (A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered Rate. Any Bank wishing to require payment of such additional interest (x) shall so notify the Borrower and the Administrative Agent, in which case such additional interest on the Euro-Dollar Loans of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice and (y) shall furnish to the Borrower at least three Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans of such Borrower an officer's certificate setting forth the amount to which such Bank is then entitled under this Section 2.16 (which shall be consistent with such Bank's good faith estimate of the level at which the related reserves are maintained by it). Each such notification shall be accompanied by such information as the Borrower may reasonably request. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). Section 2.17. Foreign Costs. (a) If the cost to any Bank of making or maintaining any Loan is increased, or the amount of any sum received or receivable by any Bank (or its Applicable Lending Office) is reduced by an amount deemed by such Bank to be material, by reason of the fact that the Borrower of such Loan is organized in, or conducts business in, a jurisdiction outside the United States of America, such Borrower shall indemnify such Bank for such increased cost or reduction within 15 days after demand by such Bank (with a copy to the Administrative Agent). A certificate of such Bank claiming compensation under this subsection (a) and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. (b) Each Bank will promptly notify the Company and the Administrative Agent of any event of which it has knowledge that will entitle such Bank to additional compensation pursuant to subsection (a) and will designate a different Applicable Lending Office if, in the judgment of such Bank, such designation will avoid the need for, or reduce the amount of, such compensation and will not be otherwise disadvantageous to such Bank. ARTICLE 3 Conditions Section 3.01. Effectiveness. This Agreement shall become effective on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 11.05): (a) receipt by the Administrative Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Administrative Agent in form satisfactory to it of telegraphic, telecopy, telex or other written confirmation from such party of execution of a counterpart hereof by such party); (b) receipt by the Administrative Agent of an opinion of (i) Kirkland & Ellis, special counsel for the Company, substantially in the form of Exhibit E-1 hereto and (ii) Phillip Gordon, General Counsel of the Company, substantially in the form of Exhibit E-2 hereto, and in each case covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (c) receipt by the Administrative Agent of an opinion of Davis Polk & Wardwell, special counsel for the Administrative Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (d) receipt by the Administrative Agent of all documents it may have reasonably requested prior to the date hereof relating to the existence of the Company, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent; provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than December 21, 1998; and provided further that the provisions of Sections 2.08, 2.09, 2.14 and 11.03 shall become effective upon satisfaction of the condition specified in clause 3.01(a). The Administrative Agent shall promptly notify the Company and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto. Section 3.02. Borrowings. The obligation of any Bank to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: (a) receipt by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 or 2.03, the case may be; (b) the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Loans will not exceed the aggregate amount of the Commitments; (c) the fact that, immediately after such Borrowing, no Default shall have occurred and be continuing; and (d) the fact that the representations and warranties (other than (i) the representation and warranty set forth in Section 4.04(c) in the case of a Borrowing which does not result in an increase in the aggregate outstanding principal amount of the Loans, (ii) the representations and warranties set forth in Sections 4.04(a) and 4.04(b) and (iii) the representations and warranties set forth in Section 4.12 in the case of a Borrowing after December 31, 2000) of the Borrower and, if the Borrower is not the Company, of the Company contained in this Agreement shall be true on and as of the date of such Borrowing. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower (and, if the Company is not the Borrower, by the Company) on the date of such Borrowing as to the facts specified in clauses (b), (c) and (d) of this Section. Section 3.03. First Borrowing by Each Eligible Subsidiary. The obligation of each Bank to make a Loan on the occasion of the first Borrowing by each Eligible Subsidiary is subject to the satisfaction of the following further conditions: (a) receipt by the Administrative Agent of an opinion or opinions of counsel for such Eligible Subsidiary reasonably acceptable to the Administrative Agent (which, in the case of an Eligible Subsidiary organized under the laws of the United States or a State thereof may be an employee of the Company) and addressed to the Administrative Agent and the Banks, substantially to the effect of Exhibit J hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (b) receipt by the Administrative Agent of all documents which it may reasonably request relating to the existence of such Eligible Subsidiary, the authority for and the validity of the Election to Participate of such Eligible Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Administrative Agent. ARTICLE 4 Representations and Warranties The Company represents and warrants that: Section 4.01. Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have a material Adverse Effect. Section 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement and its Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 4.03. Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and each of its Notes, if and when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of the Company, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 4.04. Financial Information. (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 1997 and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for the fiscal year then ended, reported on by Ernst & Young LLP, copies of which are included in the Company's Form 10-K for the period ended December 31, 1997 and have been delivered to each of the Banks, fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. (b) The financial statements presented in the Company's Form 10-Q for the period ended September 30, 1998, which the Company has filed with the Securities and Exchange Commission, copies of which have been delivered to each of the Banks, fairly present in all material respects on a basis consistent with the financial statements referred to in Section 4.04(a), the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such nine-month period (subject to normal year-end audit adjustments and the absence of full footnotes). (c) Since September 30, 1998, there has been no material adverse change in the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole. Section 4.05. Litigation. Except as disclosed in the Company's annual report on Form 10-K for the year ended December 31, 1997, each registration statement (other than a registration statement on Form S-8 (or its equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission at any time thereafter, there is no action, suit or proceeding pending against, or to the knowledge of the Company, threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have a Material Adverse Effect or which in any manner draws into question the validity of this Agreement or any Note. Section 4.06. Compliance with Laws. (a) The Company and each Subsidiary is in compliance in all material respects with all applicable laws, ordinances, rules, regulations and requirements of governmental authorities except where (i) non-compliance could not reasonably be expected to have a Material Adverse Effect or (ii) the necessity of compliance therewith is contested in good faith by appropriate proceedings. (b) Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Section 4.07. Environmental Matters. In the ordinary course of its business, the Company conducts a systematic review of the effects and reasonably ascertainable associated liabilities and costs of Environmental Laws on the business, operations and properties of the Company and its Subsidiaries. The associated liabilities and costs include, without limitation: any capital or operating expenditures required for clean-up or closure of properties presently or previously owned; any capital or operating expenditures required to achieve or maintain compliance with Environmental Laws; any constraints on operating activities related to achieving or maintaining compliance with Environmental Laws, including any periodic or permanent shutdown of any facility or reduction in the level or change in the nature of operations conducted thereat; any costs or liabilities in connection with off-site disposal of wastes or hazardous substances; and any actual or potential liabilities to third parties, including employees, arising under Environmental Laws, and any related costs and expenses. On the basis of this review, the Company has reasonably concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, could not reasonably be expected to have a Material Adverse Effect. Section 4.08. Taxes. The Company and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary except (i) where nonpayment could not reasonably be expected to have a Material Adverse Effect or (ii) where the same are contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. Section 4.09. Subsidiaries. Each of the Company's corporate Subsidiaries is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have Material Adverse Effect. Section 4.10. Regulatory Restrictions on Borrowing. The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or otherwise subject to any regulatory scheme which restricts its ability to incur debt. Section 4.11. Full Disclosure. Neither the Company's Form 10-K for the year ended December 31, 1997, as of the date of filing of such Form 10-K, nor any registration statement (other than a registration statement on Form S-8 (or its equivalent)) or report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission as at the time of filing of such registration statement or report, as applicable, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make any statements contained therein, in the light of the circumstances under which they were made, not misleading; provided that to the extent any such document contains forecasts and/or projections, it is understood and agreed that uncertainty is inherent in any forecasts or projections and that no assurances can be given by the Company of the future achievement of such performance. Section 4.12. Year 2000. Any reprogramming required to permit the proper functioning, in and following year 2000, of (a) the Company's computer systems and (b) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Company's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to the Company of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Company and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit the Company to conduct its business without Material Adverse Effect. ARTICLE 5 Covenants The Company and, where stated, each other Borrower agree that, so long as any Bank has any Commitment hereunder or any amount payable hereunder remains unpaid: Section 5.01. Information. The Company will deliver to each of the Banks: (a) as soon as available and in any event within 95 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of earnings, cash flows, and changes in stockholders' equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner consistent with the requirements of the Securities and Exchange Commission and audited by Ernst & Young LLP or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related unaudited consolidated statements of earnings and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation and preparation based on financial accounting principles consistent with generally accepted accounting principles by an Approved Officer of the Company; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of an Approved Officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.10 and 5.12 on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements (i) that nothing has come to their attention to cause them to believe that any Default arising from the Company's failure to comply with its obligations under Sections 5.10 and 5.12 existed on the date of such statements (it being understood that such accountants shall not thereby be required to perform any procedures not otherwise required under generally accepted auditing standards) and (ii) confirming the calculations set forth in the officer's certificate delivered simultaneously therewith pursuant to clause (c) above; (e) within five days after any officer of the Company obtains knowledge of any Default, if such Default is then continuing, a certificate of an Approved Officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (g) promptly after the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports (other than the exhibits thereto) on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission; (h) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; and (i) from time to time such additional information regarding the financial position or business of the Company and its Subsidiaries as the Administrative Agent, at the request of any Bank, may reasonably request. Section 5.02. Payment of Obligations. Each Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, at or before maturity, all their respective material obligations and liabilities (including, without limitation, tax liabilities and claims of materialmen, warehousemen and the like which if unpaid might by law give rise to a Lien), except where the same may be contested in good faith by appropriate proceedings, and will maintain, and will cause each of its Subsidiaries to maintain, in accordance with generally accepted accounting principles, appropriate reserves for the accrual of any of the same. Section 5.03. Maintenance of Property; Insurance. (a) Each Borrower will keep, and will cause each of its Subsidiaries to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) Each Borrower will, and will cause each of its Subsidiaries to, maintain (either in the name of the Company or in such Borrower's or Subsidiary's own name) with financially sound and responsible insurance companies, insurance on all its respective properties in at least such amounts, against at least such risks and with such risk retention as are usually maintained, insured against or retained, as the case may be, in the same general area by companies of established repute engaged in the same or a similar business; provided that the Borrowers and their Subsidiaries may self-insure to the same extent as other companies of established repute engaged in the same or a similar business in the same general area in which such Borrower or such Subsidiary operates and to the extent consistent with prudent business practice. Each Borrower will furnish to the Banks, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. Section 5.04. Conduct of Business and Maintenance of Existence. Each Borrower and its Subsidiaries taken as a whole will continue to engage in business of the same general type as now conducted by such Borrower and its Subsidiaries and any ancillary or related lines of business, and each Borrower will preserve, renew and keep in full force and effect, and will cause each of its Subsidiaries to preserve, renew and keep in full force and effect, its respective legal existence and its respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that nothing in this Section shall prohibit (i) the consolidation or merger of a Subsidiary (other than an Eligible Subsidiary with obligations with respect to Loans outstanding hereunder) with or into another Person, (ii) the consolidation or merger of an Eligible Subsidiary with or into the Company or another Eligible Subsidiary or (iii) the termination of the legal existence of any Subsidiary (other than an Eligible Subsidiary with obligations with respect to Loans outstanding hereunder) if, in the case of clauses (i), (ii) and (iii), such consolidation, merger or termination is not materially disadvantageous to the Banks; and provided further that nothing in this Section shall prohibit any sale or other disposition of assets permitted under Section 5.07. Section 5.05. Compliance with Laws. Each Borrower will comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder) except where (i) the necessity of compliance therewith is contested in good faith by appropriate proceedings or (ii) the failure to comply could not reasonably be expected to have a Material Adverse Effect. Section 5.06. Inspection of Property, Books and Records. Each Borrower will keep, and will cause each of its Subsidiaries to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each of its Subsidiaries to permit, representatives of any Bank at such Bank's expense to visit and inspect any of its respective properties, to examine and make abstracts from any of its respective books and records and to discuss its respective affairs, finances and accounts with its respective officers, employees and independent public accountants, all at such reasonable times as may be desired. Section 5.07. Mergers and Sales of Assets. (a) The Company will not consolidate or merge with or into any other Person; provided that the Company may merge with another Person if (x) the Company is the corporation surviving such merger and (y) after giving effect to such merger, no Default shall have occurred and be continuing. (b) The Company will not sell, lease or otherwise transfer, directly or indirectly, assets (exclusive of assets transferred in the ordinary course of business) if after giving effect to such transfer the aggregate book value of assets so transferred subsequent to the date of this Agreement would constitute Substantial Assets as of the day preceding the date of such transfer other than (i) sales of accounts receivable to IMC-Agrico Receivables Company L.L.C. or any other similar bankruptcy-remote Subsidiary of the Company or any of its Subsidiaries established for the purpose of engaging in transactions related to accounts receivable, (ii) the sale of substantially all of the assets comprising the IMC AgriBusiness business unit of the Company, (iii) the sale of any equity interest in McMoRan Oil & Gas Co., a Delaware corporation, or the sale or transfer of any right to receive revenues from the MOXY-FRP Exploration Program undertaken by McMoRan Oil & Gas Co., a Delaware corporation, (iv) the sale of assets acquired pursuant to an Acquisition that are unrelated to the business of the same general type as now conducted by the Company and its Subsidiaries, and (v) the sale of assets acquired in or as a direct result of the Harris Chemical Acquisition. Section 5.08. Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrowers for general corporate purposes, including without limitation the refinancing of Acquisitions. None of such proceeds will be used in violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System. Section 5.09. Negative Pledge. Neither any Borrower nor any Subsidiary of any Borrower will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal or face amount not exceeding $135,000,000; (b) any Lien existing on any asset of any Person at the time such Person becomes a Subsidiary of a Borrower and not created in contemplation of such event; (c) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition or completion of construction thereof; (d) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into a Borrower or a Subsidiary of a Borrower and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by a Borrower or a Subsidiary of a Borrower and not created in contemplation of such acquisition; (f) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that the proceeds of such Debt are used solely for the foregoing purpose and to pay financing costs and such Debt is not secured by any additional assets; (g) Liens arising in the ordinary course of its business which (i) do not secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an amount exceeding $100,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (h) Liens on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $10,000,000; and (i) Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal or face amount, together with all other Debt secured by Liens permitted under this Section 5.09(i), not to exceed an amount equal to 10% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to the date of the most recent incurrence of such Debt). Section 5.10. Debt of Subsidiaries. Total Debt of all Subsidiaries (excluding Debt (i) of a Subsidiary owing to the Company, (ii) of a Subsidiary owing to a Substantially-Owned Consolidated Subsidiary, (iii) of an Eligible Subsidiary under this Agreement, (iv) of PLP in an aggregate principal amount not exceeding $300,000,000 outstanding on December 15, 1997 (but not any refinancing thereof), (v) of Harris Chemical North America, Inc. and its Subsidiaries arising out of the Argus Utilities sale-leaseback transaction in an aggregate principal amount not exceeding $71,000,000, or (vi) of IMC Inorganic Chemicals Inc., formerly known as Harris Chemical Group Inc., and its Subsidiaries in an aggregate principal amount not exceeding UK 50,000,000) will not at any date exceed 25% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to such date). For purposes of this Section any preferred stock of a Consolidated Subsidiary (other than the Series E Preferred Stock) held by a Person other than the Company or a Substantially-Owned Consolidated Subsidiary shall be included, at the higher of its voluntary or involuntary liquidation value, in the "Debt" of such Consolidated Subsidiary. Section 5.11. Transactions with Affiliates. No Borrower will, nor will it permit any of its Subsidiaries to, directly or indirectly, pay any funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, guarantee or other agreement to pay, purchase or service, directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any Affiliate except: (i) transactions on an arms-length basis on terms at least as favorable to such Borrower or such Subsidiary as could have been obtained from a third party who was not an Affiliate, (ii) marketing services provided by IMC Global Operations Inc. to Agrico, (iii) employee leasing services agreements between IMC Global Operations Inc. and Agrico, (iv) transactions between Agrico and the Rainbow and FarMarkets business units of the Company, (v) transactions between Agrico and the IMC Kalium business unit of the Company, (vi) loans from the Company or a Subsidiary to the Company or a Subsidiary, (vii) the declaration and payment of any lawful dividend and (viii) transactions between Vigiron Partnership, a Delaware general partnership, and the IMC AgriBusiness business unit of the Company. Section 5.12. Leverage Ratio. The Leverage Ratio will not at any date exceed 3.75 to 1.00. For this purpose: "Consolidated Adjusted Debt" means at any date the sum of (i) the Debt of the Company and its Consolidated Subsidiaries plus (ii) the excess (if any) of (A) the aggregate unrecovered principal investment of transferees of accounts receivable from the Company or a Consolidated Subsidiary in transactions accounted for as sales under generally accepted accounting principles over (B) $100,000,000, in each case determined on a consolidated basis as of such date. "Consolidated EBITDA" means, for any period, the consolidated net income of the Company and its Consolidated Subsidiaries for such period before (i) income taxes, (ii) interest expense, (iii) depreciation and amortization, (iv) minority interest, (v) extraordinary losses or gains, (vi) discontinued operations and (vii) the cumulative effect of changes in accounting principles. Consolidated EBITDA for each four-quarter period will be adjusted on a pro-forma basis to reflect any Acquisition closed during such period as if such Acquisition had been closed on the first day of such period. "Leverage Ratio" means at any date the ratio of Consolidated Adjusted Debt calculated as of such date to Consolidated EBITDA calculated for the period of four consecutive fiscal quarters most recently ended on or prior to such date. Calculations of the Leverage Ratio shall (i) exclude the pretax nonrecurring charges not in excess of $325,000,000 incurred by the Company in, and reflected in the Company's consolidated statement of income for, the fiscal year ended December 31, 1998 and (ii) disregard classification of the Company's Agribusiness unit as a discontinued operation. ARTICLE 6 Defaults Section 6.01. Events of Default. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) any Borrower shall fail to pay when due any principal of any Loan or shall fail to pay, within five Domestic Business Days of the due date thereof, any interest, fees or any other amount payable hereunder; (b) any Borrower shall fail to observe or perform any covenant contained in Sections 5.07 to 5.12, inclusive; (c) any Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after notice thereof has been given to the Company by the Administrative Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by any Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment in respect of Material Financial Obligations (other than the Loans) when due or within any applicable grace period; (f) any event or condition shall occur and shall continue beyond the applicable grace or cure period, if any, provided with respect thereto and the maturity of Material Financial Obligations shall be accelerated as a result thereof; (g) the Company or any Material Subsidiary or any other Borrower shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary or any other Borrower seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Material Subsidiary or any other Borrower under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $25,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000 in the aggregate; (j) judgments or orders for the payment of money in excess of $100,000,000 in the aggregate shall be rendered against the Company or any Subsidiary and such judgments or orders shall continue unsatisfied and unstayed for a period of 30 days; (k) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Company; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Company, except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by 66-2/3% of the remaining members of the board of directors of the Company or (y) nominated for election by a majority of the remaining members of the board of directors of the Company and thereafter elected as directors by the shareholders of the Company; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that has resulted in its or their acquisition of, control over Voting Stock of the Company (or other securities convertible into such securities) representing 35% or more of the combined voting power of all Voting Stock of the Company; or (l) any of the obligations of the Company under Article 10 of this Agreement shall for any reason not be enforceable against the Company in accordance with their terms, or the Company shall so assert in writing; then, and in every such event, the Administrative Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate and (ii) if requested by Banks holding more than 50% in aggregate principal amount of the Loans, by notice to the Company declare the Loans (together with accrued interest thereon) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to any Borrower, without any notice to any Borrower or any other act by the Administrative Agent or the Banks, the Commitments shall thereupon terminate and the Loans (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers. Section 6.02. Notice of Default. The Administrative Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. ARTICLE 7 The Administrative Agent Section 7.01. Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. Section 7.02. Administrative Agent and Affiliates. Morgan Guaranty Trust Company of New York shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and Morgan Guaranty Trust Company of New York and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Subsidiary or affiliate of the Company as if it were not the Administrative Agent hereunder. Section 7.03. Action by Administrative Agent. The obligations of the Administrative Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. Section 7.04. Consultation with Experts. The Administrative Agent may consult with legal counsel (who may be counsel for any Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 7.05. Liability of Administrative Agent. Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable to any Bank for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks (or, when expressly required hereby, all the Banks) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it in good faith to be genuine or to be signed by the proper party or parties. Without limiting the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties. Section 7.06. Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Administrative Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees thereunder. Section 7.07. Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. Section 7.08. Successor Administrative Agent. The Administrative Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Company, with the consent of the Required Banks (such consent not to be unreasonably withheld or delayed), shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent. Section 7.09. Administrative Agent's Fees. The Company shall pay to the Administrative Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and the Administrative Agent. Section 7.10. Other Agents. Nothing in this Agreement shall impose upon any Managing Agent or upon any Co-Agent, in such capacity, any duties or obligations whatsoever. ARTICLE 8 Change in Circumstances Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any Euro-Dollar Borrowing or Bid Rate (Indexed) Borrowing: (a) the Administrative Agent is advised by the Euro-Dollar Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Euro-Dollar Reference Banks in the relevant market for such Interest Period, or (b) in the case of a Euro-Dollar Borrowing, Banks having more than 50% of the aggregate amount of the affected Loans advise the Administrative Agent that the London Interbank Offered Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to continue or convert outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Administrative Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Borrowing is a Bid Rate (Indexed) Borrowing, the Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. Section 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund any of its Euro-Dollar Loans to any Borrower and such Bank shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Banks and such Borrower, whereupon until such Bank notifies such Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or to continue or convert outstanding Loans as or into Euro-Dollar Loans, to such Borrower shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not be otherwise disadvantageous to such Bank in the good faith exercise of its discretion. If such notice is given, each Euro-Dollar Loan of such Bank to such Borrower then outstanding shall be converted to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Section 8.03. Increased Cost and Reduced Return. (a) If on or after (x) the date of this Agreement, in the case of any Committed Loan or any obligation to make Committed Loans or (y) the date of any related Bid Rate Quote, in the case of any Bid Rate Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) issued on or after such date of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement for which such Bank is entitled to compensation for the relevant Interest Period under Section 2.16) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the London interbank market any other condition (other than in respect of Taxes or Other Taxes) affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after receipt by the Company of written demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank an amount which on an after-tax basis is necessary to maintain the same rate of return on capital that existed immediately prior thereto which such Bank reasonably determines is attributable to this Agreement, its Loans or its obligations to make Loans hereunder (after taking into account such Bank's policies as to capital adequacy). (b) If any Bank shall have determined that, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or Administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency given or made after the date of this Agreement (including any determination by any such authority, central bank or comparable agency that, for purposes of capital adequacy requirements, the Commitments hereunder do not constitute commitments with an original maturity of one year or less), has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after receipt by the Company of written demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank an amount which on an after-tax basis is necessary to maintain the same rate of return on capital that existed immediately prior thereto which such Bank reasonably determines is attributable to this Agreement, its Loans or its obligations to make Loans hereunder (after taking into account such Bank's policies as to capital adequacy). (c) Each Bank will promptly notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be presumptively correct in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Notwithstanding the foregoing subsections 8.03(a) and 8.03(b), the Company shall only be obligated to compensate any Bank for any amount arising or accruing during (i) any time or period commencing not more than 45 days prior to the date on which such Bank notifies the Administrative Agent and the Company that it proposes to demand such compensation and identifies to the Administrative Agent and the Company the statute, regulation or other basis upon which the claimed compensation is or will be based and (ii) any time or period during which because of the retroactive application of such statute, regulation or other such basis, such Bank did not know in good faith that such amount would arise or accrue. Section 8.04. Taxes. (a) For purposes of this Section 8.04, the following terms have the following meanings: "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by any Borrower pursuant to this Agreement or any Note, and all liabilities with respect thereto, excluding (i) in the case of each Bank and the Administrative Agent, taxes imposed on its net income and franchise or similar taxes imposed on it by a jurisdiction under the laws of which such Bank or the Administrative Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located (all such excluded taxes of the Administrative Agent or any Bank being herein referred to as its "Domestic Taxes") and (ii) in the case of each Bank, any United States withholding tax imposed on such payments except to the extent that such Bank is subject to United States withholding tax by reason of a U.S. Tax Law Change. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. "U.S. Tax Law Change" means with respect to any Bank or Participant the occurrence (x) in the case of each Bank listed on the signature pages hereof, after the date of its execution and delivery of this Agreement and (y) in the case of any other Bank, after the date such Bank shall have become a Bank hereunder, and (z) in the case of each Participant, after the date such Participant became a Participant hereunder, of the adoption of any applicable U.S. federal law, U.S. federal rule or U.S. federal regulation relating to taxation, or any change therein, or the entry into force, modification or revocation of any income tax convention or treaty to which the United States is a party. (b) Any and all payments by any Borrower to or for the account of any Bank or the Administrative Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; provided that, if any Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions, (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Borrower shall furnish to the Administrative Agent, at its address referred to in Section 11.01 the original or a certified copy of a receipt evidencing payment thereof. (c) Each Borrower agrees to indemnify each Bank and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. In addition, each Borrower organized under the laws of a jurisdiction outside the United States agrees to indemnify the Administrative Agent and each Bank for all Domestic Taxes incurred by it and any liability (including any penalties, interest and expenses arising therefrom or with respect thereto), in each case to the extent that such Domestic Taxes or liabilities result from any payment or indemnification pursuant to this Section by or for the account of such Borrower. This indemnification shall be paid within 15 days after such Bank or the Administrative Agent (as the case may be) makes demand therefor. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter as required by law (but only so long as such Bank remains lawfully able to do so), shall provide the Company two completed and duly executed copies of Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, or other documentation reasonably requested by the Company, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Bank from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of such Bank or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. (e) For any period with respect to which a Bank has failed to provide the Company with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a U.S. Tax Law Change), such Bank shall not be entitled to indemnification under Section 8.04(b) or 8.04(c) with respect to any Taxes or Other Taxes which would not have been payable had such form been so provided, provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes (it being understood, however, that the Company shall have no liability to such Bank in respect of such Taxes). (f) If any Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will take such action (including changing the jurisdiction of its Applicable Lending Office) as in the good faith judgment of such Bank (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank. Section 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Bank to make or to continue or convert outstanding Loans as or into Euro-Dollar Loans to any Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.04 with respect to its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Administrative Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply: (a) all Loans to such Borrower which would otherwise be made by such Bank as (or continued as or converted to) Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (b) after each of its Euro-Dollar Loans to such Borrower has been repaid, all payments of principal which would otherwise be applied to repay such Loans shall be applied to repay its Base Rate Loans instead. If such Bank notifies such Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, the principal amount of each such Base Rate Loan shall be converted into a Euro-Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. Section 8.06. Substitution of Bank. If (i) the obligation of any Bank to make or to convert or continue outstanding Loans as or into Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04, the Company shall have the right, with the assistance of the Administrative Agent, to designate a substitute bank or banks (which may be one or more of the Banks) mutually satisfactory to the Company and the Administrative Agent (whose consent shall not be unreasonably withheld or delayed) to purchase for cash, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto, the outstanding Loans of such Bank and assume the Commitment of such Bank, without recourse to or warranty by, or expense to, such Bank, for a purchase price equal to the principal amount of all of such Bank's outstanding Loans plus any accrued but unpaid interest thereon and the accrued but unpaid fees in respect of such Bank's Commitment hereunder plus such amount, if any, as would be payable pursuant to Section 2.14 if the outstanding Loans of such Bank were prepaid in their entirety on the date of consummation of such assignment. ARTICLE 9 Representations and Warranties of Eligible Subsidiaries By the execution and delivery of its Election to Participate, each Eligible Subsidiary shall be deemed to have represented and warranted as of the date thereof that: Section 9.01. Corporate Existence and Power. It is a legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and is a Substantially-Owned Consolidated Subsidiary of the Company. Section 9.02. Corporate and Governmental Authorization; Contravention. The execution and delivery by it of its Election to Participate and its Notes, and the performance by it of this Agreement and its Notes, are within its legal powers, have been duly authorized by all necessary legal action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its organizational documents or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or such Eligible Subsidiary or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. Section 9.03. Binding Effect. Its Election to Participate has been duly executed by such Eligible Subsidiary and this Agreement constitutes a valid and binding agreement of such Eligible Subsidiary and each of its Notes, when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of such Eligible Subsidiary, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. Section 9.04. Taxes. Except as disclosed in the opinion of counsel delivered pursuant to Section 3.03 of this Agreement or in its Election to Participate, there are no Taxes or Other Taxes of any country, or any taxing authority thereof or therein, which are imposed on any payment to be made by such Eligible Subsidiary pursuant hereto or on its Notes, or imposed on or by virtue of the execution, delivery or enforcement of this Agreement, its Election to Participate or of its Notes. ARTICLE 10 Guaranty Section 10.01. The Guaranty. The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to any Eligible Subsidiary pursuant to this Agreement, and the full and punctual payment of all other amounts payable by any Eligible Subsidiary under this Agreement or any Note. Upon failure by any Eligible Subsidiary to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. Section 10.02. Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Eligible Subsidiary under this Agreement or any Note, by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any Note; (c) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Eligible Subsidiary under this Agreement or any Note; (d) any change in the existence, structure or ownership of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Eligible Subsidiary or its assets or any resulting release or discharge of any obligation of any Eligible Subsidiary contained in this Agreement or any Note; (e) the existence of any claim, set-off or other rights which the Company may have at any time against any Eligible Subsidiary, the Administrative Agent, any Bank or any other Person, whether in connection herewith or with any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (f) any invalidity or unenforceability relating to or against any Eligible Subsidiary for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Eligible Subsidiary of the principal of or interest on any Loan or any other amount payable by it under this Agreement or any Note; or (g) any other act or omission to act or delay of any kind by any Eligible Subsidiary, the Administrative Agent, any Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder. Section 10.03. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans and all other amounts payable by the Company and each Eligible Subsidiary under this Agreement or any Note shall have been paid in full. If at any time any payment of principal of or interest on any Loan or any other amount payable by any Eligible Subsidiary under this Agreement or any Note is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. Section 10.04. Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Eligible Subsidiary or any other Person. Section 10.05. Subrogation. The Company irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder in respect of any Eligible Subsidiary to be subrogated to the rights of the payee against such Eligible Subsidiary with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of such Eligible Subsidiary in respect thereof, in any bankruptcy, insolvency or similar proceeding involving such Eligible Subsidiary as debtor commenced within one year after the making of any payment by such Eligible Subsidiary under this Agreement or its Notes. Section 10.06. Stay of Acceleration. In the event that acceleration of the time for payment of any amount payable by any Eligible Subsidiary under this Agreement or any Note is stayed upon insolvency, bankruptcy or reorganization of such Eligible Subsidiary, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Administrative Agent made at the request of the Required Banks. ARTICLE 11 Miscellaneous Section 11.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (a) in the case of the Company or the Administrative Agent, at its address, facsimile number or telex number set forth on the signature pages hereof, (b) in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (c) in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Administrative Agent under Article 2 or Article 8 shall not be effective until received. Any notice required to be given to or by any Eligible Subsidiary shall be duly given if given to or by the Company, which is hereby appointed the agent of each Eligible Subsidiary for such purpose. Section 11.02. No Waivers. No failure or delay by the Administrative Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 11.03. Expenses; Indemnification. (a) The Company shall pay (i)all reasonable out-of-pocket expenses of the Administrative Agent, including reasonable fees and disbursements of special counsel for the Administrative Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Bank, including (without duplication) the reasonable fees and disbursements of outside counsel and allocated cost of inside counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. (b) The Company agrees to indemnify the Administrative Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and out-of-pocket expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any litigation or governmental or regulatory investigation or other similar proceeding (whether or not such Indemnitee shall be designated a party thereto) relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct or for its breach of its express obligations under this Agreement, in each case as determined by a court of competent jurisdiction; provided, further, that in no event shall the Company have any such indemnification obligation in respect of any liabilities, losses, damages, costs or expenses resulting from disputes between any Bank and the Administrative Agent or among the Banks. Section 11.04. Sharing of Set-offs. Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount then due with respect to the Loans held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount then due with respect to the Loans held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Loans held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments with respect to the Loans held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrowers other than their indebtedness under this Agreement. Each Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Borrower in the amount of such participation. Section 11.05. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Administrative Agent are affected thereby, by such Person); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for termination of any Commitment, (iv) make any changes to Article 10 or (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement; provided further that no such amendment, waiver or modification shall, unless signed by each Eligible Subsidiary, (w) subject such Eligible Subsidiary to any additional obligation, (x) increase the principal of or rate of interest on any outstanding Loan of such Eligible Subsidiary, (y) accelerate the stated maturity of any outstanding Loan of such Eligible Subsidiary or (z) change this proviso. Section 11.06. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Administrative Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrowers and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii), (iii) or (iv) of Section 11.05 without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest, subject to subsection 11.06(e) below. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). (c) Any Bank may at any time assign to one or more banks or other financial institutions (each an "Assignee") all, or a proportionate part (equivalent to an initial Commitment of not less than $15,000,000) of all, of its rights and obligations under this Agreement and its Notes (if any), and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank, with (and only with and subject to) the prior written consent of the Borrower and the Administrative Agent (which consents shall not be unreasonably withheld or delayed); provided that if an Assignee is an affiliate of such transferor Bank or was a Bank immediately prior to such assignment, no such consent shall be required; provided further such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Bid Rate Loans. Upon execution and delivery of such instrument of assumption and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Administrative Agent and the Borrowers shall make appropriate arrangements so that, if required by the Assignee, Note(s) are issued to the Assignee. In connection with any such assignment, the transferor Bank or the Assignee shall pay or cause to be paid to the Administrative Agent an administrative fee for processing such assignment in the amount of $3,000. If the Assignee is not organized under the laws of the United States of America or a state thereof, it shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the Company and the Administrative Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes (if any) to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder or modify any such obligations. (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. Section 11.07. Collateral. Each of the Banks represents to the Administrative Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. Section 11.08. Confidentiality. The Administrative Agent and each Bank agrees to keep any information delivered or made available by the Borrower pursuant to this Agreement confidential from anyone other than persons employed or retained by such Bank and its affiliates who are engaged in evaluating, approving, structuring or administering the credit facility contemplated hereby; provided that nothing herein shall prevent any Bank from disclosing such information (a) to any other Bank or to the Administrative Agent, (b) to any other Person if reasonably incidental to the administration of the credit facility contemplated hereby, (c) upon the order of any court or administrative agency, (d) upon the request or demand of any regulatory agency or authority, (e) which had been publicly disclosed other than as a result of a disclosure by the Administrative Agent or any Bank prohibited by this Agreement, (f) in connection with any litigation to which the Administrative Agent, any Bank or its subsidiaries or Parent may be a party, (g) to the extent necessary in connection with the exercise of any remedy hereunder, (h) to such Bank's or Administrative Agent's legal counsel and independent auditors and (i) subject to provisions substantially similar to those contained in this Section 11.08, to any actual or proposed Participant or Assignee. Section 11.09. Governing Law; Submission to Jurisdiction. This Agreement and each Note shall be construed in accordance with and governed by the law of the State of New York. Each Borrower 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 New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Section 11.10. Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. Section 11.11. Waiver of Jury Trial. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE BANKS , TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. IMC GLOBAL INC. By /s/ E. Paul Dunn, Jr. Title: Vice President 2100 Sanders Road Northbrook, IL 60062 Attention: E. Paul Dunn, Jr. Vice President & Treasurer Telecopy number: (847) 205-4930 Commitments MORGAN GUARANTY TRUST COMPANY OF NEW YORK, $21,750,000 Individually and as Administrative Agent By /s/ Robert Bottamedi Title: Vice President 60 Wall Street New York, NY 10260 Attention: Loan Department Telex number: 177615 MGT Telecopy number: (212) 648-5023 THE CHASE MANHATTAN BANK, $21,000,000 Individually and as Managing Agent By /s/ James H. Ramage Title: Vice President CITIBANK, N.A., Individually $21,000,000 and as Managing Agent By /s/ Carolyn A. Sheridan Title: Attorney-in-fact ROYAL BANK OF CANADA, $21,000,000 Individually and as Managing Agent By /s/ Gordon MacArthur Title: Manager NATIONSBANK, N.A., $12,780,000 Individually and as Managing Agent By /s/ G. Burton Queen Title: Managing Director BANK OF AMERICA NATIONAL TRUST $8,220,000 AND SAVINGS ASSOCIATION, Individually and as Managing Agent By /s/ G. Burton Queen Title: Managing Director BANQUE NATIONALE DE PARIS, $16,000,000 Individually and as Co-Agent By /s/ Arnaud Collin du Bocage Title: Executive Vice President and General Manager CREDIT AGRICOLE INDOSUEZ, $16,000,000 Individually and as Co-Agent By /s/ David Bouhl Title: F. V. P., Head of Corporate Banking, Chicago By /s/ Katherine L. Abbott Title: First Vice President CREDIT LYONNAIS, CHICAGO $16,000,000 BRANCH, Individually and as Co-Agent By /s/ Julie T. Kanak Title: First Vice President THE FIRST NATIONAL BANK OF $16,000,000 CHICAGO, Individually and as Co-Agent By /s/ Robert G. Sperhac Title: Vice President FIRST UNION NATIONAL BANK, $16,000,000 Individually and as Co-Agent By /s/ Kristen M. Denning Title: Assistant Vice President MARINE MIDLAND BANK, $16,000,000 Individually and as Co-Agent By /s/ Steve Trepiccione Title: Vice President - Officer #9435 MELLON BANK, N.A., Individually $16,000,000 and as Co-Agent By /s/ John K. Walsh Title: Vice President THE NORTHERN TRUST COMPANY, $16,000,000 Individually and as Co-Agent By /s/ Michelle M. Teteak Title: Vice President SUNTRUST BANK, ATLANTA, $16,000,000 Individually and as Co-Agent By /s/ Michel A. Odermatt Title: Vice President By /s/ F. Steven Parrish Title: Vice President THE TORONTO DOMINION (Texas), $16,000,000 Inc., Individually and as Co-Agent By /s/ Carol Brandt Title: Vice President ABN AMRO BANK N.V., $15,750,000 Individually and as Participant By /s/ Steven M. Buehler Title: Assistant Vice President By /s/ Scott J. Albert Title: Vice President THE BANK OF NEW YORK, $15,750,000 Individually and as Participant By /s/ John M. Lokay, Jr. Title: Vice President HARRIS TRUST AND SAVINGS BANK, $16,000,000 Individually and as Co-Agent By /s/ Julie K. Hossack Title: Vice President THE BANK OF TOKYO-MITSUBISHI, $12,250,000 LTD. CHICAGO BRANCH, Individually and as Participant By /s/ Hajime Watanabe Title: Deputy General Manager COOPERATIEVE CENTRALE $12,250,000 RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, Individually and as Participant By /s/ W. Jeffrey Vollack Title: Senior Credit Officer and Senior Vice President By /s/ Michiel V. M. Van der Voort Title: Vice President STANDARD CHARTERED BANK, $12,250,000 Individually and as Participant By /s/ Francois Dorival-Bordes Title: Senior Vice President By /s/ Kristina McDavid Title: Vice President Total Commitments $350,000,000 ============ Pricing Schedule The "Euro-Dollar Margin" and the "Facility Fee Rate" for any day are the respective percentages set forth below in the applicable row under the column corresponding to the Status that exists on such day: LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V Facility Fee Rate .08% .10% .125% .15% .50% Euro-Dollar Margin .47% .55% .75% .85% 1.00% For purposes of this Schedule, the following terms have the following meanings, subject to the last paragraph of this Schedule: "Level I Status" exists at any date if, at such date, the Company is rated BBB+ or higher by S&P and Baa2 or higher by Moody's or Baa1 or higher by Moody's and BBB or higher by S&P. "Level II Status" exists at any date if, at such date, the Company is rated BBB by S&P and Baa2 by Moody's. "Level III Status" exists at any date if, at such date, (i) the Company is rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. "Level IV Status" exists at any date if, at such date, (i) the Company is rated BBB- by S&P or Baa3 by Moody's and (ii) neither Level I Status, Level II Status nor Level III Status exists. "Level V Status" exists at any date if, at such date, no other Status exists. "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists at any date. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Company without third-party credit enhancement, whether or not any such debt securities are actually outstanding, and any rating assigned to any other debt security of the Company shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. If the Company is split-rated and the ratings differential is one notch, the higher of the two ratings will apply (e.g., BBB/Baa3 results in Level III Status). If the Company is split-rated and the ratings differential is more than one notch, the average of the two ratings (or the higher of two intermediate ratings) shall be used (e.g., BBB+/Baa3 results in Level III Status, as does BBB+/Ba1). Notwithstanding the foregoing, the Borrower's senior unsecured long-term debt must be rated at least BBB by S&P and Baa2 by Moody's for either Level I or Level II to apply. If at any date, the Company's long-term debt is rated by neither S&P nor Moody's, then Level V shall apply. EX-10.61 7 AMENDMENT NO. 1 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.61 Execution Copy AMENDMENT NO. 1 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT Amendment dated as of March 31, 1998 among International Minerals & Chemical (Canada) Global Limited ("IMC Canada"), IMC Kalium Canada Inc. ("IMC Kalium"), IMC Global Inc. (the "Guarantor"), the Banks listed on the signature pages hereof (the "Banks") and Royal Bank of Canada, as Agent, (the "Agent"). WHEREAS, IMC Canada, IMC Kalium, the Guarantor, the Banks and the Agent are parties to a Five-Year Canadian Credit Agreement dated as of December 22, 1997 (the "Agreement"); and AND WHEREAS, the parties hereto desire to amend the Agreement as specified below; NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the sum of $1.00 now paid by each party to the other and for other good and valuable consideration (the receipt and sufficiency which are hereby acknowledged) that parties hereto agree as follows: 1. Definitions; References. (a) Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. (b) The following definitions are added to Section 1.1 in their appropriate alphabetical positions. "Existing Harris Debt" means Debt of Harris Chemical North America, Inc., a Delaware corporation, under its outstanding $250,000,000 10.25% Senior Secured Discount Notes and its outstanding $335,000,000 10.75% Senior Subordinated Notes. "Harris Chemical Acquisition" means, collectively, the merger of Harris Chemical Group with and into IMC Merger Sub Inc., a wholly- owned Subsidiary of the Guarantor with Harris Chemical Group as the successor thereto, expected to be consummated on or about March 31, 1998 pursuant to that certain Agreement and Plan of Merger, dated December 11, 1997, by and among the Guarantor, IMC Merger Sub Inc. and Harris Chemical Group, and the acquisition, directly or indirectly, by the Guarantor of all of the outstanding shares of Harris Chemical Australia Pty Limited pursuant to the Sale and Purchase Agreement made as of December 11, 1997, among Prudential Asset Management Asia Limited, DGHA Persons and Trusts named therein, Search Investment NV, Harris Chemical Australia Pty Limited, Marsupial L.L.C., Marsupial-II L.L.C., Soda Ash (L) BHD, Manager Shareholders named therein and the Guarantor. "Harris Chemical Group" means Harris Chemical Group, Inc., a Delaware corporation. Effective retroactively from and after December 22, 1997 the definition of "Conversion Date" is deleted. The following language is added at the end of the definition of "Guarantor's Credit Agreement ": "and the U.S. $1,000,000,000 364-day credit agreement among the Guarantor and the several banks listed therein, Royal Bank of Canada, as documentation agent, The Chase Manhattan Bank and NationsBank, N.A., as co-syndication agents, Bank of Montreal as administrative agent, and Morgan Guaranty Trust Company of New York, as senior managing agent dated as of April 1, 1998". The word "either" is deleted and the word "any" substituted therefor in the definition of "US Borrower". 2. Guarantor; Mergers and Sale of Assets. (a) The word "and" appearing immediately before clause (z) in Section 5.2(e)(ii) is hereby deleted. (b) The following clause (z) is added to the proviso in Section 5.2(e)(ii): "and (z) the sale of assets acquired in or as a direct result of the Harris Chemical Acquisition." Clauses (w), (x), (y) and (z) in Section 5.2(e)(ii) are renamed (v), (w), (x) and (y) respectively. 3. Debt of Subsidiaries. (a) The following language is added to the first parenthetical in Section 5.2(g) immediately following the word "excluding": "(i)Existing Harris Debt at any time until the earlier of (x) November 1, 1998 and (y) the repurchasing or prepayment of such Debt by the Guarantor or by any such Subsidiary of the Guarantor (but not any refinancing thereof) and (ii)" Clauses (i), (ii), (iii) and (iv) in the first parenthetical in Section 5.2(g) are renamed (w), (x), (y) and (z) respectively. The percentage "20%" in Section 5.2(g) is deleted and "25%" substituted therefor. 4. Pricing. (a) Effective retroactively from and after December 22, 1997 (i) Section 1.7 of the Agreement is deleted and (ii) the proviso in the first paragraph of the Pricing Schedule is deleted. (b) On the later of (i) the date this Agreement becomes effective in accordance with paragraph 10 hereof and (ii) March 31, 1998, the Borrower shall pay to the Administrative Agent for the account of the Banks accrued amounts payable as a result of Section 4(a) hereof. 5. Representations and Warranties. (a) The Borrowers represent and warrant that as of the date hereof and after giving effect hereto: (b) no Default has occurred and is continuing; and (c) each representation and warranty of the Borrowers set forth in the Agreement is true and correct as though made on and as of such date. (d) The Guarantor represents and warrants that as of the date hereof and after giving effect hereto: (e) no Default has occurred and is continuing; and (f) each representation and warranty of the Guarantor set forth in the Agreement is true and correct on and as of such date. Confirmation of Guarantee. The Guarantor hereby acknowledges the foregoing amendments to the Agreement and hereby expressly confirms that the guarantee provided by the Guarantor pursuant to Article 9 of the Agreement and the liability of the Guarantor thereunder remains in full force and effect notwithstanding the amendments to the Agreement made pursuant hereto. Exhibit D. The word "Canadian" is added following the words "Five-Year" in the first recital of Exhibit D. EX-10.62 8 AMENDMENT NO. 2 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.62 AMENDMENT NO. 2 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT Amendment dated as of August 31, 1998 among International Minerals & Chemical (Canada) Global Limited ("IMC Canada"), IMC Kalium Canada Ltd. ("IMC Kalium"). International Minerals & Chemical (Canada) Limited Partnership ("IMC Partnership"), IMC Global Inc. (the "Guarantor"), the Banks listed on the signature pages hereof (the "Banks") and Royal Bank of Canada, as Agent (the "Agent"). WHEREAS IMC Canada, IMC Kalium, the Guarantor, the Banks and the Agent are parties to a Five-Year Canadian Credit Agreement dated as of December 22, 1997, as amended by an agreement among the same parties dated as of March 31, 1998 (collectively the "Original Agreement"); AND WHEREAS IMC Canada will subscribe for shares of IMC Esterhazy Ltd. ("IMC Esterhazy") and will pay C$2,000,000 to IMC Esterhazy in consideration therefor (the "Initial Transaction"); AND WHEREAS the said C$2,000,000 represents approximately 0.5% of the operating assets of IMC Canada; AND WHEREAS IMC Esterhazy will be a direct wholly-owned subsidiary of IMC Canada; AND WHEREAS IMC Canada and IMC Esterhazy (collectively, the "Partners") will form a Saskatchewan limited partnership to be called International Minerals & Chemical (Canada) Limited Partnership ("IMC Partnership"); AND WHEREAS IMC Canada and IMC Esterhazy will transfer their operating assets to IMC Partnership (the "Subsequent Transaction"); AND WHEREAS the parties hereto desire to amend the Original Agreement to include IMC Partnership as a Borrower and to make such other amendments as are specified below (the "Original Agreement", as amended hereby being herein referred to as the "Agreement"); NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the sum of $1.00 now paid by each party to the other and for other good and valuable consideration ( the receipt and sufficiency which are hereby acknowledged) that parties hereto agree as follows: 1. Addition of Borrower. IMC Partnership is hereby added as a Borrower under the Agreement. By its execution of this Amendment, IMC Partnership expressly agrees to become a party to the Agreement and be bound by the provisions thereof. 2. Transfer of Assets. The Banks and the Agent hereby confirm their consent to the Initial Transaction and the Subsequent Transaction. 3. Definitions; References. (a) Unless otherwise specifically defined herein, each term used herein which is defined in the Original Agreement shall have the meaning assigned to such term in the Original Agreement. (b) The following definitions are added to Section 1.1 in their appropriate alphabetical positions: (c) "change in constitution of IMC Partnership" has the meaning ascribed to that term for purposes of the Partnership Act (Saskatchewan). (d) "IMC Esterhazy means IMC Esterhazy Ltd. (e) "IMC Partnership" means International Minerals & Chemical (Canada) Limited Partnership. (f) "Jointly Liable Borrowers" has the meaning set forth in Section 1.6. (g) The definition of "Borrower" in Section 1.1 is amended by deleting the word "or" following the word "IMC Canada" and substituting a comma (",") therefore and inserting the words "or IMC Partnership" following the words "IMC Kalium". (h) The definition of "Consolidated Subsidiary" in Section 1.1 is amended by inserting the words ", for greater certain and without limitation, IMC Partnership shall be deemed to be a "Consolidated Subsidiary of the Guarantor, IMC Canada and IMC Potash" following the word "Guarantor" at the end of such definition. (i) The definition of "Substantially-Owned Consolidated Subsidiary" in Section 1.1 is amended by inserting the words", and further provided, for greater certainty, and without limitation, that IMC Partnership shall be deemed to be a "Substantially-Owned Consolidated Subsidiary"" following the words "a Consolidated Subsidiary" at the end of such definition. (j) The definition of "Subsidiary" in Section 1.1 is amended by inserting he words", for greater certainty, and without limitation, IMC Partnership shall be deemed to be a "Subsidiary" of IMC Canada, IMC Potash and the Guarantor" at the end of such definition following the words "owned by such Person". 4. Representations and Warranties - Amendments. (a) The words "Each of the Borrowers" in the introductory language of Section 4.1 are deleted and the words "IMC Kalium represents and warrants for itself and only with respect to itself and IMC Canada and IMC Partnership jointly and severally" substituted therefor. The words "for itself" appearing in the introductory language o Section 4.1 following the words "represent and warrant" and preceding the word "that;" are deleted and the words "for themselves and only with respect to themselves" are substituted therefor. (b) The words "the Borrower" following the words "Each of" in section 4.1(a) are deleted and the words "IMC Canada and IMC Kalium" substituted therefor. The words: (c) "IMC Partnership is a limited partnership validly established and existing under the laws of the Province of Saskatchewan and has all powers and all material governmental licenses, authorizations, consent and approvals required to carry n its business as now conducted and is duly qualified or registered as a limited partnership in each jurisdiction where such qualification or registration is required, except where the failure to so qualify or register could not be expected to have a Material Averse Effect. IMC Canada and IMC Esterhazy are, respectively, the general partner and limited partner of IMC Partnership. IMC Canada has full power and authority to act as the general partner of IMC Partnership" are inserted at the end of Section 4.1(a) following the period ("."). (d) Section 4.1(b) is deleted in its entirety and the following substituted therefor: (e) "Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by each of IMC Canada (for itself and in its capacity as the general partner of IMC Partnership) and IMC Kalium of this Agreement are within the corporate powers of IMC Canada and IMC Kalium and the partnership powers of IMC Partnership, have been duly authorized by all necessary corporate of other similar action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate or article so incorporation or by-laws of either of IMC Canada or IMC Kalium or the certificate of IMC Partnership or of any other agreement (including any partnership agreement), judgment, injunction, order, decree or other instrument binding upon any of the Borrowers or any of its Subsidiaries or result in the creation or imposition of any lien on any asset of any one of the Borrowers or any of its Subsidiaries." (f) The words, "(iii) The unaudited pro forma balance sheet of IMC Partnership as of July 31, 1998 fairly presents the financial position of IMC Partnership as if it was existing on such date." are added as new clause 4.1(d)(iii). (g) The word "corporate" is inserted following the words "Each of the Borrowers" in Section 4.1(i). (h) The words, "(k) IMC Esterhazy. IMC Esterhazy is a wholly-owned direct Subsidiary of IMC Canada." are added as a new subsection at the end of Section 4.1. (i) Section 4.2(a) is deleted in its entirety and the following substituted therefor: (j) "(a) The Guarantor repeats the representations and warranties made in the first sentence of subsection 4.1(a), and in subsection 4.1(b), 4.1(c), 4.1(f), 4.1(g) and 4.1(i) as if the references to the "Borrower" (and in the case of the first sentence of subsection 4.1(a) and of subsection 4.1(b) "IMC Canada and IMC Kalium") therein (s the context permits) were read as "Guarantor"." 5. Covenants - Amendments. (a) The parenthetical "(A)" is added following the words "of each fiscal year of" and preceding the words "each of" in Section 5.1(a)(i) and the words "and (B) an unaudited balance sheet of IMC Partnership and it respective Subsidiaries as a the end of such fiscal year and the related unaudited statement of earnings, cash flows and changes in partnership interest for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared on a basis consistent with the financial statements referred to in Section 4.1(d) hereof following the words "IMC potash" and preceding the semi-colon (";") at the end of Section 5.1(a). (b) The words "or any action, event or circumstance" are inserted following the word "transaction" in Section 5.1(a)(iii). (c) The parenthetical phrase "(other than a Borrower): is inserted after each reference to the word "Subsidiary" is clauses (i) and (ii) of Section 5.1(d) and clause (i) of Section 5.2(c). (d) The word "corporate" is deleted following the words ", renew and keep in full force and effect, its respective" in Section 5.1(d) and the word "legal" substituted therefor. (e) The words "and will not permit any o its Subsidiaries to" are inserted immediately following the words "The Borrower will not" in Section 5.1(g)(ii). (f) The word "corporate" is deleted from Section 5.1(b) and the word "operating" substituted therefor. 6. Defaults - Amendments. (a) The words, ", IMC Esterhazy" are inserted immediately following the word "Borrowers" and preceding the words "or any subsidiary of the Borrower" and immediately following the word "Borrowers" an preceding the words "or any such Material Subsidiary" in each place such words appear in Section 6.1(i). (b) The words ",IMC Esterhazy shall cease to be a direct wholly-owned Subsidiary of IMC Canada or there shall be any change in the members of IMC Partnership" are inserted at the end of Section 6.1(m) following the word "Guarantor". 7. Guarantee - Amendments. (a) The word ", revoked" is inserted following the word "discharged" in the introductory language of Section 9.2. (b) The words ", including a change in the constitution of IMC Partnership" are added following the words "ownership of any Borrower" in Section 9.2(d). 8. Schedules and Exhibits - Amendments. (a) The following address is added immediately prior to the heading "Guarantor" in Schedule II. International Minerals & Chemical (Canada) Limited c/o IMC Global Inc. 2100 Sanders Road Northbrook, IL 60062 Attention: Marshall I. Smith Vice President and Assistant Secretary Phone: 847-205-4882 Fax: 874-205-4894 (b) The words "International Minerals & Chemical (Canada) Limited Partnership," are added following the words "IMC Kalium Canada Ltd.," in the first paragraph of Exhibit A and Exhibit B. (c) The words "International Minerals & Chemical (Canada) Limited Partnership," are added following the words "IMC Kalium Canada Ltd.," in the second paragraph of Exhibit C. (d) The parenthetical following the words "IMC Kalium Canada Ltd.," in the introductory paragraph of Exhibit D is deleted and the following substituted therefor "("IMC Kalium"), International Minerals & Chemical (Canada) Limited Partnership ("IMC Partnership" and, collectively with IMC Canada and IMC Kalium, the "Borrowers")" substituted therefor. (e) A signature line for IMC Partnership is inserted immediately following the signature line for IMC Kalium in Exhibit D as follows: (f) "INTERNATIONAL MINERAL & CHEMICAL (CANADA) LIMITED PARTNERSHIP by its general partner, INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED By: ---------------------------------- Name: Title: (g) The words "International Minerals & Chemical (Canada) Limited Partnership," are added following the words "IMC Kalium Canada Ltd.," in the first paragraph of Exhibit F-1 and Exhibit F-2. 9. Miscellaneous Amendments. (a) The words "International Minerals & chemical (Canada) Limited Partnership" are inserted on the cover page of the Agreement following the words "IMC Kalium Canada Ltd." (b) The words "International Minerals & chemical (Canada) Limited Partnership" are inserted following the words "IMC Kalium Canada Ltd.," in the introductory paragraph on page one of the Agreement. (c) The words "Joint and Several and" are inserted in Section 1.6 preceding the heading "Several Liability". The words "each Borrower hereunder" in Section 1.6 are deleted and the words: (d) "IMC Canada and IMC Partnership (collectively, the "Jointly Liable Borrowers") hereunder shall be joint and several with respect to the indebtedness and liability of each other hereunder. The indebtedness and liability of the Jointly Liable Borrowers and each of them hereunder (on the one hand) and IMC Kalium hereunder (on the other hand)"all" are substituted therefor. (e) The word "either" is deleted and the word "any" substituted therefor preceding the words "of the Borrower" in Sections 2.1(a) and (b), 2.15(h)(ii), 6.1(a), (b), (d), (g), (i), (l) and (m), 7.4 and 9.5 in the Agreement and in the proviso of the final paragraph of Section 6.1. (f) The words "either or both" are deleted from the parenthetical in the definition of "Acquisition" in Section 1.1 and the word "any" substituted therefor. (g) The word "either" is deleted and the word "any" substituted therefor preceding the words "Borrower of the Guarantor" in Section 6.3. (h) The words "Neither" and "either" are deleted from the introductory language of Section 5.1(i) and the words "None" and "any", respectively, substituted therefor. (i) The word "both" is deleted following the word "means" and preceding the words "of the foregoing" in the definition of "Borrower" in Section 1.1 and the word "all" substituted therefor. (j) The word "both" is deleted from the definition of "Issuing Bank" in Section 1.1 and the word "all" substituted therefor. (k) The word "both" is deleted from clause (i) of Section 2.1(b) and the word "all" substituted therefor. (l) The words, ", a certificate of an Approved Officer of such Borrower setting forth the details thereof" are added at the end of Section 5.1(a)(iii) following the words "Event of Default" and preceding the semi-colon (";"). 10. Representations and Warranties. (a) IMC Kalium represents and warrants for itself and only with respect to itself and IMC Canada and IMC Partnership jointly and severally represent for themselves and only with respect to themselves that as of the date hereof and after giving effect hereto: (i) no Default has occurred and is continuing; and (ii) each representation and warranty of the Borrowers set forth in the Agreement is true and correct as though made on the date hereof. (b) IMC Canada and the Guarantor jointly and severally represent and warrant that the Initial Transaction and IMC Canada, IMC Partnership and the Guarantor jointly and severally represent and warrant that the Subsequent Transaction were, in each case, within the corporate power of the Partners, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental boy agency or official (other than those which have taken place) and do not contravene or constitute a default under any provision of applicable law or regulation or of the certificate of incorporation or by-law of either of the Partners or the certificate of IMC Partnership or any other agreement (including any partnership agreement), judgment, injunction, order, deed or other instrument brought against either of the Partners or the Guarantor or any of their respective subsidiaries or result in the creation of any lien on any asset of any one of the Partners, the Guarantor or any of their respective Subsidiaries. 10. Confirmation of Guarantee. The Guarantor hereby acknowledges the foregoing amendments to the Original Agreement and hereby expressly confirms that the guarantee (as amended hereby) provided by the Guarantor pursuant to Article 9 of the Agreement and the liability of the Guarantor thereunder remains in full force and effect notwithstanding the amendments to the Original Agreement made pursuant hereto. Without, in any way limiting the foregoing, the Guarantor hereby acknowledges and confirms that its guarantee extends to and includes all obligations of IMC Partnership under the Agreement. 11. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 12. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Agent shall have received (i) duly executed counterparts hereof signed by each of the Borrowers, the Guarantor and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party o execution of a counterpart hereof by such party) and (ii) an unaudited pro forma balance sheet of IMC Partnership as of July 31, 1998. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED By /s/ John Huber Name: John Huber Title: IMC KALIUM CANADA LTD. By /s/ Rose Marie Williams Name: Rose Marie Williams Title: IMC GLOBAL INC. By /s/ Rose Marie Williams Name: Rose Marie Williams Title: INTERNATIONAL MINERALS & CHEMICAL (CANADA) LIMITED PARTNERSHIP by its general partner, INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED By /s/ John Huber Name: John Huber Title: ROYAL BANK OF CANADA, as Agent By /s/ Joan Carstairs Name: Joan Carstairs Title: ROYAL BANK OF CANADA, as Bank By /s/ Glenn Graves Name: Glenn Graves Title: BANK OF MONTREAL, as Bank and Co-Agent By /s/ Ian M. Plester Name: Ian M. Plester Title: FIRST CHICAGO NBD BANK, CANADA By /s/ T. Thomas Cheng Name: T. Thomas Cheng Title: J.P. MORGAN CANADA, as Bank and Co-Agent By /s/ John Maynard Name: John Maynard Title: THE CHASE MANHATTAN BANK OF CANADA By /s/ Christopher Chan Name: Christopher Chan Title: EX-10.63 9 AMENDMENT NO. 3 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.63 AMENDMENT NO. 3 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of December 16, 1998 to the Five-Year Canadian Credit Agreement dated as of December 22, 1997 (as amended by Amendment No. 1 to Canadian Five-Year Credit Agreement dated as of March 31, 1998 and Amendment No. 2 to Canadian Five-Year Credit Agreement dated as of August 31, 1998, the "Agreement") among IMC Kalium Canada Ltd., International Minerals & Chemical (Canada) Global Limited and International Minerals & Chemical (Canada) Limited Partnership (collectively, the "Borrowers"), IMC Global Inc. (the "Guarantor"), the Banks listed on the signature pages hereof (the "Banks") and Royal Bank of Canada, as Agent (the "Agent"). W I T N E S S E T H: WHEREAS, the parties hereto desire to amend the Agreement as specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. 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 Agreement shall from and after the date hereof refer to the Agreement as amended hereby. SECTION 2. Amendments to Definitions. Section 1.1 of the Agreement is amended by inserting, in their appropriate alphabetical position, the following definitions: "IMC Inorganic Chemicals Inc." means IMC Inorganic Chemicals Inc., a Delaware corporation, formerly known as Harris Chemical Group, Inc. "PLP" means Phosphate Resource Partners Limited Partnership, a Delaware limited partnership and its successors. SECTION 3. Amendment to Borrowings Condition. Section 3.2 of the Agreement is amended by amending and restating subparagraph (d) thereof in its entirety as follows: (d) the fact that the representations and warranties (other than (i) the representations and warranties set forth in clauses 4.1(d)(ii) and 4.2(b)(ii) in the case of a Borrowing which does not result in an increase in the sum of the aggregate outstanding principal amount of the Loans, the aggregate Bankers' Acceptance Obligations and the aggregate Letter of Credit Liabilities and (ii) the representations and warranties set forth in clauses 4.1(1) and 4.2(b)(vii) in the case of any Borrowing after December 3l, 2000) of the Borrowers and the Guarantor contained in this Agreement shall be true on and as of the date of such Borrowing or issuance of such Letter of Credit. SECTION 4. Amendment to Representations and Warranties. (a) Article 4 of the Agreement is amended by adding a new Section 4.1(1) immediately after Section 4.1(k) thereof, to read in its entirety as follows: 4.1(1). Year 2000. Any reprogramming required to permit the proper functioning, in and following year 2000, of (a) each of the Borrower's material computer systems and (b) material equipment containing embedded microchips (including systems and equipment supplied by others or with which any of the Borrower's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to each Borrower of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to each of the Borrowers (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of each of the Borrowers and their Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit each of the Borrowers to conduct its business without Material Adverse Effect. (b) Article 4 of the Agreement is amended by adding a new Section 4.2(b)(vii) immediately after Section 4.2(b)(vi) thereof, to read in its entirety as follows: 4.2(b)(vii). Year 2000. Any reprogramming required to permit the proper functioning, in and following year 2000, of (a) the Guarantor's computer systems and (b) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Guarantor's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to the Guarantor of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Guarantor (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Guarantor and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit the Guarantor to conduct its business without Material Adverse Effect. SECTION 5. Amendment to Debt of Subsidiaries Covenant. Section 5.2(g) of the Agreement is amended and restated in its entirely as follows: SECTION 5.2(g). Debt of Subsidiaries. Total Debt of all Subsidiaries of the Guarantor (excluding Debt (i) of a Subsidiary owing to the Guarantor, (ii) of a Subsidiary owing to a Substantially-Owned Consolidated Subsidiary, (iii) of an "Eligible Subsidiary" as defined in the Guarantor's Credit Agreement, (iv) of PLP in an aggregate principal amount not exceeding (U.S.) $300,000,000 outstanding on the Effective Date (but not any refinancing thereof), (v) of Harris Chemical North America, Inc. and its Subsidiaries arising out of the Argus Utilities sale-leaseback transaction in an aggregate principal amount not exceeding (U.S.) $71,000,000, or (vi) of IMC Inorganic Chemicals Inc., formerly known as Harris Chemical Group, Inc., and its Subsidiaries in an aggregate principal amount not exceeding UK50,000,000) will not at any date exceed 25% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to such date). For purposes of this Section any preferred stock of a Consolidated Subsidiary (other than the Series E Preferred Stock) held by a Person other than the Guarantor or a Substantially-Owned Consolidated Subsidiary shall be included, at the higher of its voluntary or involuntary liquidation value, in the "Debt" of such Consolidated Subsidiary. SECTION 6. Representations and Warranties. (a) IMC Kalium represents and warrants for itself, and only with respect to itself, and IMC Canada and IMC Partnership jointly and severally represent and warrant for themselves, and only with respect to themselves, that as of the date hereof and after giving effect hereto: (i) no Default has occurred and is continuing; and (ii) each representation and warranty of IMC Kalium and IMC Canada and IMC Partnership, as applicable, set forth in the Agreement is true and correct as though made on and as of the date hereof. (b) The Guarantor represents and warrants that as of the date hereof and after giving effect hereto: (i) no Default has occurred and is continuing; and (ii) each representation and warranty of the Guarantor set forth in the Agreement is true and correct on and as of the date hereof. SECTION 7. Confirmation of Guarantee. The Guarantor hereby acknowledges and agrees to the foregoing amendments to the Agreement and expressly confirms that the guarantee provided by the Guarantor pursuant to Article 9 of the Agreement and the liability of the Guarantor thereunder remains in full force and effect notwithstanding the amendments to the Agreement made pursuant hereto. SECTION 8. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Province of Ontario. SECTION 9. Counterparts; Effectiveness. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Agent shall have received duly executed counterparts hereof signed by the Borrowers and the Guarantor and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC., as Guarantor By: /s/ E. Paul Dunn, Jr. Name: E. Paul Dunn, Jr. Title: Treasurer ROYAL BANK OF CANADA, as Agent By: /s/ Joan E. Carstairs Name: Joan E. Carstairs Title: Senior Manager ROYAL BANK OF CANADA, as Bank By: /s/ Glenn S. Graves Name: Glenn S. Graves Title: Senior Account Manager BANK OF MONTREAL, as Bank and Co-Agent By: /s/ Ian M. Plester Name: Ian M. Plester Title: Director FIRST CHICAGO NBD BANK, CANADA, as Bank By: /s/ T. Thomas Cheng Name: T. Thomas Cheng Title: First Vice President J.P. MORGAN CANADA, as Bank and Co-Agent By: /s/ John Maynard Name: John Maynard Title: Vice President and Controller THE CHASE MANHATTAN BANK OF CANADA, as Bank By: /s/ Christine Chan Name: Christine Chan Title: Vice President By: /s/ Ed Sustar Name: Ed Sustar Title: Vice President IMC KALIUM CANADA LTD., as Borrower By: /s/ Rose Marie Williams Name: Rose Marie Williams Title: Secretary INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED, as Borrower By: /s/ John U. Huber Name: John U. Huber Title: President INTERNATIONAL MINERALS & CHEMICAL (CANADA) LIMITED PARTNERSHIP, by its general partner, International Minerals & Chemical (Canada) Global Limited, as Borrower By: /s/ John U. Huber Name: John U. Huber Title: President EX-10.64 10 AMENDMENT NO. 4 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT EXHIBIT 10.64 Execution Copy AMENDMENT NO. 4 TO CANADIAN FIVE-YEAR CREDIT AGREEMENT AMENDMENT dated as of December 31, 1998 to the Five-Year Canadian Credit Agreement dated as of December 22, 1997 (as amended by Amendment No. 1 to Canadian Five-Year Credit Agreement dated as of March 31, 1998, Amendment No. 2 to Canadian Five-Year Credit Agreement dated as of August 31, 1998 and Amendment No. 3 to Canadian Five-Year Credit Agreement dated as of December 16, 1998, the "Agreement") among IMC Kalium Canada Ltd. ("IMC Kalium"), International Minerals & Chemical (Canada) Global Limited ("IMC Canada") and International Minerals & Chemical (Canada) Limited Partnership ("IMC Partnership") (collectively, the "Borrowers"), IMC Global Inc. (the "Guarantor"), the Banks listed on the signature pages hereof (the "Banks") and Royal Bank of Canada, as Agent (the "Agent"). WHEREAS the parties hereto desire to amend the Agreement as specified below; NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the sum of $1.00 now paid by each party to the other party and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties hereto agree as follows: 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. 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 Agreement shall from and after the date hereof refer to the Agreement as amended hereby. 2. Amendment of Definition of "Consolidated EBITDA". The following sentence is added to end of the definition of Consolidated EBITDA in Section 1. 1 of the Agreement: "For the purpose of calculating the Leverage Ratio for the purposes of Section 5.2(i) hereunder, Consolidated EBITDA shall (i) exclude the pre-tax non-recurring charges not in excess of U.S.$325,000,000 incurred by the Guarantor in, and reflected in the Guarantor's consolidated statement of income for, the fiscal year ended December 31, 1998 and (ii) disregard classification of the Guarantor's Agribusiness unit as a discontinued operation". 3. Representations and Warranties. (a) IMC Kalium represents and warrants for itself, and only with respect to itself, and IMC Canada and IMC Partnership jointly and severally represent and warrant for themselves, and only with respect to themselves, that as of the date hereof and after giving effect hereto: (b) no Default has occurred and is continuing; and (c) each representation and warranty of IMC Kalium and IMC Canada and IMC Partnership, as applicable, set forth in the Agreement is true and correct as though made on and as of the date hereof. (d) The Guarantor represents and warrants that as of the date hereof and after giving effect hereto. (e) no Default has occurred and is continuing; and (f) each representation and warranty of the Guarantor set forth in the Agreement is true and correct on and as of the date hereof. 4. Confirmation of Guarantee. The Guarantor hereby acknowledges and agrees to the foregoing amendments to the Agreement and expressly confirms that the guarantee provided by the Guarantor pursuant to Article 9 of the Agreement and the liability of the Guarantor thereunder remains in full force and effect notwithstanding the amendments to the Agreement made pursuant hereto. 5. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the Province of Ontario. 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 7. Effectiveness. This Amendment shall become effective as of the date hereof on the date when the following conditions are met (the "Amendment Effective Date"): (a) the Agent shall have received duly executed counterparts hereof signed by the Borrowers, the Guarantor and the Required Banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party); and (b) the Agent shall have received an amendment fee for the account of each Bank which shall have signed and delivered a permanent waiver with respect to this amendment on or before January 11, 1999, in an amount equal to 0.05% of such Bank's Commitment on January 11, 1999. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC., as Guarantor By:/s/ E. Paul Dunn, Jr. Name: E. Paul Dunn, Jr. Title: Vice President ROYAL BANK OF CANADA, as Agent By: /s/ Joan E. Carstairs Name: Joan E. Carstairs Title: Senior Manager ROYAL BANK OF CANADA, as Bank By: /s/L. J. Irwin Name: L. J. Irwin Title: BANK OF MONTREAL., as Bank and Co-Agent By: /s/ Ian M. Pfester Name: Ian M. Pfester Title: FIRST CHICAGO NBD BANK, CANADA, as Bank By: /s/ George R. Schanz Name: George R. Schanz Title: First Vice President J.P. MORGAN CANADA, as Bank and Co-Agent By: /s/ John Maynard Name: John Maynard Title: THE CHASE MANHATTAN BANK OF CANADA, as Bank By: /s/ Christine Chan Name: Christine Chan Title: By: /s/ Arun K. Berry Name: Arun K. Berry Title: IMC KALIUM CANADA LTD., as Borrower By: /s/ Rose Marie Williams Name: Rose Marie Williams Title: Secretary INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED, as Borrower By: /s/ John U. Huber Name: John U. Huber Title: President INTERNATIONAL MINERALS & CHEMICAL (CANADA) LIMITED PARTNERSHIP, by its general partner, International Minerals & Chemical (Canada) Global Limited, as Borrower By: /s/ John U. Huber Name: John U. Huber Title: President EX-10.68 11 AMENDMENT NUMBER 2 TO TRANSFER AND ADMINISTRATION AGREEMENT EXHIBIT 10.68 AMENDMENT NUMBER 2 TO TRANSFER AND ADMINISTRATION AGREEMENT AMENDMENT NUMBER 2 TO TRANSFER AND ADMINISTRATION AGREEMENT (this "Amendment"), dated as of June 26, 1998 among IMC-AGRICO RECEIV- ABLES COMPANY L.L.C., a Delaware limited liability company as trans- feror (the "Transferor"), IMC-AGRICO COMPANY, a general partnership formed under the laws of the State of Delaware, individually and 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"), amending that certain Transfer and Administration Agreement dated as of June 27, 1997 among the parties hereto, as amended to the date hereof (the "Transfer and Admin- istration Agreement"). WHEREAS, the Transferor has requested that the Company extend the Termination Date and subject to the terms and conditions set forth herein, the Company has agreed to such extension. NOW, THEREFORE, the parties hereby agree as follows: SECTION 1. Defined Terms. As used in this Amendment, and except as otherwise provided in this Section 1, capitalized terms shall have the same meanings assigned thereto in the Transfer and Administra- tion Agreement. SECTION 2. Amendments to Definitions. (a) Maximum Net Investment. The definition of "Maximum Net Investment" is hereby deleted and replaced with the following: "Maximum Net Investment" means (i) from and including June 26, 1998 through but not including June 30, 1998, $60,446,000, (ii) from and including June 30, 1998 through but not including July 20, 1998, $46,131,000, (iii) from and including July 20, 1998 through but not including August 8, 1998, $14,524,000, and (iv) on and after August 8, 1998, $0." (b) Termination Date. Clause (v) of the definition of "Termination Date" is hereby replaced with the following: "August 4, 1998, unless extended." SECTION 3. Amendment to Section 7.1. Clause (j) of Section 7.1 of the Transfer and administration Agreement is hereby amended to read as follows: "(j) The face amount of the outstanding Commercial Paper issued to fund the Net Investment shall exceed the Maximum Net Investment; or" SECTION 4. Representations and Warranties. The Transferor hereby makes to the Company, on and as of the date hereof, all of the representations and warranties set forth in Section 3.1 of the Transfer and Administration Agreement, except to the extent that any such representation or warranty specifically refers to an earlier date. In addition, the Collection Agent hereby makes to the Company, on the date hereof, all the representations and warranties set forth in Section 3.2 of the Transfer and Administration Agreement, except to the extent that any such representation or warranty specifically refers to an earlier date. SECTION 5. Limited Scope. This amendment is specific to the circumstances described above and does not imply any future amendment or waiver of rights allocated to the Company, the Transferor, the Collection Agent, IMC Agrico Company, the Seller, the Administrative Agent or the Collateral Agent under the Transfer and Administration Agreement. SECTION 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 7. Severability; Counterparts. This Amendment 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 instrument. Any provisions of this Amendment 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 provi- sion in any other jurisdiction. SECTION 8. Ratification. Except as expressly affected by the provisions hereof, the Transfer and Administration Agreement as amended shall remain in full force and effect in accordance with their terms and ratified and confirmed by the parties hereto. On and after the date hereof, each reference in the Transfer and Administration Agreement to "this Agreement", "hereunder", "herein" or words of like import shall mean and be a reference to the Transfer and Administration Agreement as amended by this Amendment. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment Number 2 as of the date first written above. ENTERPRISE FUNDING CORPORATION, as Company By: /s/ Stewart Cutler ---------------------------- Name: Stewart Cutler Title: Vice President 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: /s/ Bob Qualls ---------------------------- Name: Bob Qualls Title: Vice President IMC-AGRICO COMPANY, individually and as Collection Agent By: IMC-AGRICO MP, INC., its managing partner By: /s/ Bob Qualls ---------------------------- Name: Bob Qualls Title: Vice President EX-10.69 12 BILL OF SALE EXHIBIT 10.69 BILL OF SALE AND ASSIGNMENT OF ASSETS In consideration for the cancellation of the Subordinated Note made by IMC-Agrico Receivables Company L.L.C. ("Transferor") to the order of IMC-Agrico Company ("Transferee") dated as of June 27, 1997 and with the remainder as a distribution to Transferee as sole member of Transferor, Transferor does hereby sell, transfer, assign, convey and deliver to Transferee the "Purchased Assets" (as defined below). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Receivables Purchase Agreement among Transferee and Transferor dated as of June 27, 1997, as it may have been amended from time to time. For purposes of this Bill of Sale and Assignment of Assets, "Purchased Assets" shall mean all of Transferor's right, title and interest in, to and under (a) all Receivables of Transferor; (b) all Related Security with respect to such Receivables; (c) all Collections with respect to, and other proceeds of, such Receivables and Related Security; (e) all lock-boxes and lock-box accounts and amounts on deposit therein, and all related agreements between Transferor and the lock-box banks, in each case, to the extent related to or representing Collections of Receivables sold or contributed hereunder, or other proceeds thereof or of Related Security therefor and (f) all books and records relating to the foregoing. This Bill of Sale and Assignment of Assets shall be binding upon Transferor, its successors and assigns, and shall inure to the benefit of Transferee, its successors and assigns. IN WITNESS WHEREOF, Transferor has caused this instrument to be duly executed and delivered as of September 30, 1998. IMC-AGRICO RECEIVABLES COMPANY L.L.C., as Transferor By: IMC-Agrico Company, its Operating Manager By: IMC-Agrico MP, Inc., its managing general partner By: /s/ J. Bradford James Name: J. Bradford James Title: Vice President Agreed and accepted this 30th day of September, 1998: IMC-AGRICO COMPANY, as Transferee By: IMC-Agrico MP, Inc., its managing general partner By: /s/ J. Bradford James EX-10.73 13 AMENDMENT NO. 1 TO 364-DAY CREDIT AGREEMENT EXHIBIT 10.73 CONFORMED COPY AMENDMENT NO. 1 TO 364-DAY CREDIT AGREEMENT AMENDMENT dated as of December 31, 1998 to the 364-Day Credit Agreement dated as of April 1, 1998 (the "Credit Agreement") among IMC GLOBAL INC., the BANKS, MANAGING AGENTS and CO-AGENTS listed on the signature pages thereof, ROYAL BANK OF CANADA, as Documentation Agent, THE CHASE MANHATTAN BANK and NATIONSBANK, N.A., as Co-Syndication Agents, BANK OF MONTREAL, as Administrative Agent, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Senior Managing Agent. The parties hereto agree as follows: SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. 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 Credit Agreement shall, after this Amendment becomes effective, refer to the Credit Agreement as amended hereby. SECTION 2. Amendment of Section 5.12. Calculations of the Leverage Ratio shall (i) exclude the pretax nonrecurring charges not in excess of $325,000,000 incurred by the Company in, and reflected in the Company's consolidated statement of income for, the fiscal year ended December 31, 1998 and (ii) disregard classification of the Company's Agribusiness unit as a discontinued operation. SECTION 3. Representations of Company. The Company represents and warrants that (i) the representations and warranties of the Company set forth in Article 4 of the Credit Agreement will be true on and as of the Amendment Effective Date and (ii) no Default will have occurred and be continuing on such date. SECTION 4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 5. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. SECTION 6. Effectiveness. This Amendment shall become effective as of the date hereof on the date when the following conditions are met (the "Amendment Effective Date"): (a) the Senior Managing Agent shall have received from each of the Borrower and the Required Banks a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof; and (b) the Senior Managing Agent shall have received an amendment fee for the account of each Bank which shall have timely signed and delivered a counterpart hereof in accordance with clause (a) in an amount equal to 0.02% of such Bank's Commitment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. IMC GLOBAL INC. By /s/ E. Paul Dunn, Jr. Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Robert Bottamedi Title: Vice President THE CHASE MANHATTAN BANK By /s/ James H. Ramage Title: Vice President NATIONSBANK, N.A. By /s/ G. Burton Queen Title: Managing Director ROYAL BANK OF CANADA By /s/ Gordon MacArthur Title: Manager BANK OF MONTREAL By /s/ Ian M. Plester Title: Director BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ G. Burton Queen Title: Managing Director THE BANK OF NEW YORK By /s/ John M. Lokay, Jr. Title: Vice President CREDIT AGRICOLE INDOSUEZ By /s/ Katherine L. Abbott Title: First Vice President By /s/ David Bouhl Title: F.V.P., Head of Corporate Banking Chicago CREDIT LYONNAIS CHICAGO BRANCH By /s/ Julie T. Kanak Title: Vice President ABN-AMRO BANK N.V. By /s/ Scott J. Albert Title: Vice President By /s/ Darin P. Fischer Title: Assistant Vice President BANCA NAZIONALE DEL LAVORO, S.p.A., NEW YORK BRANCH By /s/ Miguel Medida Title: Vice President By /s/ Leonardo Valentini Title: First Vice President THE BANK OF TOKYO - MITSUBISHI, LTD. CHICAGO BRANCH By /s/ Hajime Watanabe Title: Deputy General Manager BANQUE NATIONALE DE PARIS By /s/ Arnaud Collin du Bocage Title: Executive Vice President and General Manager CREDIT SUISSE FIRST BOSTON By /s/ Douglas E. Maher Title: Vice President By /s/ James P. Moran Title: Director THE FIRST NATIONAL BANK OF CHICAGO By /s/ Kenneth J. Fatur Title: Vice President FIRST UNION NATIONAL BANK By /s/ Kristen M. Denning Title: Assistant Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED By /s/ Tohru Yasumaru Title: Deputy General Manager MARINE MIDLAND BANK By /s/ Steve Trepiccione Title: Vice President -Officer #9435 MELLON BANK, N.A. By /s/ John K. Walsh Title: Vice President SOCIETE GENERALE By /s/ Paul Dalle Molle Title: Managing Director Head of Midwest Region THE SUMITOMO BANK, LIMITED By /s/ John H. Kemper Title: Senior Vice President TORONTO DOMINION (TEXAS), INC. By /s/ Carol Brandt Title: Vice President THE NORTHERN TRUST COMPANY By /s/ Michelle M. Teteak Title: Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By /s/Armund J. Schoen, Jr. Title: Senior Vice President EX-10.74 14 45,000,000 REVOLVING LOAN AGREEMENT EXHIBIT 10.74 Conformed Copy HARRIS CHEMCIAL EUROPE LTD NAMSCO (UK) LTD SALT UNION LIMITED Original Borrowers IMC GLOBAL INC. IMC INORGANIC CHEMICALS INC. Guarantors CHASE MANHATTAN plc Arranger CHASE MANHATTAN INTERNATIONAL LIMITED Agent And OTHERS ================================================================== 45,000,000 REVOLVING LOAN AGREEMENT ================================================================== CONTENTS CLAUSE PAGE 1. Definitions And Interpretation 1 2. The Facility 14 3. Utilisation Of The Facility 15 4. Payment And Calculation Of Interest 16 5. Market Disruption And Alternative Interest Rates 16 6. Notification 18 7. Repayment 18 8. Cancellation And Prepayment 18 9. Taxes 19 10. Tax Receipts 21 11. Increased Costs 22 12. Illegality 23 13. Mitigation 23 14. Representations And Warranties 24 15. Covenants 28 16. Events Of Default 37 17. Guarantee And Indemnity 40 18. Commitment Commission And Fees 42 19. Costs And Expenses 43 20. Default Interest And Break Costs 44 21. Borrowers' Indemnities 45 22. Currency Of Account And Payment 46 23. Payments 46 24. Set-Off 47 25. Sharing 47 26. The Agent, The Arranger And The Banks 48 27. Assignments And Transfers 53 28. Economic And Monetary Union 55 29. Calculations And Evidence Of Debt 57 30. Remedies And Waivers, Partial Invalidity 58 31. Notices 58 32. Counterparts 59 33. Amendments 59 34. Additional Borrowers 60 35. Governing Law 60 36. Jurisdiction 60 Schedule 1 The Banks 63 Schedule 2 Form Of Transfer Certificate 64 Schedule 3 Conditions Precedent 67 Schedule 4 Notice Of Drawdown 68 Schedule 5 Determination Of Margin And Commitment Commission 69 Schedule 6 Deed Of Accession 71 THIS AGREEMENT is made on 18 December 1998 BETWEEN (1) HARRIS CHEMICAL EUROPE LTD (registered no. 3107016), NAMSCO (UK) LTD (registered no. 2654680) and SALT UNION LIMITED (registered no. 2654529) (each, an "Original Borrower"); (2) IMC GLOBAL INC. and IMC INORGANIC CHEMICALS INC. (formerly Harris Chemical Group Inc.) (each, a "Guarantor"); (3) CHASE MANHATTAN plc as arranger of the Facility (the "Arranger"); (4) CHASE MANHATTAN INTERNATIONAL LIMITED as agent for the Banks (the "Agent"); and (5) THE BANKS (as defined below). IT IS AGREED as follows. 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement: "Acquisition" means an acquisition by an Obligor or any of its Consolidated Subsidiaries of a company, a division, a location or a line of business or of all or substantially all of the assets of any of the foregoing. "Advance" means an advance made or to be made by the Banks hereunder. "Additional Borrower" means any company which has executed and delivered to the Agent a Deed of Accession pursuant to Clause 34 (Additional Borrowers). "Affiliate" means (i) any person that directly, or indirectly through one or more intermediaries, controls the Company (a "Controlling Person") or (ii) any person (other than the Company or a subsidiary of the Company) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to vote 10 per cent. or more of any class of voting securities of a person or to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise. "Agrico" means IMC-Agrico Company, a Delaware general partnership. "Associated Costs Rate" means, in relation to each Advance or Unpaid Sum, the percentage rate from time to time determined by the Agent (in its reasonable discretion) as reflecting the cost, loss or difference in return which would be suffered or incurred by the Agent (and/or any Bank as it may from time to time reasonably determine) (if the Agent or any Bank funded such Advance or Unpaid Sum) as a result of: (a) funding (at LIBOR and on a match funded basis) any special deposit or cash ratio deposit required to be placed with the Bank of England (or any other authority which replaces all or any of its functions); and/or (b) any charge imposed by the Financial Services Authority (or any other authority which replaces all or any of its functions), in respect of Eligible Liabilities (assuming these to be in excess of any stated minimum) which relate to funding such Advance or Unpaid Sum. "Authorised Signatory" means, in relation to an Obligor, any person who is duly authorised (in such manner as may be reasonably acceptable to the Agent) and in respect of whom the Agent has received a certificate signed by a director or another Authorised Signatory of such Obligor setting out the name and signature of such person and confirming such person's authority to act. "Available Commitment" means, in relation to a Bank at any time and save as otherwise provided herein, its Commitment at such time less the aggregate of its portions of the Advances which are then outstanding, provided that such amount shall not be less than zero. "Available Facility" means, at any time, the aggregate amount of the Available Commitments adjusted, in the case of any proposed drawdown, so as to take into account: (a) any reduction in the Commitment of a Bank pursuant to the terms hereof; (b) any Advance which, pursuant to any other drawdown, is to be made; and (c) any Advance which is due to be repaid, on or before the proposed drawdown date. "Bank" means any financial institution: (a) named in Schedule 1 (The Banks); or (b) which has become a party hereto in accordance with Clause 27.5 (Assignments by Banks) or Clause 27.6 (Transfers by Banks), and which has not ceased to be a party hereto in accordance with the terms hereof. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan which is maintained or otherwise contributed to by any member of the ERISA Group. "Borrower" means each Original Borrower and each Additional Borrower. "BoS Cross Guarantee" means the document under which each of HCEL, NAMSCO (UK) Ltd and Salt Union Limited grant a cross guarantee to the Bank of Scotland in support of the bank overdraft facility, in aggregate amount of 4,000,000, extended to them by the Bank of Scotland. "Business Day" means a day (other than a Saturday or Sunday) on which commercial banks generally are open for business in London and Chicago. "Commitment" means, in relation to a Bank at any time and save as otherwise provided herein, the amount set opposite its name in Schedule 1 (The Banks). "Company" means IMC Global Inc., a Delaware corporation. "Consolidated Net Worth" means in relation to an Obligor at any date, the consolidated shareholders' equity of the Obligor and its Consolidated Subsidiaries determined as of such date (other than any amount attributable to stock which is required to be redeemed or is redeemable at the option of the holder, if certain events or conditions occur or exist or otherwise.) "Consolidated Subsidiary" means, for any person, at any date any subsidiary or other entity the accounts of which would be consolidated with those of such person in its consolidated financial statements if such statements were prepared as at such date. "Debt" of any person means at any date, without duplication, (i) all obligations of such person for borrowed money, (ii) all obligations of such person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such person to pay the deferred purchase price of property or services, except trade accounts payable and similar items arising in the ordinary course of business, (iv) all obligations of such person as lessee which are capitalised in accordance with generally accepted accounting principles, (v) all non-contingent obligations (and, for purposes of Clause 15.11 (Negative Pledge) and the definition of "Material Financial Obligations", all contingent obligations) of such person to reimburse any bank or other person in respect of amounts paid under a letter of credit or similar instrument, (vi) all Debt secured by an Encumbrance on any asset of such person, whether or not such Debt is otherwise an obligation of such person, provided that the amount of such Debt treated as Debt of such person solely pursuant to this sub-clause (vi) shall not exceed the greater of the book value or the fair market value of the collateral, and (vii) all Debt of others guaranteed by such person. For purposes of sub-clause (v) above, a reimbursement obligation in respect of a letter of credit or similar instrument is contingent unless and until there has been a drawing under such letter of credit or instrument. "Deed of Accession" means a deed substantially in the form of Schedule 6 (Deed of Accession). "Derivatives Obligations" of any person means all obligations of such person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions. "Eligible Liabilities" means eligible liabilities as defined under or pursuant to the Bank of England Act 1998 or by the Bank of England (as may be appropriate) for the time being. "Encumbrance" means a mortgage, charge, pledge, security interest, lien or other encumbrance securing any obligation of any person or any other type of preferential arrangement (including any title transfer and retention arrangement but excluding any banker's right of set-off) having a similar effect. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgements, orders, decrees, permits, concessions, grants, franchises, licences, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ERISA" means at any date, the Employee Retirement Income Security Act 1974 (US) and the regulations promulgated and rulings issued thereunder, as the same shall be in effect on such date. "ERISA Group" means the Company, any subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. "Event of Default" means any circumstance described as such in Clause 16 (Events of Default). "Facility" means the sterling revolving loan facility granted to the Borrowers in this Agreement. "Facility Office" means in relation to the Agent, the office identified with its signature below or such other office as it may select by notice and, in relation to any Bank, the office notified by it to the Agent in writing prior to the date hereof (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) or such other office as it may from time to time select by notice to the Agent. "Final Maturity Date" means the day which is 60 months after the date hereof. "Finance Parties" means the Agent, the Arranger and the Banks. "Group" means the Company and its subsidiaries from time to time. "Guarantee" means any, guarantee, indemnity, bond, letter of credit, legally binding letter of comfort or suretyship. It includes any other obligation or irrevocable offer (whatever called and of whatever nature): (a) to pay or purchase; (b) to provide funds (whether by the advance of money, the purchase of or subscription for shares or other securities, the purchase of assets, rights or services, or otherwise) for the payment or discharge of: (c) to indemnify against the consequences of default of the payment of: (d) to be responsible otherwise for, an obligation or debt of another person, a dividend, distribution, capital or premium on shares, stock or other interests, or the solvency or financial condition of another person. "Harris Chemical Acquisition" means, collectively, the merger of IMC Inorganic Chemicals Inc. with and into IMC Merger Sub Inc., a wholly-owned subsidiary of the Company, with IMC Inorganic Chemicals Inc. as the successor thereto, pursuant to the certain Agreement and Plan of Merger, dated 11 December 1997, by and among the Company, IMC Merger Sub, Inc. and IMC Inorganic Chemicals Inc., and the acquisition, directly or indirectly, by the Company of all of the outstanding shares of Harris Chemical Australia Pty Limited pursuant to the Sale and Purchase Agreement made as of 11 December 1997 among Prudential Asset Management Asia Limited, DGHA persons and Trusts named therein, Search Investment NV, Harris Chemical Australia Pty Limited, Marsupial L.L.C., Marsupial-II L.L.C., Soda Ash (L) BHD, Manager Shareholders named therein and the Company. "Harris Chemical Europe Group" means HCEL, NAMSCO (UK) Ltd, Salt Union Limited and any other subsidiary of HCEL from time to time other than Harris Soda Products (Europe) SAS, Harris Inorganic Chemicals BV, Societa Chimica Larderello SpA and Matthes & Weber GmbH. "HCEL" means Harris Chemical Europe Ltd. "Information Memorandum" means the document concerning the Obligors which, at their request and on their behalf, was prepared in relation to this transaction and distributed by the Arrangers to selected banks during November 1998. "Instructing Group" means: (a) whilst no Advances are outstanding, a Bank or Banks whose Commitments amount (or, if each Bank's Commitment has been reduced to zero, did immediately before such reduction to zero, amount) in aggregate to more than two thirds of the Total Commitments; and (b) whilst at least one Advance is outstanding, a Bank or Banks to whom in aggregate more than two thirds of the Loan is owed. "Inter-Company Loans" means, collectively: (a) that certain Note dated 21 July 1998, issued by Salt Union Limited to the Company in principal amount of 33,700,000; (b) that certain Note dated 29 July 1998, issued by Salt Union Limited to the Company in principal amount of 32,338,356; (c) that certain Revolving Note dated 27 August 1998, issued by Salt Union Limited to the Company in principal amount of 10,000,000; (d) that certain Subordinated Revolving Note dated on or about the date of this Agreement, issued by either HCEL or Salt Union Limited to the Company in principal amount of 40,000,000; and (e) that certain Subordinated Note dated on or about the date of this Agreement, issued by Salt Union Limited to the Company in principal amount of 2,559,701.58. "LIBOR" means, in relation to any amount owed by an Obligor hereunder on which interest for a given period is to accrue: (a) the percentage rate per annum equal to the offered quotation which appears on the page of the Telerate Screen which displays an average British Bankers Association Interest Settlement Rate for sterling (being currently "3750") or the currency of any Unpaid Sum for such period at or about 11.00 a.m. on the Quotation Date for such period or, if such page or such service shall cease to be available, such other page or such other service for the purpose of displaying an average British Bankers Association Interest Settlement Rate for sterling (or the currency of such Unpaid Sum) as the Agent, after consultation with the Banks and with the approval of the Company (not to be unreasonably withheld or delayed), shall select; or (b) if no quotation for sterling (or the currency of such Unpaid Sum) and the relevant period is displayed and the Agent has not selected an alternative service on which a quotation is displayed, the arithmetic mean (rounded upwards to four decimal places) of the rates (as notified to the Agent) at which each of the Reference Banks was offering to prime banks in the London Interbank Market deposits in sterling (or the currency of such Unpaid Sum) for such period at or about 11.00 a.m. on the Quotation Date for such period. "Loan" means the aggregate principal amount for the time being outstanding hereunder. "Margin" means the rate calculated in accordance with Schedule 5 (Determination of Margin and Commitment Commission). "Material Adverse Effect" means a material adverse effect on (a) the business, financial position or results of operations of the Group taken as a whole; (b) the ability of an Obligor to perform its obligations under this Agreement; or (c) the validity or enforceability of this Agreement or the rights or remedies of any Finance Party hereunder. "Material Financial Obligations" means: (a) in relation to the Guarantors, a principal or face amount of Debt and/or payment or collateralisation obligations in respect of Derivatives Obligations of the Guarantors and/or one or more of their subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $100,000,000 (or its equivalent); and (b) in relation to the Harris Chemical Europe Group, a principal or face amount of Debt and/or payment or collateralisation obligations in respect of Derivatives Obligations of the Harris Chemical Europe Group, arising in one or more related or unrelated transactions, exceeding in the aggregate $8,000,000 (or its equivalent). "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Material Subsidiary" means, at any date: (a) any subsidiary having (i) at least 5 per cent of the total consolidated assets of the Group (determined as of the last day of the fiscal quarter of such person most recently ended on or prior to such date) or (ii) at least 5 per cent of Consolidated EBITDA for four consecutive fiscal quarters most recently ended on or prior to such date; or (b) collectively, any one or more subsidiaries having (i) at least 10 per cent. of the total consolidated assets of the Group (determined as of the last day of the fiscal quarter of such persons most recently ended on or prior to such date) or (ii) at least 10 per cent of Consolidated EBITDA for four consecutive fiscal quarters most recently ended on or prior to such date. For the purposes of this definition, the term "Consolidated EBITDA" shall have the meaning given to it in sub-clause 15.13.2 of Clause 15.13 (Leverage Ratio). "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group either (i) is then making or accruing an obligation to make contributions or (ii) has within the preceding five plan years made contributions, including for these purposes any person which was at the time such contribution was made a member of the ERISA Group. "Notice of Drawdown" means a notice substantially in the form set out in Schedule 4 (Notice of Drawdown). "Obligor" means each Borrower and each Guarantor. "Obligors' Representations and Warranties" means in relation to each Obligor other than the Company, the representations and warranties set out in Clauses 14.2 (Corporate and Governmental Authorisation), 14.3 (Binding Effect), 14.4.4, 14.6 (Compliance with Laws), 14.9 (Existence and Corporate Power of Obligors) and Clauses 14.12 (Year 2000) to 14.16 (No Deduction or Withholding), inclusive. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any person which was at such time a member of the ERISA Group for employees of any person which was at such time a member of the ERISA Group. "Potential Event of Default" means any event which shall have occurred and be continuing and which is reasonably likely to become (with the passage of time, the giving of notice, the making of any determination hereunder or any combination thereof) an Event of Default. "Proportion" means, in relation to a Bank: (a) whilst no Advances are outstanding, the proportion borne by its Commitment to the Total Commitments (or, if the Total Commitments are then zero, by its Commitment to the Total Commitments immediately prior to their reduction to zero); or (b) whilst at least one Advance is outstanding, the proportion borne by its share of the Loan to the Loan. "Qualifying Lender" means: (a) a bank or financial institution which is entitled to receive payments of interest hereunder free of withholding or deduction for or on account of United Kingdom tax under Section 349(3)(a) of the Income and Corporation Taxes Act 1988; or (b) a Treaty Lender. "Quotation Date" means, in relation to any period for which an interest rate is to be determined hereunder, the day on which quotations would ordinarily be given by prime banks in the London Interbank Market for deposits in sterling (or the currency of any Unpaid Sum) for delivery on the first day of that period, provided that, if, for any such period, quotations would ordinarily be given on more than one date, the Quotation Date for that period shall be the last of those dates. "Reference Banks" means the principal London offices of The Chase Manhattan Bank, Midland Bank plc and Lloyds Bank Plc or such banks as may be appointed as such by the Agent with the approval of the Company (not to be unreasonably withheld or delayed). "Repayment Date" means, in relation to any Advance, the last day of its Term. "Repeated Representations" means: (a) in relation to the Company, each of the representations (except, in relation to a Rollover Advance, the representation set out in sub-clauses 14.4.3 of Clause 14.4 (Financial Information)) set out in Clause 14.1 (Corporate Existence and Power) to Clause 14.12 (Year 2000), inclusive; and (b) in relation to each other Obligor, each of the representations set out in Clauses 14.2 (Corporate and Governmental Authorisation), 14.3 (Binding Effect), 14.4.4, 14.6 (Compliance with Laws), 14.9 (Existence and Corporate Power of Other Obligors) and 14.12 (Year 2000). "Rollover Advance" means an Advance which is used to refinance a maturing Advance and which is in the same amount as such maturing Advance and is to be drawn on the day such maturing Advance is to be repaid. "Subordination Deed" means the document of that name dated on or before the date of this Agreement between the Company, HCEL, Salt Union Limited and the Agent. "Substantial Assets" means, in relation to a Guarantor or the Harris Chemical Europe Group, assets sold or otherwise disposed of in a single transaction or a series of related transactions representing 25 per cent. or more of the consolidated assets of the Guarantor and its Consolidated Subsidiaries (taken as a whole), or the Harris Chemical Europe Group (as the case may be). "Term" means, save as otherwise provided herein: (a) in relation to any Advance, the period for which such Advance is borrowed as specified in the Notice of Drawdown relating thereto; and (b) in relation to an Unpaid Sum, any of those periods mentioned in Clause 20.1 (Default Interest Periods). "Total Commitments" means, at any time, the aggregate of the Banks' Commitments. "Transfer Certificate" means a certificate substantially in the form set out in Schedule 2 (Form of Transfer Certificate) signed by a Bank and a Transferee under which: (a) such Bank seeks to procure the transfer to such Transferee of all or a part of such Bank's rights, benefits and obligations hereunder upon and subject to the terms and conditions set out in Clause 27.3 (Assignments and Transfers by Banks); and (b) such Transferee undertakes to perform the obligations it will assume as a result of delivery of such certificate to the Agent as contemplated in Clause 27.6 (Transfers by Banks). "Transfer Date" means, in relation to any Transfer Certificate, the date for the making of the transfer as specified in such Transfer Certificate. "Transferee" means a person to which a Bank seeks to transfer by novation all or part of such Bank's rights, benefits and obligations hereunder. "Treaty Lender" means a bank or financial institution which is resident (as such term is defined in the appropriate double taxation treaty) in a country with which the United Kingdom has an appropriate double taxation treaty giving residents of that country complete exemption from United Kingdom tax on interest and which does not carry on business in the United Kingdom at or through a permanent establishment with which the interest is paid is effectively connected. For the purpose of this definition, "double taxation treaty" means any convention or agreement between the government of the United Kingdom and any other government for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA (or other applicable standard), exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "United States" means the United States of America, including the States and District of Columbia, but excluding its territories and possessions. "Unpaid Sum" means the unpaid balance of any of the sums referred to in Clause 20.1 (Default Interest Periods). "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such person, even if the right so to vote has been suspended by the happening of such a contingency. 1.2 Interpretation Any reference in this Agreement to: "continuing", in relation to an Event of Default, shall be construed as a reference to an Event of Default which has not been waived in accordance with the terms hereof and, in relation to a Potential Event of Default, one which has not been remedied within the relevant grace period or waived in accordance with the terms hereof; a "Guarantor and its subsidiaries" shall be construed as a reference to the Guarantor and each of its subsidiaries from time to time other than any member of the Harris Chemical Europe Group; a "holding company" of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary; "indebtedness" shall be construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; a "law" shall be construed as any law (including common or customary law), statute, constitution, decree, judgement, treaty, regulation, directive, by-law, order or any other legislative measure of any government, supranational, local government, statutory or regulatory body or court; a "month" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that: (a) if any such numerically corresponding day is not a Business Day, such period shall end on the immediately succeeding Business Day to occur in that next succeeding calendar month or, if none, it shall end on the immediately preceding Business Day; and (b) if there is no numerically corresponding day in that next succeeding calendar month, that period shall end on the last Business Day in that next succeeding calendar month, (and references to "months" shall be construed accordingly); a "person" shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing; "repay" (or any derivative form thereof) shall, subject to any contrary indication, be construed to include "prepay" (or, as the case may be, the corresponding derivative form thereof); a "subsidiary" of a company or corporation shall be construed as a reference to any company or corporation: (a) which is controlled, directly or indirectly, by the first-mentioned company or corporation; (b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or (c) which is a subsidiary of another subsidiary of the first-mentioned company or corporation, and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body; a "successor" shall be construed so as to include an assignee or successor in title of such party and any person who under the laws of its jurisdiction of incorporation or domicile has assumed the rights and obligations of such party under this Agreement or to which, under such laws, such rights and obligations have been transferred; "tax" shall be construed so as to include any tax, levy, impost, duty or other charge of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same); "VAT" shall be construed as a reference to value added tax including any similar tax which may be imposed in place thereof from time to time; a "wholly-owned subsidiary" of a company or corporation shall be construed as a reference to any company or corporation which has no other members except that other company or corporation and that other company's or corporation's wholly-owned subsidiaries or persons acting on behalf of that other company or corporation or its wholly-owned subsidiaries; and the "winding-up", "dissolution" or "administration" of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors. 1.3 Currency Symbols "sterling" denotes lawful currency of the United Kingdom and "$" and "dollars" denote the lawful currency of the United States. 1.4 Agreements and Statutes Any reference in this Agreement to: 1.4.1 this Agreement or any other agreement or document shall be construed as a reference to this Agreement or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented; 1.4.2 a statute or to a provision of a statute shall be construed as a reference to a modification or re- enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it; and 1.4.3 a treaty shall be construed as a reference to it as modified from time to time. 1.5 Headings Clause and Schedule headings are for ease of reference only. 1.6 Time Any reference in this Agreement to a time of day shall, unless a contrary indication appears, be a reference to London time. 1.7 Parts of Speech Where: 1.7.1 a word or phrase is defined, its other grammatical forms have a corresponding meaning; and 1.7.2 anything is mentioned after "include", "includes" or "including", it does not limit what else might be included. 1.8 Accounting Terms and Determinations 1.8.1 In relation to each Obligor and save as provided herein: (a) all accounting terms used herein shall be interpreted; (b) all accounting determinations hereunder shall be made; and (c) all financial statements required to be delivered hereunder shall be prepared in accordance with, generally accepted accounting principles as in effect from time to time in the place of incorporation of the relevant Obligor (and any jurisdiction in which it carries on business), applied on a basis consistent in all material respects (except for changes agreed with the Obligor's auditor) with the most recent audited (and consolidated where applicable) financial statements of the Obligor and its Consolidated Subsidiaries. 1.8.2 If at any time an Obligor notifies the Agent that it wishes to amend any covenant in Clause 15 (Covenants) to eliminate the effect of any change in generally accepted accounting principles in its place of incorporation (and any jurisdiction in which it carries on business) on the operation of such covenant (or if the Agent notifies an Obligor that an Instructing Group wishes to amend Clause 15 (Covenants) for such purpose), then the relevant Obligor's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either: (a) such notice is withdrawn; or (b) such covenant is amended in a manner satisfactory to the Obligor and the Instructing Group, and the parties hereto agree to enter into negotiations in good faith in order to amend such provisions in a credit-neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating the financial condition and performance of the relevant Obligor and its Consolidated Subsidiaries shall be the same after such changes as if such changes had not been made. 1.9 Parties A reference to a party to this Agreement or any other document includes that person's successors and permitted substitutes and assigns. 1.10 Economic and Monetary Union Definitions In Clause 28 (Economic and Monetary Union) and in each other provision of this Agreement to which reference is made in Clause 28 (Economic and Monetary Union) expressly or impliedly: "Commencement Date" means the date of commencement of the third stage of EMU (at the date of this Agreement expected to be 1 January 1999) or on which circumstances arise which (in the opinion of an Instructing Group) have substantially the same effect and result in substantially the same consequences as commencement of the third stage of EMU as contemplated by the Treaty on European Union. "EMU" means Economic and Monetary Union as contemplated in the Treaty on European Union. "EMU legislation" means legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the implementation of the third stage of EMU. "euro" means the single currency of participating member states of the European Union. "euro unit" means the currency unit of the euro. "national currency unit" means the unit of currency (other than a euro unit) of a participating member state. "participating member state" means each state so described in any EMU legislation. "Treaty on European Union" means the Treaty of Rome of 25 March 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on 7 February 1992 and came into force on 1 November 1993). 2. THE FACILITY 2.1 Grant of the Facility The Banks grant to the Borrowers, upon the terms and subject to the conditions hereof, a sterling revolving loan facility in an aggregate principal amount, save as provided herein, of up to 45,000,000. 2.3 Purpose and Application The Facility is intended for general corporate purposes, including repayment of the Inter-Company Loans (subject to Clause 15.17 (Subordination of Inter-Company Loans)) and any bank overdraft facility. Accordingly, each Borrower shall apply all amounts raised by it hereunder in or towards satisfaction of its general corporate financing requirements including the refinancing of the Inter-Company Loans. No Finance Party shall be obliged to concern itself with such application. 2.4 Conditions Precedent Save as the Banks may otherwise agree, no Borrower may deliver any Notice of Drawdown unless the Agent has confirmed to the Borrowers and the Banks that it has received all of the documents and other evidence listed in Schedule 3 (Conditions Precedent) and that each is, in form and substance, reasonably satisfactory to the Agent. 2.5 Banks' Obligations Several The obligations of each Bank are several and the failure by a Bank to perform its obligations hereunder shall not affect the obligations of an Obligor towards any other party hereto nor shall any other party be liable for the failure by such Bank to perform its obligations hereunder. 2.6 Banks' Rights Several The rights of each Bank are several and any debt arising hereunder at any time from an Obligor to any of the other parties hereto shall be a separate and independent debt. Each such party shall be entitled to protect and enforce its individual rights arising out of this Agreement independently of any other party (so that it shall not be necessary for any party hereto to be joined as an additional party in any proceedings for this purpose). 3. UTILISATION OF THE FACILITY 3.1 Delivery of Notice of Drawdown Each Borrower may from time to time request the making of an Advance by the delivery to the Agent, by 10 a.m. not more than ten nor less than two Business Days before the proposed date for the making of such Advance, of a completed Notice of Drawdown. 3.2 Drawdown Details Each Notice of Drawdown delivered to the Agent pursuant to Clause 3.1 (Delivery of Notice of Drawdown) shall specify: 3.2.1 the proposed date for the making of the Advance requested, which shall be a Business Day falling one month or more before the Final Maturity Date; 3.2.2 the amount of the Advance requested, which shall be (a) (if less than the Available Facility) a minimum amount of 3,000,000 and an integral multiple of 1,000,000 or (b) equal to the amount of the Available Facility; 3.2.3 the proposed Term of the Advance requested, which shall be a period of one, two, three or six months or such other period as the Banks may agree ending on or before the Final Maturity Date; and 3.2.4 the account to which the proceeds of the proposed drawdown are to be paid. 3.3 Drawdown Conditions If a Borrower requests an Advance in accordance with the preceding provisions of this Clause 3 and, on the proposed date for the making of such Advance: 3.3.1 (save in relation to a Rollover Advance) neither of the events mentioned in sub-clauses 5.1.1 and 5.1.2 of Clause 5.1 (Market Disruption) shall have occurred; 3.3.2 such Advance will not exceed the Available Facility on that date or on the date on which the Term of such Advance is due to expire; and 3.3.3 on and as of the proposed date for the making of such Advance (i) no Event of Default or (save in relation to a Rollover Advance) Potential Event of Default is continuing and (ii) the Repeated Representations are true in all material respects, then, save as otherwise provided herein, such Advance will be made in accordance with the provisions hereof. 3.4 Each Bank's Participation Each Bank will participate through its Facility Office in each Advance made pursuant to this Clause 3 in the proportion borne by its Available Commitment to the Available Facility immediately prior to the making of that Advance. 3.5 Reduction of Available Commitment If a Bank's Commitment is reduced in accordance with the terms hereof after the Agent has received the Notice of Drawdown for an Advance and such reduction was not taken into account in the Available Facility, then the amount of that Advance shall be reduced accordingly. 4. PAYMENT AND CALCULATION OF INTEREST 4.1 Payment of Interest On the Repayment Date relating to each Advance (and, if the Term of such Advance exceeds six months, on the expiry of each period of six months during such Term) the relevant Borrower shall pay accrued interest on that Advance. 4.2 Calculation of Interest The rate of interest applicable to an Advance from time to time during its Term shall be the rate per annum which is the sum of the Margin at such time, the Associated Costs Rate at such time and LIBOR on the Quotation Date therefor. 5. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES 5.1 Market Disruption If, in relation to any Advance or Unpaid Sum: 5.1.1 LIBOR is to be determined by reference to Reference Banks and at or about 11.00 a.m. on the Quotation Date for the relevant Term none or only one of the Reference Banks supplies a rate for the purpose of determining LIBOR for the relevant Term; or 5.1.2 before the close of business in London on the Quotation Date for such Advance or Unpaid Sum the Agent has been notified by a Bank or each of a group of Banks to whom in aggregate fifty per cent. or more of such Advance if made would be owed (or such Unpaid Sum is owed) that, due to circumstances affecting the London Interbank Market generally, the LIBOR rate does not accurately reflect the cost of funding its participation in such Advance or Unpaid Sum, then, the Agent shall notify the other parties hereto of such event and, notwithstanding anything to the contrary in this Agreement, Clause 5.2 (Substitute Term and Interest Rate) shall apply to such Advance (if it is a Rollover Advance) or Unpaid Sum. If sub-clause 5.1.1 or 5.1.2 of this Clause 5.1 applies to a proposed Advance, such Advance other than a Rollover Advance shall not be made. 5.2 Substitute Term and Interest Rate If sub-clause 5.1.1 of Clause 5.1 (Market Disruption) applies to a Rollover Advance, the duration of the relevant Term shall be one month or, if less, such that it shall end on the Final Maturity Date. If either sub-clause 5.1.1 or 5.1.2 of Clause 5.1 (Market Disruption) applies to a Rollover Advance or an Unpaid Sum, the rate of interest applicable to such Rollover Advance or Unpaid Sum during the relevant Term shall (subject to any agreement reached pursuant to Clause 5.3 (Alternative Rate)) be the rate per annum which is the sum of: 5.2.1 the Margin at such time; 5.2.2 the Associated Costs Rate at such time; and 5.2.3 the rate per annum notified to the Agent by such Bank before the last day of such Term to be that which expresses as a percentage rate per annum the cost to such Bank of funding from whatever sources it may reasonably select its portion of such Rollover Advance or Unpaid Sum during such Term. 5.3 Alternative Rate If (a) either of those events mentioned in sub-clauses 5.1.1 and 5.1.2 of Clause 5.1 (Market Disruption) occurs in relation to an Advance or Unpaid Sum or (b) by reason of circumstances affecting the London Interbank Market during any period of three consecutive Business Days LIBOR is not available for sterling to prime banks in the London Interbank Market, then if the Agent or a Borrower so requires, the Agent and the Borrower shall enter into negotiations with a view to agreeing a substitute basis: 5.3.1 for determining the rates of interest from time to time applicable to the Advances and Unpaid Sums; and/or 5.3.2 upon which the Advances and Unpaid Sums may be maintained (whether in sterling or some other currency) thereafter and any such substitute basis that is agreed shall take effect in accordance with its terms and be binding on each party hereto, provided that the Agent may not agree any such substitute basis without the prior consent of each Bank. 5.4 Consultation with Borrowers During any period in which interest rates are determined in accordance with this Clause 5, the Agent shall consult with the Borrowers on at least a weekly basis with a view to calculating interest rates in accordance with Clause 4.2 (Calculation of Interest) as soon as possible. 6. NOTIFICATION 6.1 Advances and Term By 12 p.m. not less than two Business Days before an Advance is to be made, the Agent shall notify each Bank of the proposed amount of the relevant Advance, its proposed Term and the aggregate principal amount of the relevant Advance allocated to such Bank pursuant to Clause 3.4 (Each Bank's Participation). 6.2 Interest Rate Determination The Agent shall promptly notify the Borrowers and the Banks of each determination of LIBOR, the Associated Costs Rate and the Margin. 6.3 Changes to Interest Rates The Agent shall promptly notify the Borrowers and the Banks of any change in interest rate or Term occasioned by the operation of Clause 5 (Market Disruption and Alternative Interest Rates). 7. REPAYMENT Each Borrower shall repay each Advance made to it in full on the Repayment Date relating thereto. 8. CANCELLATION AND PREPAYMENT 8.1 Cancellation at Option of Borrowers The Borrowers may, by giving to the Agent not less than ten Business Days' prior notice to that effect, cancel the whole or any part (being a minimum amount of 3,000,000 and an integral multiple of 1,000,000) of the Available Facility. Any such cancellation shall reduce the Available Commitment and the Commitment of each Bank rateably. No amount of the Available Facility so cancelled may be reinstated. 8.2 Notice of Cancellation Any notice of cancellation given by a Borrower pursuant to Clause 8.1 (Cancellation at Option of Borrowers) shall be irrevocable and shall specify the date upon which such cancellation is to be made and the amount of such cancellation. 8.3 Cancellation of a Bank's Commitment If: 8.3.1 any sum payable to any Bank is required to be increased pursuant to Clause 9.1 (Tax Gross-up); 8.3.2 any Bank claims indemnification from any Borrower under Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs); or 8.3.3 such Borrower is required to treat any payment of interest to a Bank as a distribution for tax purposes, such Borrower may, whilst such circumstance continues, by not less than ten Business Days' prior notice to the Agent (which notice shall be irrevocable), cancel such Bank's Commitment whereupon such Bank shall cease to be obliged to participate in further Advances and its Commitment shall be reduced to zero. 8.4 Prepayment of a Bank's Commitment If a Borrower gives notice pursuant to Clause 8.3 (Cancellation of a Bank's Commitment), it shall, at the time such notice expires prepay the relevant Bank's portion of all outstanding Advances together with accrued interest thereon and all other amounts owing to such Bank hereunder. 8.5 No Other Repayments The Borrowers shall not repay all or any part of any Advance except at the times and in the manner expressly provided herein. 8.6 Mandatory Cancellation The aggregate Commitments hereunder shall reduce automatically: 8.6.1 to 37,500,000 on the day which is 36 months after the date hereof; and 8.6.2 to 25,000,000 on the day which is 48 months after the date hereof, and each Bank's Commitment shall be reduced rateably. 9. TAXES 9.1 Tax Gross-up All payments to be made by an Obligor to any Finance Party hereunder shall be made free and clear of and without deduction for or on account of tax unless such Obligor is required to make such a payment subject to the deduction or withholding of tax, in which case the sum payable by such Obligor (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that such Finance Party receives a sum net of any deduction or withholding equal to the sum which it would have received had no such deduction or withholding been made or required to be made. 9.2 Tax Indemnity Without prejudice to Clause 9.1 (Tax Gross-up), if any Finance Party is required to make any payment of or on account of tax on or in relation to any sum received or receivable hereunder or if any liability in respect of any such payment is asserted, imposed, levied or assessed against any Finance Party, the Borrowers shall, upon demand of the Agent, promptly indemnify the Finance Party which suffers a loss or liability as a result against such payment or liability, together with any interest, penalties, costs and reasonable expenses payable or incurred in connection therewith, provided that this Clause 9.2 shall not apply to: 9.2.1 any tax imposed on and calculated by reference to the net income actually received or receivable by such Finance Party by the jurisdiction in which such Finance Party is incorporated; or 9.2.2 any tax imposed on and calculated by reference to the net income of the Facility Office of such Finance Party actually received or receivable by such Finance Party by the jurisdiction in which its Facility Office is located. 9.3 Banks' Tax Status Confirmation Each Bank confirms in favour of the Agent on the date hereof or, in the case of a Bank which becomes a party hereto pursuant to a transfer or assignment, on the date on which the relevant transfer or assignment becomes effective, that either: 9.3.1 it is not resident for tax purposes in the United Kingdom and is beneficially entitled to its share of the Loan and the interest thereon; or 9.3.2 it is a bank as defined for the purposes of Section 349 of the Income and Corporation Taxes Act 1988 and is beneficially entitled to its share of the Loan and the interest thereon, and each Bank shall promptly notify the Agent if there is any change in its position from that set out above. 9.4 Status as Qualifying Lender Each Bank represents to each Borrower on the date hereof, or in the case of a Bank which becomes a party hereto pursuant to a transfer or assignment, on the date on which the relevant transfer or assignment becomes effective, that it is a Qualifying Lender. 9.5 Cessation of Status as Qualifying Lender If at any time after the date of this Agreement any Bank ceases, or becomes aware that it will cease, to be a Qualifying Lender for any reason, it shall promptly notify each Borrower, and no Obligor shall be liable to pay to such Bank under Clause 9.1 (Tax Gross-up) or 9.2 (Tax Indemnity) any amount in excess of the amount it would have been obliged to pay if such Bank had not ceased to be a Qualifying Lender provided that this Clause 9.5 shall not apply and no Obligor shall be obliged to comply with its obligations under Clauses 9.1 (Tax Gross-up) and 9.2 (Tax Indemnity) if after the date hereof: 9.5.1 there shall have been any change in, or in the interpretation or application of, any relevant law or the practice of the United Kingdom Inland Revenue and as a result thereof a Bank ceases to be a Qualifying Lender; and/or 9.5.2 a Bank has transferred its Facility Office outside of the United Kingdom at the request of a Borrower pursuant to Clause 13 (Mitigation). 9.6 Treaty Lenders Each Treaty Lender will submit such claim to the appropriate authorities (together with such forms, papers, other documents and/or evidence as necessary) as may be required for a Borrower which is incorporated in the United Kingdom and resident in the United Kingdom for tax purposes, to receive a direction from the United Kingdom Inland Revenue to make payment of interest to such Treaty Lender free of withholding or deduction on account of United Kingdom tax. 9.7 Claims by Banks A Bank intending to make a claim pursuant to Clause 9.2 (Tax Indemnity) shall notify the Agent of the event or circumstance giving rise to the claim giving reasonable detail of such event or circumstance, whereupon the Agent shall notify the Borrowers thereof provided that nothing herein shall require any Bank to disclose any confidential information relating to the organisation of its affairs. 10. TAX RECEIPTS 10.1 Notification of Requirement to Deduct Tax If, at any time, an Obligor is required by law to make any deduction or withholding from any sum payable by it hereunder (or if thereafter there is any change in the rates at which or the manner in which such deductions or withholdings are calculated), such Obligor shall promptly notify the Agent. 10.2 Evidence of Payment of Tax If an Obligor makes any payment hereunder in respect of which it is required to make any deduction or withholding, it shall pay the full amount required to be deducted or withheld to the relevant taxation or other authority within the time allowed for such payment under applicable law and shall deliver to the Agent for each Bank, within thirty days after it has made such payment to the applicable authority: 10.2.1 an original receipt (or a certified copy thereof) issued by such authority evidencing the payment to such authority of all amounts so required to be deducted or withheld in respect of that Bank's share of such payment; or 10.2.2 if no such receipt is issued, evidence of such payment in form and substance reasonably satisfactory to the Agent. 10.3 Tax Credit Payment If an additional payment is made under Clause 9 (Taxes) by an Obligor for the benefit of any Finance Party and such Finance Party, in its sole discretion, determines that it has obtained (and has derived full use and benefit from) a credit against, a relief or remission for, or repayment of, any tax, then, if and to the extent that such Finance Party, in its sole opinion, determines that: 10.3.1 such credit, relief, remission or repayment is in respect of or calculated with reference to the additional payment made pursuant to Clause 9 (Taxes); and 10.3.2 its tax affairs for its tax year in respect of which such credit, relief, remission or repayment was obtained have been finally settled, such Finance Party shall, to the extent that it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to such Obligor such amount as such Finance Party shall, in its sole opinion, determine to be the amount which will leave such Finance Party (after such payment) in no worse after-tax position than it would have been in had the additional payment in question not been required to be made by such Obligor. 10.4 Tax Credit Clawback If any Finance Party makes any payment to an Obligor pursuant to Clause 10.3 (Tax Credit Payment) and such Finance Party subsequently determines, in its sole opinion, that the credit, relief, remission or repayment in respect of which such payment was made was not available or has been withdrawn or that it was unable to use such credit, relief, remission or repayment in full, such Obligor shall reimburse such Finance Party such amount as such Finance Party determines, in its sole opinion, is necessary to place it in the same after-tax position as it would have been in if such credit, relief, remission or repayment had been obtained and fully used and retained by such Finance Party. 10.5 Tax and Other Affairs No provision of this Agreement shall interfere with the right of any Finance Party to arrange its tax or any other affairs in whatever manner it thinks fit, oblige any Finance Party to claim any credit, relief, remission or repayment in respect of any payment under Clause 9.1 (Tax Gross-up) in priority to any other credit, relief, remission or repayment available to it nor oblige any Finance Party to disclose any information relating to its tax or other affairs or any computations in respect thereof. 11. INCREASED COSTS 11.1 Increased Costs If, by reason of (a) any change in applicable law or in its interpretation or administration and/or (b) compliance with any request or requirement relating to the maintenance of capital or any other request from or requirement of any central bank or other comparable fiscal, monetary or other authority in all cases not known generally in the London Interbank Market at the date of this Agreement: 11.1.1 a Bank or any holding company of such Bank is unable to obtain the rate of return on its capital which it would have been able to obtain but for such Bank's entering into or assuming or maintaining a commitment or performing its obligations under this Agreement; 11.1.2 a Bank or any holding company of such Bank incurs a cost as a result of such Bank's entering into or assuming or maintaining a commitment or performing its obligations under this Agreement; or 11.1.3 there is any increase in the cost to a Bank or any holding company of such Bank of funding or maintaining such Bank's share of the Advances or any Unpaid Sum, then the Borrowers shall, from time to time on demand of the Agent, promptly pay to the Agent for the account of that Bank amounts sufficient to indemnify that Bank or to enable that Bank to indemnify its holding company from and against, as the case may be, (i) such reduction in the rate of return of capital, (ii) such cost or (iii) such increased cost. 11.2 Increased Costs Claims A Bank intending to make a claim pursuant to Clause 11.1 (Increased Costs) shall notify the Agent of the event or circumstance giving rise to such claim giving reasonable detail of such event or circumstance, whereupon the Agent shall notify the Borrowers thereof provided that nothing herein shall require any Bank to disclose any confidential information relating to the organisation of its affairs. 11.3 Exclusions Notwithstanding the foregoing provisions of this Clause 11, no Bank shall be entitled to make any claim under this Clause 11 in respect of: 11.3.1 any cost, increased cost or liability compensated by Clause 9 (Taxes); or 11.3.2 any cost, increased cost or liability as referred to in Clause 11.1 (Increased Costs) to the extent the same is compensated by the Associated Costs Rate. 12. ILLEGALITY If, at any time, it is or will become unlawful for a Bank to make, fund or allow to remain outstanding all or part of its share of the Advances, then that Bank shall, promptly after becoming aware of the same, deliver to the relevant Borrower through the Agent a notice to that effect and: 12.0.1 such Bank shall not thereafter be obliged to participate in the making of any Advances and the amount of its Commitment shall be immediately reduced to zero; and 12.0.2 if the Agent on behalf of such Bank so requires, the relevant Borrower shall on or before the latest date permitted by the relevant law repay such Bank's share of any outstanding Advances together with accrued interest thereon and all other amounts owing to such Bank hereunder. 13. MITIGATION If, in respect of any Bank, circumstances arise which would or would upon the giving of notice result in: 13.1.1 an increase in any sum payable to it or for its account pursuant to Clause 9.1 (Tax Gross-up); 13.1.2 a claim for indemnification pursuant to Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs); or 13.1.3 the reduction of its Available Commitment to zero or any repayment to be made by the relevant Borrower pursuant to Clause 12 (Illegality), then, without in any way limiting, reducing or otherwise qualifying the rights of such Bank or the obligations of the Obligors under any of the Clauses referred to in sub-clauses 13.1.1, 13.1.2 and 13.1.3 of this Clause 13, such Bank shall promptly upon becoming aware of such circumstances notify the Agent thereof and, in consultation with the Agent and the Borrowers and to the extent that it can do so lawfully and without prejudice to its own position, take reasonable steps (including a change of location of its Facility Office or the transfer of its rights, benefits and obligations hereunder to another financial institution acceptable to the Borrowers and willing to participate in the Facility) to mitigate the effects of such circumstances, provided that such Bank shall be under no obligation to take any such action if, in the opinion of such Bank, to do so might have any adverse effect upon its business, operations or financial condition (other than any minor costs and expenses of an administrative nature). 14. REPRESENTATIONS AND WARRANTIES The Company makes each of the representations and warranties set out in Clause 14.1 (Corporate Existence and Power) to Clause 14.16 (No Deduction or Withholding), inclusive. Each other Obligor makes each of the Obligors' Representations and Warranties in respect of itself only. The Company and each other Obligor acknowledge that the Finance Parties have entered into this Agreement in reliance on those representations and warranties. 14.1 Corporate Existence and Power The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all corporate powers and all material governmental licences, authorisations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have a Material Adverse Effect. 14.2 Corporate and Governmental Authorisation The execution, delivery and performance by each Obligor of this Agreement are within its corporate powers, have been duly authorised by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or constituent documents of such Obligor or of any agreement, judgement, injunction, order, decree or other instrument binding upon it or any of its subsidiaries or result in the creation or imposition of any Encumbrance on any asset of such Obligor or any of its subsidiaries. 14.3 Binding Effect This Agreement constitutes a valid and binding agreement of each Obligor enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 14.4 Financial Information 1.4.1 The most recent audited consolidated balance sheet of the Company and its Consolidated Subsidiaries and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for the fiscal year then ended fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. 14.4.2 The financial statements presented in the Company's most recent Form 10-Q, which the Company has filed with the Securities and Exchange Commission, fairly presents in all material respects on a basis consistent with the financial statements referred to in sub-clause 14.4.1 of this Clause 14.4 (Financial Information), the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for the period to which it relates (subject to normal year-end audit adjustments and the absence of full footnotes). 14.4.3 Since the date of the Company's most recent Form 10- Q, there has been no material adverse change in the business, financial position or results of operations of the Group, considered as a whole. 14.4.4 The most recent audited financial statements (consolidated where applicable) of each Obligor (other than the Company) and its Consolidated Subsidiaries for the fiscal year then ended fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Obligor and \ its Consolidated Subsidiaries as of such date and since such date there has been no material adverse change in the business, financial position or results of operations of each Obligor (other than the Company) and its Consolidated Subsidiaries, considered as a whole. 14.5 Litigation Except as disclosed in the Company's most recent annual report on Form 10-K, each registration statement (other than a registration statement on Form S-8 (or its equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission at any time thereafter, there is no action, suit or proceeding pending against, or to the knowledge of the Company, threatened against or affecting, any member of the Group before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have a Material Adverse Effect or which in any manner draws into question the validity of this Agreement. 14.6 Compliance with Laws 14.6.1 Each member of the Group is in compliance in all material respects with all applicable laws, ordinances, rules, regulations and requirements of governmental authorities except where (i) non- compliance could not reasonably be expected to have a Material Adverse Effect or (ii) the necessity of compliance therewith is contested in good faith by appropriate proceedings. 14.6.2 Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of an Encumbrance or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. 14.7 Environmental Matters In the ordinary course of its business, the Company conducts a systematic review of the effects and reasonably ascertainable associated liabilities and costs of Environmental Laws on the business, operations and properties of the Group. The associated liabilities and costs include: any capital or operating expenditures required for clean-up or closure of properties presently or previously owned, any capital or operating expenditures required to achieve or maintain compliance with Environmental Laws, any constraints on operating activities related to achieving or maintaining compliance with Environmental Laws, including any periodic or permanent shutdown of any facility or reduction in the level or change in the nature of operations conducted thereat, any costs or liabilities in connection with off-site disposal of wastes or hazardous substances and any actual or potential liabilities to third parties, including employees, arising under Environmental Laws, and any related costs and expenses. On the basis of this review, the Company has reasonably concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, could not reasonably be expected to have a Material Adverse Effect. 14.8 Taxes Each member of the Group has filed all applicable United States Federal income tax returns and all other material tax returns which are required to be filed by it and have paid all taxes due pursuant to such returns or pursuant to any assessment received by any member of the Group except (i) where non-payment could not reasonably be expected to have a Material Adverse Effect or (ii) where the same are contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of each member of the Group in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. 14.9 Existence and Corporate Power of Other Obligors Each Obligor (other than the Company) is a corporation validly existing and in good standing (where relevant) under the laws of its jurisdiction of incorporation and any jurisdiction in which it carries on business, and has all corporate powers and all material governmental licences, authorisations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have Material Adverse Effect. 14.10 Regulatory Restrictions on Borrowing The Company is not an "investment company" within the meaning of the Investment Company Act 1940 (US), a "holding company" within the meaning of the Public Utility Holding Company Act 1935 (US), or otherwise subject to any regulatory scheme which restricts its ability to incur debt. 14.11 Full Disclosure Neither the Company's most recent Form 10-K as of the date of filing of such Form 10-K, nor any registration statement (other than a registration statement on Form S-8 (or its equivalent)) or report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission as at the time of filing of such registration statement or report, as applicable, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make any statements contained therein, in the light of the circumstances under which they were made, not misleading; provided that to the extent any such document contains forecasts and/or projections, it is understood and agreed that uncertainty is inherent in any forecasts or projections and that no assurances can be given by the Company of the future achievement of such performance. 14.12 Year 2000 Any reprogramming required to permit the proper functioning, in and following year 2000, of (a) the Obligors' computer systems and (b) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Obligors' systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to the Obligors of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Obligors (including reprogramming errors and the failure of others' systems or equipment) will not result in an Event of Default or Potential Event of Default or a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of each Obligor and its subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit each Borrower to conduct its business without Material Adverse Effect. 14.13 Information Memorandum The factual information contained in the Information Memorandum is true, complete and accurate in all material respects, the financial projections contained therein have been prepared on the basis of recent historical information and on the basis of reasonable assumptions and nothing has occurred or been omitted that renders the information contained in the Information Memorandum untrue or misleading in any material respect. 14.14 Claims Pari Passu Under the laws of its jurisdiction of incorporation and any jurisdiction in which it carries on business in force at the date hereof, the claims of the Finance Parties against each Obligor under this Agreement will rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred solely by any bankruptcy, insolvency, liquidation or other similar laws of general application. 14.15 No Filing or Stamp Taxes Under the laws of its jurisdiction of incorporation and any jurisdiction in which it carries on business in force at the date hereof, it is not necessary that this Agreement be filed, recorded or enrolled with any court or other authority in such jurisdiction or that any stamp, registration or similar tax be paid on or in relation to this Agreement. 14.16 No Deduction or Withholding Under the laws of its jurisdiction of incorporation and any jurisdiction in which it carries on business, it will not be required to make any deduction or withholding from any payment it may make hereunder to any Qualifying Lender or to the Agent. 14.17 Repetition of Representations The Repeated Representations shall be deemed to be repeated by each Obligor (as applicable) by reference to the facts and circumstances then existing on each date on which an Advance is or is to be made. 15. COVENANTS The Company makes each of the covenants set out in Clauses 15.1 (Provision of Information) to 15.13 (Leverage Ratio), inclusive and Clauses 15.15 (Claims Pari Passu) to 15.17 (Subordination of Inter-Company Loans), inclusive. Each other Obligor makes each of the covenants set out in Clauses 15.2 (Payment of Obligations) to 15.12 (Transactions with Affiliates), inclusive and Clauses 15.15 (Claims Pari Passu), 15.16 (Compliance with Regulations T, U and X) and 15.18 (No Guarantees). In addition to any other covenant made by it under this Clause 15, HCEL makes the covenants set out in Clause 15.14 (Minimum Net Worth of HCEL) and (if applicable) Clause 15.17 (Subordination of Inter-Company Loans). In addition to any other covenant made by it under this Clause 15, Salt Union Limited makes the covenants set out in Clause 15.17 (Subordination of Inter-Company Loans). 15.1 Provision of Information The Company will deliver to the Agent in sufficient copies for the Banks: 15.1.1 as soon as available and in any event within 95 days after the end of each fiscal year of the Company, an audited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of earnings, cash flows, and changes in stockholders' equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner consistent with the requirements of the Securities and Exchange Commission, and audited by an internationally recognised firm of independent public accountants; 15.1.2 as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related unaudited consolidated statements of earnings and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation and preparation based on financial accounting principles consistent with generally accepted accounting principles by an Authorised Signatory of the Company; 15.1.3 in relation to each other Obligor, as soon as available, but in any event within 120 days after the end of each fiscal year, the audited financial statements (consolidated where applicable) of each Obligor and its Consolidated Subsidiaries prepared in accordance with generally accepted accounting principles, in each case audited by a firm of internationally recognised independent public accountants; 15.1.4 simultaneously with the delivery of each set of financial statements referred to in sub-clauses 15.1.1, 15.1.2 and 15.1.3 of this Clause 15.1, a certificate of an Authorised Signatory of the Company: (a) setting forth in reasonable detail the calculations required to establish whether: (i) the Company is complying with the requirements of Clause 15.13 (Leverage Ratio) and HCEL is complying with the requirements of Clause 15.14 (Minimum Net Worth of HCEL), in each case on the date of such financial statements; and (ii) the Company and Salt Union Limited are complying with the requirements of sub-clauses 15.17.1(a) and (b) of Clause 15.17 (Subordination of Inter-Company Loans) in each case during the relevant period to which such calculation relates; and (b) stating whether any Event of Default or Potential Event of Default exists on the date of such certificate and, if any Event of Default or Potential Event of Default is continuing, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; 15.1.5 simultaneously with the delivery of each set of financial statements referred to in sub-clauses 15.1.1 and 15.1.3 of this Clause 15.1, a statement of the firm of independent public accountants which reported on such statements (i) that nothing has come to their attention to cause them to believe that any Event of Default or Potential Event of Default arising from a failure to comply with Clause 15.13 (Leverage Ratio), Clause 15.14 (Minimum Net Worth of HCEL) or Clause 15.17 (Subordination of Inter-Company Loans) existed on the date of such statements (it being understood that such accountants shall not thereby be required to perform any procedures not otherwise required under generally accepted auditing standards) and (ii) confirming the calculations set forth in the Authorised Signatory's certificate delivered simultaneously therewith pursuant to sub-clause 15.1.4 of this Clause 15.1; 15.1.6 within five days after any officer of an Obligor obtains knowledge of any Event of Default or Potential Event of Default, if such Event of Default or Potential Event of Default is then continuing, a certificate of an Authorised Signatory of such Obligor setting forth the details thereof and the action which it is taking or proposes to take with respect thereto; 15.1.7 promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; 15.1.8 promptly after the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports (other than the exhibits thereto) on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission; 15.1.9 if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganisation, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of an Encumbrance or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; and 15.1.10 from time to time such additional information regarding the financial position or business of the Group as the Agent, at the request of any Bank, may reasonably request. 15.2 Payment of Obligations Each Obligor will pay and discharge, and will cause each of its subsidiaries to pay and discharge, at or before maturity, all their respective material payment obligations and liabilities (including tax liabilities and claims of materialmen, warehousemen and the like which if unpaid might by law give rise to an Encumbrance, but excluding the Inter-Company Loans), except where the same may be contested in good faith by appropriate proceedings, and will maintain, and will cause each of its subsidiaries to maintain, in accordance with generally accepted accounting principles, appropriate reserves for the accrual of any of the same. 15.3 Maintenance of Property Each Obligor will keep, and will cause each of its subsidiaries to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. 15.4 Insurance Each Obligor will, and will cause each of its subsidiaries to, maintain (either in its name or in such subsidiary's name) with financially sound and responsible insurance companies, insurance on all its respective properties in at least such amounts, against at least such risks and with such risk retention as are usually maintained, insured against or retained, as the case may be, in the same general area by companies of established repute engaged in the same or a similar business; provided that the Obligors and their subsidiaries may self-insure to the same extent as other companies of established repute engaged in the same or a similar business in the same general area in which such Obligor or such subsidiary operates and to the extent consistent with prudent business practice. Each Obligor will furnish to the Banks, upon request from the Agent, information presented in reasonable detail as to the insurance so carried. 15.5 Conduct of Business and Maintenance of Existence Each Obligor and its subsidiaries taken as a whole will continue to engage in business of the same general type as now conducted by such Obligor and its subsidiaries and any ancillary or related lines of business, and each Obligor will preserve, renew and keep in full force and effect, and will cause each of its subsidiaries to preserve, renew and keep in full force and effect, its respective legal existence and its respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that nothing in this Clause 15.5 shall prohibit (i) the consolidation or merger of a subsidiary (other than a Borrower with obligations with respect to Advances outstanding hereunder) with or into another person, (ii) the consolidation or merger of an Obligor with or into the Company or another Borrower or (iii) the termination of the corporate existence of any subsidiary (other than a Borrower with obligations with respect to Advances outstanding hereunder) if, in the case of sub-clauses (i), (ii) and (iii), such consolidation, merger or termination is not materially disadvantageous to the Banks; and provided further that nothing in this Clause 15.5 shall prohibit any sale or other disposition of assets permitted under Clause 15.8 (Mergers) and Clause 15.9 (Disposals). 15.6 Compliance with Laws Each Obligor will comply, and cause each of its subsidiaries to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including Environmental Laws and, where relevant, ERISA and the rules and regulations thereunder) except where (i) the necessity of compliance therewith is contested in good faith by appropriate proceedings or (ii) the failure to comply could not reasonably be expected to have a Material Adverse Effect. 15.7 Inspection of Property, Books and Records Each Obligor will keep, and will cause each of its subsidiaries to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each of its subsidiaries to permit, representatives of any Bank at such Bank's expense to visit and inspect any of its respective properties, to examine and make abstracts from any of its respective books and records and to discuss its respective affairs, finances and accounts with its respective officers, employees and independent public accountants, all at such reasonable times as may be desired. 15.8 Mergers Subject to Clause 15.5 (Conduct of Business and Maintenance of Existence), no Obligor will consolidate or merge with or into any other person; provided that the Company may merge with another person if (i) the Company is the corporation surviving such merger and (ii) after giving effect to such merger, no Event of Default or Potential Event of Default shall have occurred and be continuing. 15.9 Disposals Neither the Guarantors nor the Harris Chemical Europe Group shall sell, lease or otherwise transfer, directly or indirectly, assets (exclusive of assets transferred in the ordinary course of business and on normal commercial terms) if after giving effect to such transfer the aggregate book value of assets so transferred subsequent to the date of this Agreement would constitute Substantial Assets as of the day preceding the date of such transfer other than (i) sales of accounts receivable to IMC-Agrico Receivables Company L.L.C. or any other similar bankruptcy-remote subsidiary of the Company or any of its subsidiaries established for the purpose of engaging in transactions related to accounts receivable, (ii) the sale of substantially all of the assets comprising the IMC AgriBusiness business unit of the Company, (iii) the sale of any equity interest in McMoRan Oil & Gas Co., a Delaware corporation, or the sale or transfer of any right to receive revenues from the MOXY-FRP Exploration Program undertaken by McMoRan Oil & Gas Co., a Delaware corporation, (iv) the sale of assets acquired pursuant to an Acquisition that are unrelated to the business of the same general type as now conducted by the Company and its subsidiaries, and (v) the sale, lease or other transfer, directly or indirectly, of assets acquired in or as a direct result of the Harris Chemical Acquisition. 15.10 Use of Proceeds The proceeds of any Advance made under this Agreement will be used by the Obligors for general corporate purposes, including the refinancing of Acquisitions or the repayment of the Inter-Company Loans (subject to Clause 15.17 (Subordination of Inter-Company Loans)) and any bank overdraft facility. None of such proceeds will be used in violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System. 15.11 Negative Pledge Neither the Guarantors and their subsidiaries nor the Harris Chemical Europe Group shall create, assume or suffer to exist any Encumbrance on any asset now owned or hereafter acquired by it, except: 15.11.1 Encumbrances existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal or face amount not exceeding $135,000,000 (or its equivalent) in the case of the Guarantors and their subsidiaries and $8,000,000 (or its equivalent) in the case of the Harris Chemical Europe Group; 15.11.2 any Encumbrance existing on any asset of any person at the time such person becomes a subsidiary of an Obligor and not created in contemplation of such event; 15.11.3 any Encumbrance on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Encumbrance attaches to such asset concurrently with or within 90 days after the acquisition or completion of construction thereof; 15.11.4 any Encumbrance on any asset of any person existing at the time such person is merged or consolidated with or into an Obligor or a subsidiary of an Obligor and not created in contemplation of such event; 15.11.5 any Encumbrance existing on any asset prior to the acquisition thereof by an Obligor or a subsidiary of an Obligor and not created in contemplation of such acquisition; 15.11.6 any Encumbrance arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Encumbrance permitted by any of the foregoing paragraphs of this Clause 15.11, provided that the proceeds of such Debt are used solely for the foregoing purpose and to pay financing costs and such Debt is not secured by any additional assets; 15.11.7 Encumbrances arising in the ordinary course of its business which (i) do not secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an amount exceeding $100,000,000 (or its equivalent) in the case of the Guarantors and their subsidiaries and $5,000,000 (or its equivalent) in the case of the Harris Chemical Europe Group and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; 15.11.8 Encumbrances on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Encumbrances may at no time exceed $10,000,000 (or its equivalent) in the case of the Guarantors and their subsidiaries and $1,000,000 (or its equivalent) in the case of the Harris Chemical Europe Group; and 15.11.9 Encumbrances not otherwise permitted by the foregoing paragraphs of this clause 15.11 securing Debt in an aggregate principal or face amount, together with all other Debt secured by Encumbrances permitted under this sub-clause 15.11.9, not to exceed an amount equal to 10 per cent of its Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to the date of the most recent incurrence of such Debt). 15.12 Transactions with Affiliates No Obligor will, nor will it permit any of its subsidiaries to, directly or indirectly, pay any funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, guarantee or other agreement to pay, purchase or service, directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any Affiliate except: (a) transactions on an arms-length basis on terms at least as favourable to such Obligor or such subsidiary as could have been obtained from a third party who was not an Affiliate, (b) marketing services provided by IMC Global Operations Inc. to Agrico, (c) employee leasing services agreements between IMC Global Operations Inc. and Agrico, (d) transactions between Agrico and the Rainbow and FarMarkets business units of the Company, (e) transactions between Agrico and the IMC Kalium business unit of the Company, (f) loans from an Obligor or a subsidiary to an Obligor or a subsidiary, (g) the declaration and payment of any lawful dividend and (h) transactions between Vigiron Partnership, a Delaware general partnership, and the IMC AgriBusiness business unit of the Company, provided further that nothing in this Clause 15.12 shall prohibit any sale or other disposition of assets permitted under Clause 15.8 (Mergers) and Clause 15.9 (Disposals). 15.13 Leverage Ratio 15.13.1 The Company shall ensure that the Leverage Ratio will not at any time exceed 3.75 to 1.00. 15.13.2 In this Clause 15.13: (a) "Consolidated Adjusted Debt" means at any date the sum of (i) the Debt of the Company and its Consolidated Subsidiaries plus (ii) the excess (if any) of (A) the aggregate unrecovered principal investment of transferees of accounts receivable from the Company or a Consolidated Subsidiary in transactions accounted for as sales under generally accepted accounting principles over (B) $100,000,000 (or its equivalent), in each case determined on a consolidated basis as of such date; (b) "Consolidated EBITDA" means, for any period, the consolidated net income of the Company and its Consolidated Subsidiaries for such period before (i) income taxes, (ii) interest expense, (iii) depreciation and amortisation, (iv) minority interest, (v) extraordinary losses or gains, (vi) discontinued operations and (vii) the cumulative effect of changes in accounting principles. Consolidated EBITDA for each four-quarter period will be adjusted on a pro-forma basis to reflect any Acquisition closed during such period as if such Acquisition had been closed on the first day of such period; and (c) "Leverage Ratio" means at any date the ratio of Consolidated Adjusted Debt calculated as of such date to Consolidated EBITDA calculated for the period of four consecutive fiscal quarters most recently ended on or prior to such date. 15.14 Minimum Net Worth of HCEL 15.14.1 HCEL shall ensure that its Minimum Net Worth shall: (a) be not less that 40,000,000 by no later than the close of its fiscal year ending on 31 December 1999; and (b) increase each fiscal year thereafter by not less than 75 per cent of its Net Income in such fiscal year so that X = Y + 0.75(a), where: X = Minimum Net Worth calculated on 31 December 2000 and at the date of each of HCEL's fiscal years thereafter; Y = Minimum Net Worth calculated at the close of the immediately preceding fiscal year to that for which it is being calculated; and a = Net Income for the fiscal year for which X is being calculated. 15.14.2 In this Clause 15.14: (a) "Minimum Net Worth" means at any date, the consolidated shareholders' equity of HCEL and its Consolidated Subsidiaries determined as of such date (other than any amount attributable to stock which is required to be redeemed or is redeemable at the option of the holder, if certain events or conditions occur or exist or otherwise); and (b) "Net Income" means, in any fiscal year, the net income of HCEL and its Consolidated Subsidiaries after the payment of tax and dividends. 15.15 Claims Pari Passu Each Obligor shall ensure that at all times the claims of the Finance Parties against it under this Agreement rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application. 15.16 Compliance with Regulations T, U and X No Obligor is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock (as such term is defined in Regulation U of the Regulations of the Board of Governors of the Federal Reserve System of the United States) and no part of the proceeds of any Advance will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of or is inconsistent with, the provisions of Regulations T, U or X of such Regulations. 15.17 Subordination of Inter-Company Loans 15.17.1 The Company, HCEL and Salt Union Limited shall comply with the terms of the Subordination Deed and shall ensure that: (a) all rights of the Company under the Inter- Company Loans shall be subordinated in all respects to the rights of the Finance Parties hereunder; and (b) no amount owing under the Inter-Company Loans other than a Permitted Payment shall be paid until all obligations of the Obligors hereunder have been discharged in full and this Agreement shall have been terminated. 15.17.2 In this Clause 15.17: (a) "EBITDA" means, for any period, the net income of Harris Chemical Europe Group for such period before (i) income taxes, (ii) interest expense, (iii) depreciation and amortisation, (iv) minority interest, (v) extraordinary losses or gains, (vi) discontinued operations and (vii) the cumulative effect of changes in accounting principles. EBITDA for each four- quarter period will be adjusted on a pro-forma basis to reflect any Acquisition closed during such period as if such Acquisition had been closed on the first day of such period; (b) "Permitted Payment" means: (i) the repayment of the outstanding principal amount of each of the Notes referred to in paragraphs (a) to (c) inclusive of the definition of Inter-Company Loans; (ii) if an Event of Default or a Potential Event of Default shall not have occurred and be continuing, the payment of any interest due to be paid under the Inter- Company Loans on 31 December 1998 provided that the ratio of EBITDA to Net Interest Expense is greater than 2.50 to 1.00 at such date; (iii)if an Event of Default or a Potential Event of Default shall not have occurred and be continuing, the payment of any other amount of interest due under the Inter-Company Loans provided that EBITDA to Net Interest Expense is greater than 2.50 to 1.00 on a quarterly rolling 12 month basis; and (iv) the payment of any proceeds from the transfer (whether by sale of assets or shares, merger, recapitilisation or otherwise) of Harris Soda Products (Europe) SAS, Harris Inorganic Chemicals BV, Societa Chimica Larderello SpA and Matthes & Weber GmbH or substantially all of the chemicals business conducted thereby. (c) "Net Interest Expense" means for any period all interest expense (including all interest payable under the Inter-Company Loans), commissions and discounts and other fees payable by the Harris Chemical Europe Group less any interest receivable by the Harris Chemical Europe Group. 15.18 No Guarantees No Obligor (other than the Company) shall give a Guarantee in connection with an obligation or liability, whether actual or contingent, of any of its holding companies other than the BoS Cross Guarantee. 16. EVENTS OF DEFAULT Clauses 16.1 (Failure to Pay) to 16.10 (Guarantee Unenforceable) describe each circumstance which constitutes an Event of Default if it occurs and continues. 16.1 Failure to Pay An Obligor shall fail to pay when due any principal of any Advance or shall fail to pay, within five Business Days of the due date thereof, any interest, fees or any other amount payable hereunder. 16.2 Specific Covenants 16.2.1 An Obligor shall fail to observe or perform any covenant contained in Clauses 15.8 (Mergers) to 15.12 (Transactions with Affiliates), inclusive and Clauses 15.15 (Claims Pari Passu) and 16.16 (Compliance with Regulations T, U and X). 16.2.2 The Company shall fail to observe or perform the covenant contained in Clause 15.13 (Leverage Ratio). 16.2.3 HCEL shall fail to observe or perform the covenants contained in Clause 15.14 (Minimum Net Worth of HCEL). 16.2.4 The Company or Salt Union Limited shall fail to observe or perform the covenants contained in Clause 15.17 (Subordination of Inter-Company Loans). 16.3 Misrepresentation 16.3.1 An Obligor shall fail to observe or perform any of its covenants or agreements contained in this Agreement (other than those covered by Clauses 16.1 (Failure to Pay) and 16.2 (Specific Covenants)) for 30 days after notice thereof has been given to it by the Agent at the request of any Bank. 16.3.2 Any representation, warranty, certification or statement made by an Obligor in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made or deemed made. 16.4 Cross Acceleration Any member of the Group shall fail to make any payment in respect of any Material Financial Obligation (other than the Loan or the Inter-Company Loans) when due or within any applicable grace period, or any event or condition shall occur and continue beyond the applicable grace period (if any) and the repayment of any Material Financial Obligations shall be accelerated as a result thereof. 16.5 Insolvency Proceedings 16.5.1 An Obligor or any Material Subsidiary shall commence a voluntary case or voluntary winding-up or other proceeding seeking liquidation, reorganisation or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, administrative receiver, liquidator, custodian, compulsory manager or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or winding-up or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorise any of the foregoing. 16.5.2 An involuntary case or winding-up or other proceeding shall be commenced against an Obligor or any Material Subsidiary seeking liquidation, reorganisation or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, administrative receiver, liquidator, custodian, compulsory manager or other similar official of it or any substantial part of its property, and such involuntary case or winding-up or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against an Obligor or any Material Subsidiary under the bankruptcy laws as now or hereafter in effect. 16.6 ERISA Default Any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $25,000,000 (or its equivalent) which it shall have become liable to pay under Title IV of ERISA, notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing, the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan, a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated, or there shall occur a complete or partial withdrawal from, or a Event of Default or Potential Event of Default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000 (or its equivalent) in the aggregate. 16.7 Failure to Comply with Final Judgement Any final judgement or any final order for the payment of money in excess of: 16.7.1 $100,000,000 (or its equivalent) in aggregate is rendered against the Guarantors or any of their subsidiaries which continues unsatisfied and unstayed for a period of 30 days; or 16.7.2 $8,000,000 (or its equivalent) in aggregate is rendered against the Harris Chemical Europe Group which continues unsatisfied and unstayed for a period of 30 days. 16.8 Change in Ownership of Company 16.8.1 Any person or two or more persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act 1934 (US)), directly or indirectly, of Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 35 per cent or more of the combined voting power of all Voting Stock of the Company. 16.8.2 During any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Company, except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by two thirds of the remaining members of the board of directors of the Company or (y) nominated for election by a majority of the remaining members of the board of directors of the Company and thereafter elected as directors by the shareholders of the Company. 16.8.3 Any person or two or more persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that has resulted in its or their acquisition of, control over Voting Stock of the Company (or other securities convertible into such securities) representing 35 per cent or more of the combined voting power of all Voting Stock of the Company. 16.9 Illegality At any time it is or becomes unlawful for an Obligor to perform or comply with all or any of its material obligations hereunder or any of the material obligations of an Obligor hereunder are not or cease to be legal, valid, binding and effective. 16.10 Guarantee Unenforceable Any obligation of a Guarantor under Clause 17 (Guarantee and Indemnity) shall for any reason not be enforceable in accordance with its terms, or a Guarantor shall so assert in writing. 16.11 Acceleration and Cancellation If an Event of Default occurs and is continuing, the Agent may (and, if so instructed by an Instructing Group, shall) by notice to the Company: 16.11.1 declare all or any part of the Advances to be immediately due and payable (whereupon the same shall become so payable together with accrued interest thereon and any other sums then owed by a Borrower hereunder) or declare all or any part of the Advances to be due and payable on demand of the Agent; and/or 16.11.2 declare that the Facility shall be cancelled, whereupon the same shall be cancelled and the Commitment of each Bank shall be reduced to zero, provided that, notwithstanding the foregoing, upon the occurrence of an Event of Default specified in Clause 16.5 (Insolvency Proceedings), the Available Commitment of each Bank shall be immediately reduced to zero and all Advances, interest thereon and other sums then owed by the Borrower hereunder shall become immediately due and payable, in each case without declaration, notice or demand by or to any person. 16.12 Advances Due on Demand If, pursuant to Clause 16.11 (Acceleration and Cancellation), the Agent declares all or any part of the Advances to be due and payable on demand of the Agent, then, and at any time thereafter, the Agent may (and, if so instructed by an Instructing Group, shall) by notice to the Borrowers: 16.12.1 require repayment of all or such part of the Advances on such date as it may specify in such notice (whereupon the same shall become due and payable on the date specified together with accrued interest thereon and any other sums then owed by the Borrowers hereunder) or withdraw its declaration with effect from such date as it may specify; and 16.12.2 declare that the Facility shall be cancelled, whereupon the same shall be cancelled and the Commitment of each Bank reduced to zero. 16.13 Length of Terms If, pursuant to Clause 16.11 (Acceleration and Cancellation), the Agent declares the Advances to be due and payable on demand of the Agent, the Term in respect of any such Advance shall, if the Agent subsequently demands payment before the scheduled Repayment Date in respect of such Advance, be deemed (except for the purposes of Clause 20.4 (Break Costs) to be of such length that it ends on the date that such demand is made. 17. GUARANTEE AND INDEMNITY 17.1 Guarantee Each Guarantor jointly and severally irrevocably and unconditionally guarantees to each Finance Party to pay on demand any and every sum or sums of money which each Borrower is at any time liable to pay to any Finance Party under or pursuant to this Agreement and which has become due and payable but has not been paid at the time such demand is made. 17.2 Indemnity Each Guarantor jointly and severally irrevocably and unconditionally agrees as a primary obligation to indemnify each Finance Party from time to time on demand from and against any loss incurred by any Finance Party as a result of any of the obligations of any Borrower under or pursuant to this Agreement being or becoming void, voidable, unenforceable or ineffective as against such Borrower for any reason whatsoever, whether or not known to any Finance Party or any other person, the amount of such loss being the amount which the person or persons suffering it would otherwise have been entitled to recover from such Borrower. 17.3 Additional Security The obligations of each Guarantor herein contained shall be in addition to and independent of every other security which any Finance Party may at any time hold in respect of any of the Borrowers' obligations hereunder. 17.4 Continuing Obligations The obligations of each Guarantor herein contained shall constitute and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of each Borrower under this Agreement and shall continue in full force and effect until final payment in full of all amounts owing by each Borrower hereunder and total satisfaction of all each Borrower's actual and contingent obligations hereunder. 17.5 Obligations not Discharged Neither the obligations of any Guarantor herein contained nor the rights, powers and remedies conferred in respect of any Guarantor upon any Finance Party by this Agreement or by law shall be discharged, impaired or otherwise affected by: 17.5.1 the winding-up, dissolution, administration or re-organisation of a Borrower or any other person or any change in its status, function, control or ownership; 17.5.2 any of the obligations of a Borrower or any other person hereunder or under any other security taken in respect of any of its obligations hereunder being or becoming illegal, invalid, unenforceable or ineffective in any respect; 17.5.3 time or other indulgence being granted or agreed to be granted to any Borrower in respect of its obligations hereunder or under any such other security; 17.5.4 any amendment to, or any variation, waiver or release of, any obligation of any Borrower hereunder or under any such other security; 17.5.5 any failure to take, or fully to take, any security contemplated hereby or otherwise agreed to be taken in respect of any Borrower's obligations hereunder; 17.5.6 any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any security taken in respect of any Borrower's obligations hereunder; or 17.5.7 any other act, event or omission which, but for this Clause 17.5, might operate to discharge, impair or otherwise affect any of the obligations of a Guarantor herein contained or any of the rights, powers or remedies conferred upon any of the Finance Parties by this Agreement or by law. 17.6 Settlement Conditional Any settlement or discharge between a Guarantor and any of the Finance Parties shall be conditional upon no security or payment to any Finance Party by an Obligor or any other person on behalf of an Obligor being avoided or reduced by virtue of any laws relating to bankruptcy, insolvency, liquidation or similar laws of general application and, if any such security or payment is so avoided or reduced, each Finance Party shall be entitled to recover the value or amount of such security or payment from such Guarantor subsequently as if such settlement or discharge had not occurred. 17.7 Exercise of Rights No Finance Party shall be obliged before exercising any of the rights, powers or remedies conferred upon it in respect of the Guarantors by this Agreement or by law: 17.7.1 to make any demand of any Borrower; 17.7.2 to take any action or obtain judgement in any court against any Borrower; 17.7.3 to make or file any claim or proof in a winding-up or dissolution of any Borrower; or 17.7.4 to enforce or seek to enforce any other security taken in respect of any of the obligations of any Borrower hereunder. 17.8 Deferral of Guarantors' Rights Each Guarantor agrees that, so long as any amounts are or may be owed by any Borrower hereunder or any Borrower is under any actual or contingent obligations hereunder, the Guarantor shall not exercise any rights which the Guarantor may at any time have by reason of performance by it of its obligations hereunder: 17.8.1 to be indemnified by any Borrower; and/or 17.8.2 to claim any contribution from any other guarantor of any Borrower's obligations hereunder; and/or 17.8.3 to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties hereunder or of any other security taken pursuant to, or in connection with, this Agreement by all or any of the Finance Parties. 17.9 Suspense Accounts All moneys received, recovered or realised by a Bank by virtue of Clause 17.1 (Guarantee) or Clause 17.2 (Indemnity) may, in that Bank's discretion, be credited to a suspense or impersonal account (which shall bear interest at a commercial rate) and may be held in such account for so long as such Bank thinks fit pending the application from time to time (as such Bank may think fit) of such moneys in or towards the payment and discharge of any amounts owing by an Obligor to such Bank hereunder. 18. COMMITMENT COMMISSION AND FEES 18.1 Commitment Commission The Borrowers shall pay to the Agent for account of each Bank a commitment commission on the amount of such Bank's Available Commitment from day to day during the period beginning on the date hereof and ending on the date of termination of the Commitments, such commitment commission to be calculated at the rate determined by the Agent in accordance with Schedule_5 (Determination of Margin and Commitment Commission) and payable in arrear on the last day of each successive period of three months which ends during such period and on the date of termination of the Commitments. The Agent shall promptly notify the Borrowers and the Banks of the commitment commission after is it determined. 18.2 Arrangement Fee The Borrowers shall pay to the Arranger the fees specified in the letter of even date herewith from the Arranger to the Original Borrowers at the times, and in the amounts, specified in such letter. 18.3 Agency Fee The Borrowers shall pay to the Agent for its own account the agency fees specified in the letter of even date herewith from the Agent to the Original Borrowers at the times, and in the amounts, specified in such letter. 19. COSTS AND EXPENSES 19.1 Transaction Expenses Each Borrower shall, from time to time on demand of the Agent, reimburse each of the Agent and the Arranger for all reasonable costs and expenses (including reasonable legal fees) together with any VAT thereon incurred by it in connection with the negotiation, preparation and execution of this Agreement, any other document referred to in this Agreement and the completion of the transactions herein contemplated. The Agent or the Arranger may pay for any such costs and expenses (including legal fees) together with any VAT thereon prior to receiving payment in respect thereof from any Borrower and (without prejudice to the provisions of this Agreement) the Agent or the Arranger may debit an amount equal to any such costs and expenses (including legal fees) together with any VAT thereon to any account maintained by a Borrower with any of them. 19.2 Preservation and Enforcement of Rights The Borrowers shall, from time to time on demand of the Agent, reimburse the Finance Parties for all reasonable costs and expenses (including reasonable legal fees) on a full indemnity basis together with any VAT thereon incurred in or in connection with the preservation and/or enforcement of any of the rights of the Finance Parties under this Agreement and any other document referred to in this Agreement (including any reasonable costs and expenses relating to any steps necessary in connection with any proposal for remedying or otherwise resolving an Event of Default or Potential Event of Default). 19.3 Stamp Taxes The Borrowers shall pay all stamp, registration and other taxes to which this Agreement, any other document referred to in this Agreement or any judgement given in connection therewith is or at any time may be subject and shall, from time to time on demand of the Agent, indemnify the Finance Parties against any liabilities, reasonable costs, claims and expenses resulting from any failure to pay or any delay in paying any such tax. 19.4 Amendment Costs If an Obligor requests any amendment, waiver or consent then the Borrowers shall, within five Business Days of demand by the Agent, reimburse the Finance Parties for all costs and expenses (including legal fees) together with any VAT thereon incurred by such person in responding to or complying with such request. 19.5 Banks' Liabilities for Costs If any Borrower fails to perform any of its obligations under this Clause 19, each Bank shall, in its Proportion, indemnify each of the Agent and the Arranger against any loss incurred by any of them as a result of such failure. 19.6 Agent's Costs The Borrowers shall, from time to time on demand of the Agent (and without prejudice to the provisions of Clause 19.2 (Preservation and Enforcement Rights) and Clause 19.4 (Amendment Costs)) compensate the Agent for all reasonable costs and expenses (including telephone, fax, copying, travel and personnel costs) incurred by the Agent in connection with its taking such action as are reasonable or in complying with any instructions from an Instructing Group or any request by a Borrower in connection with: 19.6.1 the granting or proposed granting of any waiver or consent requested hereunder by any Borrower; 19.6.2 any actual breach by any Borrower of its obligations hereunder; 19.6.3 the occurrence of any event which is an Event of Default or a Potential Event of Default; or 19.6.4 the transfer of the role of Agent to another person. 20. DEFAULT INTEREST AND BREAK COSTS 20.1 Default Interest Periods If any sum due and payable by an Obligor hereunder is not paid on the due date therefor in accordance with Clause 23 (Payments) or if any sum due and payable by an Obligor under any judgement of any court in connection herewith is not paid on the date of such judgement, the period beginning on such due date or, as the case may be, the date of such judgement and ending on the date upon which the obligation of such Obligor to pay such sum is discharged shall be divided into successive periods, each of which (other than the first) shall start on the last day of the preceding such period and the duration of each of which shall (except as otherwise provided in this Clause 20) be selected by the Agent. 20.2 Default Interest An Unpaid Sum shall bear interest during each Term in respect thereof at the rate per annum which is one per cent. per annum above the percentage rate which would apply to an Advance in the amount and currency of such Unpaid Sum and for the same Term, provided that if such Unpaid Sum relates to an Advance which became due and payable on a day other than the last day of the Term thereof: 20.2.1 the first such Term applicable to such Unpaid Sum shall be of a duration equal to the unexpired portion of the current Term relating to that Advance; and 20.2.2 the percentage rate of interest applicable thereto from time to time during such period shall be that which exceeds by one per cent. the rate which would have been applicable to it had it not so fallen due. 20.3 Payment of Default Interest Any interest which shall have accrued under Clause 20.2 (Default Interest) in respect of an Unpaid Sum shall be due and payable and shall be paid by the Obligor owing such Unpaid Sum on the last day of its Term or on such other dates as the Agent may specify by prior written notice to such Obligor. 20.4 Break Costs If any Bank or the Agent on its behalf receives or recovers all or any part of such Bank's share of an Advance or Unpaid Sum otherwise than on the last day of the Term thereof, the Borrowers shall pay to the Agent on demand for account of such Bank an amount equal to the amount (if any) by which (a) the additional interest (excluding Margin) which would have been payable on the amount so received or recovered had it been received or recovered on the last day of the Term thereof exceeds (b) the amount of interest which in the reasonable opinion of the Agent would have been payable to the Agent on the last day of the Term thereof in respect of a sterling deposit equal to the amount so received or recovered placed by it with a prime bank in London for a period starting on the third Business Day following the date of such receipt or recovery and ending on the last day of the Term thereof. 21. BORROWERS' INDEMNITIES 21.1 Borrowers' Indemnity Each Borrower undertakes to indemnify: 21.1.1 each Finance Party against any reasonable cost or any claim, loss, expense (including reasonable legal fees) or liability together with any VAT thereon, whether or not reasonably foreseeable, which it may sustain or incur (otherwise than as a result of the gross negligence or wilful misconduct of a Finance Party) as a consequence of the occurrence of any Event of Default or any default by any Borrower in the performance of any of the material obligations expressed to be assumed by it in this Agreement; 21.1.2 each Bank against any cost or loss it may suffer under Clause 19.5 (Banks' Liabilities for Costs) or Clause 26.5 (Indemnification); and 21.1.3 each Bank against any cost or loss it may suffer or incur as a result of its funding or making arrangements to fund its portion of an Advance requested by a Borrower but not made by reason of the operation of any one or more of the provisions hereof. 21.2 Currency Indemnity If any sum (a "Sum") due from an Obligor under this Agreement or any order or judgement given or made in relation hereto has to be converted from the currency (the "First Currency") in which such Sum is payable into another currency (the "Second Currency") for the purpose of: 21.2.1 making or filing a claim or proof against such Obligor; 21.2.2 obtaining an order or judgement in any court or other tribunal; or 21.2.3 enforcing any order or judgement given or made in relation hereto, the Borrowers shall indemnify each person to whom such Sum is due from and against any actual loss suffered or incurred as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert such Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to such person at the time of receipt of such Sum. 22. CURRENCY OF ACCOUNT AND PAYMENT Sterling is the currency of account and payment for each and every sum at any time due from an Obligor hereunder, provided that: 22.0.1 each payment in respect of costs and expenses shall be made in the currency in which the same were incurred; and 22.0.2 each payment pursuant to Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) shall be made in the currency reasonably specified by the party claiming thereunder. 23. PAYMENTS 23.1 Payments to the Agent On each date on which this Agreement requires an amount to be paid by an Obligor or a Bank, such Obligor or, as the case may be, such Bank shall make the same available to the Agent for value on the due date at such time and in such funds and to such account with such bank as the Agent shall specify from time to time. 23.2 Payments by the Agent Save as otherwise provided herein, each payment received by the Agent pursuant to Clause 23.1 (Payments to the Agent) shall: 23.2.1 in the case of a payment received for the account of any Borrower, be made available by the Agent to such Borrower by application: (a) first, in or towards payment the same day of any amount then due from such Borrower hereunder to the person from whom the amount was so received; and (b) secondly, in or towards payment the same day to the account of such Borrower with such bank in London as such Borrower shall have previously notified to the Agent for this purpose; and 23.2.2 in the case of any other payment, be made available by the Agent to the person entitled to receive such payment in accordance with this Agreement (in the case of a Bank, for the account of the Facility Office) for value as soon as reasonably practicable after receipt by the Agent by transfer to such account of such person with such bank in London as such person shall have previously notified to the Agent. 23.3 No Set-off All payments required to be made by an Obligor hereunder shall be calculated without reference to any set-off or counterclaim and shall be made free and clear of and without any deduction for or on account of any set-off or counterclaim. 23.4 Clawback Where a sum is to be paid hereunder to the Agent for account of another person, the Agent shall not be obliged to make the same available to that other person until it has been able to establish to its satisfaction that it has actually received such sum, but if it does so and it proves to be the case that it had not actually received such sum, then the person to whom such sum was so made available shall on request refund the same to the Agent together with an amount sufficient to indemnify the Agent against any cost or loss it may have suffered or incurred by reason of its having paid out such sum prior to its having received such sum. 23.5 Partial Payments If and whenever a payment is made by an Obligor hereunder the Agent may apply the amount received towards the obligations of the Obligors under this Agreement in the following order: 23.5.1 first, in or towards payment of any unpaid costs and expenses of each of the Agent and the Arranger; 23.5.2 secondly, in or towards payment pro rata of any accrued interest due but unpaid; 23.5.3 thirdly, in or towards payment pro rata of any principal due but unpaid; and 23.5.4 fourthly, in or towards payment pro rata of any other sum due but unpaid. 23.6 Variation of Partial Payments The order of payments set out in Clause 23.5 (Partial Payments) shall override any appropriation made by the Obligor to which the partial payment relates but the order set out in sub-clauses 23.5.2, 23.5.3 and 23.5.4 of Clause 23.5 (Partial Payments) may be varied if agreed by all the Banks. 24. SET-OFF 24.1 Contractual Set-off Each Obligor authorises each Bank to apply any credit balance to which such Obligor is entitled on any account of such Obligor with such Bank in satisfaction of any sum due and payable from such Obligor to such Bank hereunder but unpaid. For this purpose, each Bank is authorised to purchase with the moneys standing to the credit of any such account such other currencies as may be necessary to effect such application. 24.2 Set-off not Mandatory No Bank shall be obliged to exercise any right given to it by Clause 24.1 (Contractual Set-off). 25. SHARING 25.1 Payments to Banks If a Bank (a "Recovering Bank") applies any receipt or recovery from an Obligor to a payment due under this Agreement and such amount is received or recovered other than in accordance with Clause 23 (Payments), then such Recovering Bank shall: 25.1.1 notify the Agent of such receipt or recovery; and 25.1.2 at the request of the Agent, promptly pay to the Agent an amount (the "Sharing Payment") equal to such receipt or recovery less any amount which the Agent determines may be retained by such Recovering Bank as its share of any payment to be made in accordance with Clause 23.5 (Partial Payments). 25.2 Redistribution of Payments The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Bank) in accordance with Clause 23.5 (Partial Payments). 25.3 Recovering Bank's Rights The Recovering Bank will be subrogated into the rights of the parties which have shared in a redistribution pursuant to Clause 25.2 (Redistribution of Payments) in respect of the Sharing Payment (and the relevant Obligor shall be liable to the Recovering Bank in an amount equal to the Sharing Payment). 25.4 Repayable Recoveries If any part of the Sharing Payment received or recovered by a Recovering Bank becomes repayable and is repaid by such Recovering Bank, then: 25.4.1 each party which has received a share of such Sharing Payment pursuant to Clause 25.2 (Redistribution of Payments) shall, upon request of the Agent, pay to the Agent for account of such Recovering Bank an amount equal to its share of such Sharing Payment; and 25.4.2 such Recovering Bank's rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing party for the amount so reimbursed. 25.5 Exception This Clause 25 shall not apply if the Recovering Bank would not, after making any payment pursuant hereto, have a valid and enforceable claim against the relevant Obligor. 25.6 Recoveries Through Legal Proceedings If any Bank intends to commence any action in any court it shall give prior notice to the Agent and the other Banks. If any Bank shall commence any action in any court to enforce its rights hereunder and, as a result thereof or in connection therewith, receives any amount, then such Bank shall not be required to share any portion of such amount with any Bank which has the legal right to, but does not, join in such action or commence and diligently prosecute a separate action to enforce its rights in another court. 26. THE AGENT, THE ARRANGER AND THE BANKS 26.1 Appointment of the Agent Each of the Arranger and the Banks hereby appoints the Agent to act as its agent in connection herewith and authorises the Agent to exercise such rights, powers, authorities and discretions as are specifically delegated to the Agent by the terms hereof together with all such rights, powers, authorities and discretions as are reasonably incidental thereto. 26.2 Agent's Discretions The Agent may: 26.2.1 assume, unless it has, in its capacity as agent for the Banks, received notice to the contrary from any other party hereto, that (a)any representation made or deemed to be made by an Obligor in connection herewith is true, (b) no Event of Default or Potential Event of Default has occurred, (c) no Obligor is in breach of or default under its obligations hereunder and (d) any right, power, authority or discretion vested herein upon an Instructing Group, the Banks or any other person or group of persons has not been exercised; 26.2.2 assume that the Facility Office of each Bank is that notified to it by such Bank in writing prior to the date hereof (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee) until it has received from such Bank a notice designating some other office of such Bank to replace its Facility Office and act upon any such notice until the same is superseded by a further such notice; 26.2.3 engage and pay for the advice or services of any lawyers, accountants, surveyors or other experts whose advice or services may to it seem necessary, expedient or desirable and rely upon any advice so obtained; 26.2.4 rely as to any matters of fact which might reasonably be expected to be within the knowledge of an Obligor upon a certificate signed by or on behalf of such Obligor; 26.2.5 rely upon any communication or document believed by it to be genuine; 26.2.6 refrain from exercising any right, power or discretion vested in it as agent hereunder unless and until instructed by an Instructing Group as to whether or not such right, power or discretion is to be exercised and, if it is to be exercised, as to the manner in which it should be exercised; and 26.2.7 refrain from acting in accordance with any instructions of an Instructing Group to begin any legal action or proceeding arising out of or in connection with this Agreement until it shall have received such security as it may require (whether by way of payment in advance or otherwise) for all costs, claims, losses, expenses (including legal fees) and liabilities together with any VAT thereon which it will or may expend or incur in complying with such instructions. 26.3 Agent's Obligations The Agent shall: 26.3.1 promptly inform each Bank of the contents of any notice or document received by it in its capacity as Agent from an Obligor hereunder; 26.3.2 promptly notify each Bank of the occurrence of any Event of Default or any default by an Obligor in the due performance of or compliance with its obligations under this Agreement of which the Agent has written notice from any other party hereto; 26.3.3 save as otherwise provided herein, act as agent hereunder in accordance with any instructions given to it by an Instructing Group, which instructions shall be binding on the Arranger and the Banks; and 26.3.4 if so instructed by an Instructing Group, refrain from exercising any right, power or discretion vested in it as agent hereunder. The Agent's duties to the Banks under this Agreement are solely mechanical and administrative in nature. 26.4 Excluded Obligations Notwithstanding anything to the contrary expressed or implied herein, neither the Agent nor the Arranger shall: 26.4.1 be bound to enquire as to (a) whether or not any representation made or deemed to be made by an Obligor in connection herewith is true, (b) the occurrence or otherwise of any Event of Default or Potential Event of Default, (c) the performance by an Obligor of its obligations hereunder or (d) any breach of or default by an Obligor of or under its obligations hereunder; 26.4.2 be bound to account to any Bank for any sum or the profit element of any sum received by it for its own account; 26.4.3 be bound to disclose to any other person any information relating to any member of the Group if (a) such person, on providing such information expressly stated to the Agent or, as the case may be, the Arranger, that such information was confidential or (b) such disclosure would or might in its opinion constitute a breach of any law or be otherwise actionable at the suit of any person; 26.4.4 be under any obligations other than those for which express provision is made herein; or 26.4.5 be or be deemed to be a fiduciary for any other party hereto. 26.5 Indemnification Each Bank shall, in its Proportion, from time to time on demand by the Agent, indemnify the Agent, against any and all costs, claims, losses, expenses (including legal fees) and liabilities together with any VAT thereon which the Agent may incur, otherwise than by reason of its own gross negligence or wilful misconduct, in acting in its capacity as agent hereunder (other than any which have been reimbursed by the Borrowers pursuant to Clause 21.1 (Borrowers' Indemnity)). 26.6 Exclusion of Liabilities Each Bank confirms that it has read the "Important Notice" in the Information Memorandum, that it has complied with the Recipients' Obligations (as defined in the Important Notice) and, accordingly, that it enters into this Agreement on the basis of the Important Notice. In particular, each of the Banks accepts that it is entering into this Agreement in reliance only on the representations of the Obligors in this Agreement and on its own investigations, that it has not relied on the Arranger and that, except that in the case of fraud, it neither has nor will have any claims against the Arranger arising from or in connection with this Agreement. Similarly, each of the Banks accepts that the Important Notice in the Information Memorandum is applicable also to the Agent as if the Agent had been named in addition to the Arranger in the Important Notice. Except in the case of gross negligence or wilful default, none of the Agent and the Arranger accepts any responsibility: 26.6.1 for the adequacy, accuracy and/or completeness of the Information Memorandum or any other information supplied by the Agent or the Arranger, by an Obligor or by any other person in connection with this Agreement, the transactions herein contemplated or any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement; 26.6.2 for the legality, validity, effectiveness, adequacy or enforceability of this Agreement or any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement; or 26.6.3 for the exercise of, or the failure to exercise, any judgement, discretion or power given to any of them by or in connection with this Agreement or any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement. Accordingly, none of the Agent and the Arranger shall be under any liability (whether in negligence or otherwise) in respect of such matters, save in the case of gross negligence or wilful misconduct. 26.7 No Actions Each of the Banks agrees that it will not assert or seek to assert against any director, officer or employee of the Agent or the Arranger any claim it might have against any of them in respect of the matters referred to in Clause 26.6 (Exclusion of Liabilities). 26.8 Business with the Group The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group, whether or not it may or does lead to a conflict with the interests of any of the Banks. Similarly, the Agent or the Arranger may undertake business with or for others even though it may lead to a conflict with the interests of any of the Banks 26.9 Resignation The Agent may resign its appointment hereunder at any time without assigning any reason therefor by giving not less than thirty days' prior notice to that effect to each of the other parties hereto, provided that no such resignation shall be effective until a successor for the Agent is appointed in accordance with the succeeding provisions of this Clause 26. 26.10 Successor Agent If the Agent gives notice of its resignation pursuant to Clause 26.9 (Resignation), then any reputable and experienced bank or other financial institution may be appointed as a successor to the Agent by an Instructing Group during the period of such notice but, if no such successor is so appointed, the Agent may appoint such a successor itself provided that in each case, the prior written consent of the Company (not to be unreasonably withheld or delayed) to any successor to the Agent is obtained. 26.11 Rights and Obligations If a successor to the Agent is appointed under the provisions of Clause 26.10 (Successor Agent), then (a) the retiring Agent shall be discharged from any further obligation hereunder but shall remain entitled to the benefit of the provisions of this Clause 26 and (b) its successor and each of the other parties hereto shall have the same rights and obligations amongst themselves as they would have had if such successor had been a party hereto. 26.12 Own Responsibility It is understood and agreed by each Bank that at all times it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigation into all risks arising under or in connection with this Agreement including, but not limited to: 26.12.1 the financial condition, creditworthiness, condition, affairs, status and nature of each member of the Group; 26.12.2 the legality, validity, effectiveness, adequacy and enforceability of this Agreement and any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement; 26.12.3 whether such Bank has recourse, and the nature and extent of that recourse, against an Obligor or any other person or any of their respective assets under or in connection with this Agreement, the transactions herein contemplated or any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement; and 26.12.4 the adequacy, accuracy and/or completeness of the Information Memorandum and any other information provided by the Agent or the Arranger, an Obligor, or by any other person in connection with this Agreement, the transactions contemplated herein or any other agreement, arrangement or document entered into, made or executed in anticipation of, pursuant to or in connection with this Agreement. Accordingly, each Bank acknowledges to the Agent and the Arranger that it has not relied on and will not hereafter rely on the Agent and the Arranger or any of them in respect of any of these matters. 26.13 Receipt of Information by Agent Any information or document received by the Agent shall only be treated as having been received by the Agent if the same has been delivered to the Agent's agency department in accordance with Clause 31 (Notices). Accordingly, any information or documents received by the Agent other than by its agency department in accordance with Clause 31 (Notices) is not by reason of that receipt to be treated as having been received by the Agent unless and until the Agent's agency department has received actual notice of the same in accordance with such Clause. Save as expressly set out in this Agreement and, unless the Agent's agency department shall have received information or documents in accordance with Clause 31 (Notices) the Agent shall have no duty to disclose, and shall not be liable for the failure to disclose, any information or documents, that re communicated to or obtained by the Agent. 26.14 Confidential Information Notwithstanding anything to the contrary expressed or implied herein and without prejudice to Clause 26.13 (Receipt of Information by Agent), the Agent shall not as between itself and the Banks be bound to disclose to any Bank or other person any information which is supplied by any member of the Group to the Agent in its capacity as agent hereunder for the Banks and which is identified by such member of the Group at the time it is so supplied as being confidential information provided that the consent of the relevant member of the Group to such disclosure shall not be required in relation to any information which in the reasonable opinion of the Agent relates to an Event of Default or Potential Event of Default or in respect of which the Banks have given a confidentiality undertaking in a form satisfactory to the Agent. 26.15 Delegation The Agent may delegate, transfer or assign to any subsidiary of The Chase Manhattan Corporation or its successor from time to time all or any of the rights, powers, authorities and discretions vested in it hereunder and the performance of its duties in accordance herewith, and such delegation, transfer or assignment may be made upon such terms and subject to such conditions (including the power to sub-delegate) and subject to such regulations as the Agent may think fit (and the term "Agent" as used in this Agreement shall include any such delegate). 27. ASSIGNMENTS AND TRANSFERS 27.1 Binding Agreement This Agreement shall be binding upon and enure to the benefit of each party hereto and its or any subsequent successors and Transferees. 27.2 No Assignments and Transfers by the Obligors No Obligor shall be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder. 27.3 Assignments and Transfers by Banks Any Bank may, at any time, assign all or any of its rights and benefits hereunder or transfer in accordance with Clause 27.6 (Transfers by Banks) all or any of its rights, benefits and obligations hereunder to a bank or financial institution, provided that (save in the case of any such assignment or transfer (a) to any subsidiary or holding company, or to any subsidiary of any holding company, of such Bank or (b) to any other Bank and subject as provided in Clause 27.4 (Deemed Consent)) no such assignment or transfer may be made without the prior written consent of the Borrowers, such consent not to be unreasonably withheld or delayed. 27.4 Deemed Consent Any consent required to be given by a party under Clause 27.3 (Assignments and Transfers by Banks) shall be deemed to have been given unless such party shall have notified the requesting party to the contrary within five Business Days after the request for such consent. 27.5 Assignments by Banks If any Bank assigns all or any of its rights and benefits hereunder in accordance with Clause 27.3 (Assignments and Transfers by Banks), then, unless and until the assignee has delivered a notice to the Agent confirming in favour of the Agent, the Arranger and the other Banks that it shall be under the same obligations towards each of them as it would have been under if it had been an original party hereto as a Bank (whereupon such assignee shall become a party hereto as a "Bank"), the Obligors, the Agent, the Arranger and the other Banks shall not be obliged to recognise such assignee as having the rights against each of them which it would have had if it had been such a party hereto. 27.6 Transfers by Banks If any Bank wishes to transfer all or any of its rights, benefits and/or obligations hereunder as contemplated in Clause 27.3 (Assignments and Transfers by Banks), then such transfer may be effected by the delivery to the Agent of a duly completed Transfer Certificate executed by such Bank and the relevant Transferee in which event, on the later of the Transfer Date specified in such Transfer Certificate and the fifth Business Day after (or such earlier Business Day endorsed by the Agent on such Transfer Certificate falling on or after) the date of delivery of such Transfer Certificate to the Agent: 27.6.1 to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer by novation its rights, benefits and obligations hereunder, each of the Obligors and such Bank shall be released from further obligations towards one another hereunder and their respective rights against one another shall be cancelled (such rights and obligations being referred to in this Clause 27.6 as "discharged rights and obligations"); 27.6.2 each of the Obligors and the Transferee party thereto shall assume obligations towards one another and/or acquire rights against one another which differ from such discharged rights and obligations only insofar as such Obligor and such Transferee have assumed and/or acquired the same in place of such Obligor and such Bank; 27.6.3 the Agent, the Arranger, such Transferee and the other Banks shall acquire the same rights and benefits and assume the same obligations between themselves as they would have acquired and assumed had such Transferee been an original party hereto as a Bank with the rights, benefits and/or obligations acquired or assumed by it as a result of such transfer and to that extent the Agent, the Arranger and the relevant Bank shall each be released from further obligations to each other hereunder; and 27.6.4 such Transferee shall become a party hereto as a "Bank". 27.7 Assignment and Transfer Fees On the date upon which an assignment takes effect pursuant to Clause 27.5 (Assignments by Banks) or a transfer takes effect pursuant to Clause 27.6 (Transfers by Banks) the relevant assignee or Transferee shall pay to the Agent for its own account a fee of 1,000. 27.8 Disclosure of Information Any Bank may disclose to any person: 27.8.1 to (or through) whom such Bank assigns or transfers (or may potentially assign or transfer) all or any of its rights, benefits and obligations hereunder; 27.8.2 with (or through) whom such Bank enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor; or 27.8.3 to whom information may be required to be disclosed by any applicable law, such information about any Obligor or the Group and this Agreement as such Bank shall consider appropriate provided that the person to whom such information is disclosed shall give a confidentiality undertaking in a form agreed between the Company and the Agent. 27.9 Notification The Agent shall within fourteen days after receiving a Transfer Certificate notify the Borrowers and the other Banks of any assignment or transfer completed pursuant to this Clause 27. 28. ECONOMIC AND MONETARY UNION 28.1 Commencement Clause 28.2 (Redenomination and Alternative Currencies) to Clause 28.8 (Rounding and Other Consequential Changes) (inclusive) shall come into effect on the Commencement Date provided that, if and to the extent that any such Clause relates to any state (or the currency of such state) which shall not be a participating member state on the Commencement Date, such Clause shall come into effect in relation to such state (and the currency of such state) on and from the date on which such state becomes a participating member state. 28.2 Redenomination and Alternative Currencies Each obligation under this Agreement which has been denominated in a national currency unit shall be redenominated into the euro unit in accordance with EMU legislation. However, if and to the extent that any EMU legislation provides that an amount (which is (a) denominated either in the euro or in the national currency unit of a participating member state and (b) payable within that participating member state by crediting an account of the creditor) can be paid by the debtor either in the euro unit or in that national currency unit, each party to this Agreement shall be entitled to pay or repay any such amount either in the euro unit or in such national currency unit. 28.3 Advances Any Advance in the currency of a participating member state shall be made in the euro unit. 28.4 Business Days In relation to any amount denominated or to be denominated in the euro or a national currency unit, any reference to a Business Day shall be construed as a reference to a day (other than a Saturday or Sunday) on which commercial banks are generally open for business in: 28.4.1 London and Chicago; and 28.4.2 the principal financial centre in such participating member state as the Agent shall from time to time nominate for this purpose. 28.5 Payments to the Agent Clause 23.1 (Payments to the Agent) shall be construed so that, in relation to the payment of any amount of euro units or national currency units, such amount shall be made available to the Agent in immediately available, freely transferable, cleared funds to such account with such bank in such principal financial centre in such participating member state (or in London) as the Agent shall from time to time nominate for this purpose. 28.6 Payments by the Agent to the Banks Any amount payable by the Agent to the Banks under this Agreement in the currency of a participating member state shall be paid in the euro unit. 28.7 Payments System and the Agent In relation to the payment of any amount denominated in the euro or in a national currency unit, the Agent shall not be liable to any Borrower or any of the Banks for any delay, or the consequences of any delay, in the crediting to any account of any amount required by this Agreement to be paid by the Agent if the Agent shall have taken all relevant steps to achieve, on the date required by this Agreement, the payment of such amount in immediately available, freely transferable, cleared funds (in the euro unit or, as the case may be, in a national currency unit) to the account with the bank in the principal financial centre in the participating member state which any Borrower or, as the case may be, any Bank shall have specified for such purpose. In this Clause 28.7, "all relevant steps" means all such steps as may be prescribed from time to time by the regulations or operating procedures of such clearing or settlement system as the Agent may from time to time reasonably determine for the purpose of clearing or settling payments of the euro. 28.8 Rounding and Other Consequential Changes Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU legislation: 28.8.1 each reference in this Agreement to a minimum amount (or an integral multiple thereof) in a national currency unit to be paid to or by the Agent shall be replaced by a reference to such reasonably comparable and convenient amount (or an integral multiple thereof) in the euro unit as the Agent may from time to time specify; and 28.8.2 save as expressly provided in this Clause 28, this Agreement shall be subject to such reasonable changes of construction as the Agent may from time to time specify to be necessary or appropriate to reflect the introduction of or changeover to the euro in participating member states, provided that this Clause shall not reduce or increase any actual or contingent liability arising under this Agreement. 29. CALCULATIONS AND EVIDENCE OF DEBT 29.1 Basis of Accrual Interest and commitment commission shall accrue from day to day and shall be calculated on the basis of a year of 365 days (or, in any case where market practice differs, in accordance with market practice) and the actual number of days elapsed. 29.2 Quotations If on any occasion a Reference Bank or Bank fails to supply the Agent with a quotation required of it under the foregoing provisions of this Agreement, the rate for which such quotation was required shall be determined from those quotations which are supplied to the Agent, provided that, in relation to determining LIBOR, this Clause 29.2 shall not apply if only one Reference Bank supplies a quotation. 29.3 Evidence of Debt Each Bank shall maintain in accordance with its usual practice accounts evidencing the amounts from time to time lent by and owing to it hereunder. 29.4 Control Accounts The Agent shall maintain on its books a control account or accounts in which shall be recorded (a) the amount of any Advance or Unpaid Sum and each Bank's share therein, (b) the amount of all principal, interest and other sums due or to become due from an Obligor and each Bank's share therein and (c) the amount of any sum received or recovered by the Agent hereunder and each Bank's share therein. 29.5 Prima Facie Evidence In any legal action or proceeding arising out of or in connection with this Agreement, the entries made in the accounts maintained pursuant to Clause 29.3 (Evidence of Debt) and Clause 29.4 (Control Accounts) shall be prima facie evidence of the existence and amounts of the specified obligations of the Obligors. 29.6 Certificates of Banks A certificate of a Bank as to (a) the amount by which a sum payable to it hereunder is to be increased under Clause 9.1 (Tax Gross-up), (b) the amount for the time being required to indemnify it against any such cost, payment or liability as is mentioned in Clause 9.2 (Tax Indemnity) or Clause 11.1 (Increased Costs) or (c) the amount of any credit, relief, remission or repayment as is mentioned in Clause 10.3 (Tax Credit Payment) or Clause 10.4 (Tax Credit Clawback) shall, in the absence of manifest error, be prima facie evidence of the existence and amounts of the specified obligations of the Obligors. 29.7 Agent's Certificates A certificate of the Agent as to the amount at any time due from the Borrower hereunder or the amount which, but for any of the obligations of the Borrowers hereunder being or becoming void, voidable, unenforceable or ineffective, at any time would have been due from the Borrowers hereunder shall, in the absence of manifest error, be conclusive for the purposes of Clause 17 (Guarantee and Indemnity). 30. REMEDIES AND WAIVERS, PARTIAL INVALIDITY 30.1 Remedies and Waivers No failure to exercise, nor any delay in exercising, on the part of any Finance Party any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. 30.2 Partial Invalidity If, at any time, any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. 31. NOTICES 31.1 Communications in Writing Each communication to be made hereunder shall be made in writing and, unless otherwise stated, shall be made by fax or letter. 31.2 Addresses Any communication or document to be made or delivered pursuant to this Agreement shall (unless the recipient of such communication or document has, by fifteen days' written notice to the Agent, specified another address or fax number) be made or delivered to the address or fax number: 31.2.1 in the case of the Obligors and the Agent, identified with its name below; and 31.2.2 in the case of each Bank, notified in writing to the Agent prior to the date hereof (or, in the case of a Transferee, at the end of the Transfer Certificate to which it is a party as Transferee), provided that not more than one address may be specified by each party pursuant to this Clause 31.2 at any time. 31.3 Delivery Any communication or document to be made or delivered by one person to another pursuant to this Agreement shall: 31.3.1 if by way of fax, be deemed to have been received when a transmission report which confirms that the transmission was successfully completed has been printed; and 31.3.2 if by way of letter, be deemed to have been delivered when left at the relevant address or, as the case may be, ten days after being deposited in the post postage prepaid in an envelope addressed to it at such address, provided that any communication or document to be made or delivered to the Agent shall be effective only when received by its agency department and then only if the same is expressly marked for the attention of the department or officer identified with the Agent's signature below (or such other department or officer as the Agent shall from time to time specify for this purpose). 31.4 Notification of Changes Promptly upon receipt of notification of a change of address or fax number pursuant to Clause 31.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other parties hereto of such change. 31.5 English Language Each communication and document made or delivered by one party to another pursuant to this Agreement shall be in the English language or accompanied by a translation thereof into English certified (by an officer of the person making or delivering the same) as being a true and accurate translation thereof. 32. COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 33. AMENDMENTS 33.1 Amendments If the Agent has the prior consent of an Instructing Group, the Agent and the Obligors may from time to time agree in writing to amend this Agreement or to waive, prospectively or retrospectively, any of the requirements of this Agreement and any amendments or waivers so agreed shall be binding on all the Finance Parties and the Obligors, provided that no such waiver or amendment shall subject any party hereto to any new or additional obligations without the consent of such party. 33.2 Amendments Requiring the Consent of all the Banks An amendment or waiver which relates to: 33.2.1 Clause 25 (Sharing) or this Clause 33; 33.2.2 reducing the proportion of any amount received or recovered in respect of any amount due from the Borrowers hereunder to which any Bank is entitled; 33.2.3 a change in the principal amount of or currency of any Advance, or extending the term of the Facility or the Term of any Advance; 33.2.4 a change in the Margin, the amount or currency of any payment of interest, fees or any other amount payable hereunder to any Finance Party or deferral of the date for payment thereof; 33.2.5 the conditions set out in sub-clause 3.3.3 of Clause 3.3 (Drawdown Conditions) if an Event of Default or Potential Event of Default which relates to a Repeated Representation is continuing; 33.2.6 the definition of "Event of Default", "Instructing Group" or "Potential Event of Default"; or 33.2.7 any provision which contemplates the need for the consent or approval of all the Banks, shall not be made without the prior consent of all the Banks. 33.3 Exceptions Notwithstanding any other provisions hereof, the Agent shall not be obliged to agree to any such amendment or waiver if the same would: 33.3.1 amend or waive this Clause 33, Clause 19 (Costs and Expenses) or Clause 26 (The Agent, the Arranger and the Banks); or 33.3.2 otherwise amend or waive any of the Agent's rights hereunder or subject the Agent or the Arranger to any additional obligations hereunder. 34. ADDITIONAL BORROWERS 34.1 Designation of Additional Borrowers The Company may, with the prior written consent of the Agent (after consultation with the Banks), which consent shall not be unreasonably withheld or delayed, at any time designate another member of the Group as an Additional Borrower. 34.2 Accession of Additional Borrower Such designation shall take effect and the member of the Group so designated shall become an Additional Borrower on the date the Agent receives in form and substance reasonably satisfactory to it: 34.2.1 a Deed of Accession signed by each party to it other than the Agent; 34.2.2 each of the documents referred to in Clause 4 (Conditions Precedent) of the Deed of Accession; and 34.2.3 such information relating to the member of the Group to become a party to this Agreement in the capacity of "Borrower" as the Agent may reasonably require. 35. GOVERNING LAW This Agreement shall be governed by, and construed in accordance with, English law. 36. JURISDICTION 36.1 English Courts Each of the parties hereto irrevocably agrees for the benefit of the Finance Parties that the courts of England shall have non-exclusive jurisdiction to hear and determine any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Agreement (respectively "Proceedings" and "Disputes") and, for such purposes, irrevocably submits to the jurisdiction of such courts. 36.2 New York Courts Each of the parties hereto irrevocably agrees that the courts of the State of New York and the courts of the United States of America, in each case sitting in the county of New York, shall have non-exclusive jurisdiction to hear and determine any Proceedings and to settle any Disputes and, for such purposes, irrevocably submits to the jurisdiction of such courts. 36.3 Convenient Forum The parties agree that the courts of England and the State of New York are the most appropriate and convenient courts to determine any proceedings and to settle Disputes between them and, accordingly, that they will not argue to the contrary. 36.4 Non-Exclusive Jurisdiction This Clause 36 is for the benefit of the Finance Parties only. As a result and notwithstanding Clauses 36.1 (English Courts) and 36.2 (New York Courts), it does not prevent any Finance Party from taking Proceedings in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent Proceedings in any number of jurisdictions. 36.5 Service of Process Each Obligor agrees that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on it: 36.5.1 in connection with any Proceedings in England on HCEL at the address identified with its name below; and 36.5.2 in connection with any Proceedings in New York on CT Corp. at 2085 La Salle Street, Suite 824, Chicago, Illinois 60604. HCEL unconditionally accepts such appointment. If the appointment of either of the persons mentioned in this Clause 36.5 ceases to be effective, each of the Obligors shall immediately appoint a further person in England or, as the case may be, New York and, failing such appointment within fifteen days, the Agent shall be entitled to appoint a person by notice to each of the Obligors. Nothing contained herein shall affect the right to serve process in any manner permitted by law. 36.6 Waiver of Jury Trial EACH OF THE PARTIES TO THIS AGREEMENT AGREES TO WAIVE IRREVOCABLY ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE DOCUMENTS REFERRED TO HEREIN OR ANY TRANSACTION CONTEMPLATED HEREIN. This waiver is intended to apply to all Disputes. Each party acknowledges that (a) this waiver is a material inducement to enter into this Agreement, (b) it has already relied on this waiver in entering into this Agreement and (c) it will continue to rely on this waiver in future dealings. Each party hereto represents that it has reviewed this waiver with its legal advisers and that it knowingly and voluntarily waives its jury trial rights after consultation with its legal advisers. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written. SCHEDULE 1 THE BANKS Bank Commitment Banca Nazionale del Lavoro S.p.A., London Branch 7,500,000 The Governor and Company of the Bank of Scotland 7,500,000 The Chase Manhattan Bank 7,500,000 Lloyds Bank Plc 7,500,000 Midland Bank plc 7,500,000 State Street Bank and Trust Company 7,500,000 ----------- 45,000,000 SCHEDULE 2 FORM OF TRANSFER CERTIFICATE To: Chase Manhattan International Limited TRANSFER CERTIFICATE relating to the agreement (as from time to time amended, varied, novated or supplemented, the "Facility Agreement") dated 18 December 1998 whereby a 45,000,000 revolving credit facility was made available to Harris Chemical Europe Ltd, NAMSCO (UK) Ltd and Salt Union Limited as original borrowers under the guarantee of IMC Global Inc. and IMC Inorganic Chemicals Inc. by a group of banks on whose behalf Chase Manhattan International Limited acted as agent in connection therewith. 1. Terms defined in the Facility Agreement shall, subject to any contrary indication, have the same meanings herein. The terms Bank and Transferee are defined in the schedule hereto. 2. The Bank (i) confirms that the details in the schedule hereto under the heading "Bank's Commitment" or "Advance(s)" accurately summarises its Commitment and/or, as the case may be, its participation in, and the Term and Repayment Date of, one or more existing Advances and (ii) requests the Transferee to accept and procure the transfer by novation to the Transferee of the portion specified in the schedule hereto of, as the case may be, its Commitment and/or its participation in such Advance(s) by counter-signing and delivering this Transfer Certificate to the Agent at its address for the service of notices specified in the Facility Agreement. 3. The Transferee hereby requests the Agent to accept this Transfer Certificate as being delivered to the Agent pursuant to and for the purposes of Clause 27.6 (Transfers by Banks) of the Facility Agreement so as to take effect in accordance with the terms thereof on the Transfer Date or on such later date as may be determined in accordance with the terms thereof. 4. The Transferee confirms that it has received a copy of the Facility Agreement together with such other information as it has required in connection with this transaction and that it has not relied and will not hereafter rely on the Bank to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information and further agrees that it has not relied and will not rely on the Bank to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Obligors. 5. The Transferee hereby undertakes with the Bank and each of the other parties to the Facility Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Facility Agreement will be assumed by it after delivery of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. 6. The Bank makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Facility Agreement or any document relating thereto and assumes no responsibility for the financial condition of the Obligors or for the performance and observance by the Obligors of any of its obligations under the Facility Agreement or any document relating thereto and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded. 7. The Bank hereby gives notice that nothing herein or in the Facility Agreement (or any document relating thereto) shall oblige the Bank to (a) accept a re-transfer from the Transferee of the whole or any part of its rights, benefits and/or obligations under the Facility Agreement transferred pursuant hereto or (b) support any losses directly or indirectly sustained or incurred by the Transferee for any reason whatsoever including the non-performance by an Obligor or any other party to the Facility Agreement (or any document relating thereto) of its obligations under any such document. The Transferee hereby acknowledges the absence of any such obligation as is referred to in (a) or (b) above. 8. This Transfer Certificate and the rights, benefits and obligations of the parties hereunder shall be governed by and construed in accordance with English law. THE SCHEDULE 1. Bank: 2. Transferee: 3. Transfer Date: 4. Commitment: Bank's Commitment Portion Transferred 5. Advance(s): Amount of Term and Bank's Participation Repayment Date Portion Transferred [Transferor Bank] [Transferee Bank] By: By: Date: Date: ADMINISTRATIVE DETAILS OF TRANSFEREE Address: Contact Name: Account for Payments in sterling: Fax: Telephone: SCHEDULE 3 CONDITIONS PRECEDENT 1. Duly executed copies of this Agreement and the Subordination Deed. 2. In relation to each Obligor: (a) a copy, certified as at the date of this Agreement a true and up-to-date copy by an Authorised Signatory of such Obligor, of the constitutional documents of such Obligor; (b) copy, certified as at the date of this Agreement a true and up-to-date copy by an Authorised Signatory of such Obligor, of an extract of a board resolution of such Obligor approving the execution, delivery and performance of this Agreement and the terms and conditions hereof and authorising a named person or persons to sign this Agreement and any documents to be delivered by such Obligor pursuant hereto; (c) a certificate of an Authorised Signatory of such Obligor setting out the names and signatures of the persons authorised to sign, on behalf of such Obligor, this Agreement and any documents to be delivered by such Obligor pursuant hereto; and (d) a certificate of an Authorised Signatory of such Obligor confirming that utilisation of the Facility would not breach any restriction on its borrowing powers. 3. A copy, certified as at the date of this Agreement a true and up-to-date copy by an Authorised Signatory of such Obligor, of each of the most recent Form 10-K, Form 10-Q and Form 8-K (or their equivalents) lodged by an Obligor with the Securities Exchange Commission. 4. A copy, certified as at the date of this Agreement a true and complete copy, of the Deed of Release dated on or about the date of this Agreement between HCEL and the Bank of Scotland. 5. Certificate from an Authorised Signatory of the Company confirming that the guarantee granted by it under Clause 17 (Guarantee and Indemnity) is within the limit on guarantees in respect of UK operations stipulated in the resolutions referred to in paragraph 2(b) above. 6. An opinion of the General Counsel of the Company satisfactory in form and substance to the Agent. 7. An opinion of the Obligors' US Counsel satisfactory in form and substance to the Agent. 8. An opinion of the Banks' US Counsel satisfactory in form and substance to the Agent. 9. An opinion of Clifford Chance, solicitors to the Arranger. 10. Evidence that CT Corp has agreed to act as the agent of the Obligors for the service of process in New York. SCHEDULE 4 NOTICE OF DRAWDOWN From: [Borrower] To: Chase Manhattan International Limited Dated: Dear Sirs, 1. We refer to the agreement (the "Facility Agreement") dated 18 December 1998 and made between Harris Chemical Europe Ltd, NAMSCO (UK) Ltd and Salt Union Limited as original borrowers, IMC Global Inc and IMC Inorganic Chemicals Inc. as guarantors, Chase Manhattan International Limited as agent and the financial institutions named therein as banks. Terms defined in the Facility Agreement shall have the same meaning in this notice. 2. This notice is irrevocable. 3. We hereby give you notice that, pursuant to the Facility Agreement and upon the terms and subject to the conditions contained therein, we wish an Advance to be made to us as follows: 4. Amount: (a) Drawdown Date: (b) Term: 5. We confirm that, at the date hereof, the Repeated Representations are true in all material respects and no Event of Default [or Potential Event of Default]( ) is continuing. 6. The proceeds of this drawdown should be credited to [insert account details]. Yours faithfully ------------------------ Authorised Signatory for and on behalf of [Name of Borrower] SCHEDULE 5 DETERMINATION OF MARGIN AND COMMITMENT COMMISSION 1. The Margin and Commitment Commission for a period will be the applicable percentage rate per annum set out in the table below. Margin Commitment Commission Credit Rating (% per annum) (% per annum) Level 1 0.60 0.30 Level II 0.65 0.30 Level III 1.00 0.45 Level IV 1.50 0.75 2. The credit ratings to be used for the purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Company excluding any credit enhancement provided by any person other than a member of the Group. Any rating assigned to any other debt security of the Company shall be disregarded. 3. The credit rating on any day is the credit rating in effect at the close of business on that day. 4. If on any calculation date the Company has split ratings and the ratings differential is more than one increment, the median rating (or if none, the higher of the intermediate ratings) shall apply. 5. For the purposes of this Schedule: (a) "Level I Status" exists at any date if the Company long term debt is rated BBB+ or higher by S&P or Baa1 or better by Moody's; (b) "Level II Status" exists at any date if: (i) the Company long term debt is rated BBB or higher by S&P or Baa2 or better by Moody's; and (ii) Level I Status does not exist; (c) "Level III Status" exists at any date if: (i) IMC Global Inc. long term debt is rated BBB- or higher by S&P or Baa3 or better by Moody's; and (ii) neither Level I Status nor Level II Status exists; (d) "Level IV Status" exists at any date if no other status exists; (e) "Moody's" means Moody's Investor Services, Inc.; and (f) "S&P" means Standard and Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. SCHEDULE 6 DEED OF ACCESSION THIS DEED is made on [*] BETWEEN (1) [*] (the "Additional Borrower"); (2) IMC GLOBAL INC. and IMC INORGANIC CHEMICALS INC. (each, a "Guarantor") on their own behalf and on behalf of each Borrower; and (3) CHASE MANHATTAN INTERNATIONAL LIMITED in its capacity as agent under the Facility Agreement (the "Agent"). WHEREAS (A) This Deed is supplemental to an agreement (the "Facility Agreement") dated 18 December 1998 between HCEL, NAMSCO (UK) Ltd and Salt Union Limited as Original Borrowers, IMC Global Inc. and IMC Inorganic Chemicals Inc. as Guarantors, Chase Manhattan International Limited as Agent, Chase Manhattan plc as Arranger and Banks referred to therein. (B) The Additional Borrower wishes to become a party to the Facility Agreement in the capacity of Borrower. NOW THIS DEED WITNESSES: 1. Definitions Definitions in the Facility Agreement apply in this Deed unless the context requires otherwise. 2. Interpretation This Deed and the Facility Agreement shall be read and construed as one document and references in the Facility Agreement to the Facility Agreement (however expressed) shall be read and construed as references to the Facility Agreement this Deed together. 3. Accession of Additional Borrower In consideration of the Banks through the Agent agreeing to the Additional Borrower becoming an Additional Borrower under Clause 34 (Additional Borrowers) of the Facility Agreement, the Additional Borrower agrees to observe and be bound by the terms and provisions of the Facility Agreement to the extent that they apply to the Borrower as if it were an original party to the Facility Agreement. 4. Conditions Precedent The obligations of the Agent and each Bank under this Deed are subject to the condition precedent that the Agent has received the following documents in form and substance satisfactory to it: 4.1 a copy, certified by a director of the Additional Borrower as being a true, complete and up-to-date, of the certificate of incorporation and constituent documents of the Additional Borrower; 4.2 a certificate of a director of the Additional Borrower which: 4.2.1 attaches an extract of the minutes of a meeting of the directors of the Additional Borrower which authorise (a) the execution, delivery and performance on behalf of the Additional Borrower of this Deed, (b) named persons to execute this Deed on behalf of the Additional Borrower and to give any notices or certificates required in connection with it and which certifies that such minutes are a true and complete copy and that such resolutions have not been varied or rescinded; 4.2.2 a copy, certified to be a true copy, of the signature of each Authorised Signatory of the Additional Borrower; 4.2.3 a certificate of a director of the Additional Borrower confirming that the aggregate of the borrowings of the Additional Borrower do not or, as the case may be, would not if fully drawn, exceed any borrowing limit contained in the Additional Borrower's constitutional documents or in any trust deed or other agreement or instrument to which the Additional Borrower is a party; 4.2.4 an English law legal opinion in a form satisfactory to the Agent (together with a legal opinion (in a form satisfactory to the Agent) from the jurisdiction of incorporation of the Additional Borrower (if the Additional Borrower is not established in England)); and 4.2.5 [*Insert any other conditions precedent as Agent may reasonably require*] 5. Representations The Additional Borrower makes each of the Repeated Representations made by the Obligors (other than the Company) in respect of itself only and the representation set out in Clause 14.14 (Claims Pari Passu). 6. Confirmation of Guarantee Each Guarantor confirms that its obligations and the rights, powers and remedies conferred upon the Agent and the Banks under Clause 17 (Guarantee and Indemnity) of the Facility Agreement shall not be discharged, impaired or otherwise be affected by this Deed. 7. Notices The Additional Borrower's address for notices is identified beneath its name below. 8. Governing Law This Deed shall be governed by and construed in accordance with English law. - - ------------------------------------------------- *Insert provisions to deal with process agent and jurisdiction clause if Additional Borrower is a foreign company. IN WITNESS whereof this Deed has been duly executed on the day and year first above written. Additional Borrower [Name of Additional Borrower] By: Address: [*] Fax: [*] Attention: [*] Guarantors IMC GLOBAL INC. By: IMC INORGANIC CHEMICALS INC. By: Agent CHASE MANHATTAN INTERNATIONAL LIMITED By: SIGNATURES The Original Borrowers HARRIS CHEMICAL EUROPE LTD By: David Goadby Address: 3 Kings Court, Manor Farm Road Manor Park Runcorn Cheshire WA7 1HR Fax: 01928 579 432 NAMSCO (UK) LTD By: David Goadby Address: 3 Kings Court, Manor Farm Road Manor Park Runcorn Cheshire WA7 1HR Fax: 01928 579 432 SALT UNION LIMITED By: David Goadby Address: 3 Kings Court, Manor Farm Road Manor Park Runcorn Cheshire WA7 1HR Fax: 01928 579 432 The Guarantors IMC GLOBAL INC. By: E. Paul Dunn, Jr Address: 2100 Sanders Road Northbrook Illinois 60062 USA Fax: 1 847 205 4900 IMC INORGANIC CHEMICALS INC. By: E. Paul Dunn, Jr Address: 2100 Sanders Road Northbrook Illinois 60062 USA Fax: 1 847 205 4900 The Arranger CHASE MANHATTAN plc By: Philippe GOFFIN The Agent CHASE MANHATTAN INTERNATIONAL LIMITED By: Kathryn Jepson Address: 125 London Wall London EC2Y 5AS Fax: 0171 777 2360 Attention: Loan Agency The Banks BANCA NAZIONALE DEL LAVORO S.p.A., LONDON BRANCH By: John Barnett Giulia Billard THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND By: Gavin Johnstone THE CHASE MANHATTAN BANK By: Kathryn Jepson LLOYDS BANK PLC By: Simon Gledhill MIDLAND BANK plc By: Mark Stapley STATE STREET BANK AND TRUST COMPANY By: Richard T. Flood III EX-10.75 15 AMENDMENT AGREEMENT EXHIBIT 10.75 IMC GLOBAL (EUROPE) LIMITED IMC GLOBAL (UK) LIMITED SALT UNION LIMITED Original Borrowers IMC GLOBAL INC. IMC INORGANIC CHEMICALS INC. Guarantors CHASE MANHATTAN INTERNATIONAL LIMITED Agent ===================================== AMENDMENT AGREEMENT relating to a 45,000,000 Revolving Loan Agreement dated 18 December 1998 ===================================== THIS AGREEMENT is made on 15 January 1999 BETWEEN (1) IMC GLOBAL (EUROPE) LIMITED (formerly Harris Chemical Europe Ltd) (registered no. 3107016), IMC GLOBAL (UK) LIMITED (formerly Namsco (UK) Ltd) (registered no. 2654680) and SALT UNION LIMITED (registered no. 2654529) (each, an "Original Borrower"); (2) IMC GLOBAL INC. and IMC INORGANIC CHEMICALS INC. (each, a "Guarantor"); and (3) CHASE MANHATTAN INTERNATIONAL LIMITED as agent for the Arranger and the Banks (the "Agent"). RECITALS (A) The Banks have agreed to extend certain financial accommodation to the Borrowers under the Principal Agreement. (B) The parties wish to amend the Principal Agreement in the manner set out herein. IT IS AGREED as follows. 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions The following definitions apply unless the context requires otherwise. "Effective Date" means 31 December 1998. "Principal Agreement" means the 45,000,000 Revolving Loan Agreement dated 18 December 1998 between IMC Global (Europe) Limited, IMC Global (UK) Limited and Salt Union Limited as borrowers, IMC Global Inc. and IMC Inorganic Inc. as guarantors, Chase Manhattan plc as arranger, Chase Manhattan International Limited as agent and the banks referred to therein. 1.2 Interpretation Clauses 1.2 (Interpretation) to 1.10 (Economic and Monetary Union Definitions) of the Principal Agreement shall apply (having made all necessary changes) in this Agreement as if set out in full. 1.3 Principal Agreement Definitions Definitions in the Principal Agreement apply in this Agreement unless the context requires otherwise. 2. AMENDMENT 2.1 Amendment On and from the date on which the Agent confirms to the Banks and the Company that it has received the fees referred to in Clause 3 (Condition Precedent), the Principal Agreement shall be amended, with effect from the Effective Date, by inserting a new sub-clause 15.13.3 at the end of sub-clause 15.13.2 of Clause 15.13 (Leverage Ratio) as follows. "15.13.3 The calculation of the Leverage Ratio shall: (a) exclude the pre-tax non-recurring charges not in excess of approximately $325,000,000 incurred by the Company in, and reflected in the Company's consolidated statement of income for, the fiscal year ended 31 December 1998; and (b) disregard classification of the Company's Agribusiness unit as a discontinued operation, provided that if within 3 months of the date hereof (the "Relevant Period") the Company's credit rating (as defined in Schedule 5 (Determination of Margin and Commitment Commission) at the date hereof (the "Current Credit Rating") is: (c) downgraded and not subsequently restored to the Current Credit Rating during the Relevant Period, the increase in the Margin and the commitment commission provided for by Schedule 5 (Determination of Margin and Commitment Commission) shall take effect from the date hereof; and (d) downgraded but subsequently restored to the Current Credit Rating at any time during the Relevant Period, the increase in the Margin and the commitment commission provided for by Schedule 5 (Determination of Margin and Commitment Commission) shall: (i) accrue from the date hereof up to and including the date on which the Current Credit Rating is restored; and (ii) thereafter the Margin and the commitment commission shall reduce in accordance with the provisions of Schedule 5 (Determination of Margin and Commitment Commission). For the avoidance of doubt, if at any time during the Relevant Period the Current Credit Rating is affirmed in circumstances where the Current Credit Rating has not previously been downgraded, paragraphs (c) and (d) of this sub-clause 15.13.3 shall not apply." 2.2 Waiver 2.2.1 The Finance Parties waive any Event of Default or Potential Event of Default which has been disclosed in writing by the Company to the Agent prior to the date hereof. 2.2.2 Nothing herein shall affect the rights of the Finance Parties in respect of the occurrence of any other Event of Default or Potential Event of Default which has arisen but which has not been disclosed in writing by the Company or any other Obligor to the Agent prior to the date hereof. 3. CONDITION PRECEDENT This Agreement shall be of no force and effect until the Agent shall have received on account of each Bank an amendment fee in an amount equal to 0.05 per cent. of each Bank's Commitment. 4. REPRESENTATIONS On the date hereof, each Obligor makes each of the Repeated Representations save that the Company does not make the representation set out in sub-clause 14.4.1 of Clause 14.4 (Financial Information) of the Principal Agreement. 5. CONTINUITY AND FURTHER ASSURANCE 5.1 Continuing Obligations The provisions of Principal Agreement shall, save as amended by this Agreement, continue in full force and effect. 5.2 Further Assurance Each Obligor shall, at the request of the Agent and at its own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected by this Agreement. 6. STAMP TAXES The Company shall pay all stamp, registration and other taxes to which this Agreement or any judgment given in connection herewith is or at any time may be subject and shall, from time to time on demand of the Agent, indemnify the Finance Parties against any liabilities, costs, claims and expenses resulting from any failure to pay or any delay in paying any such tax. 7. MISCELLANEOUS 7.1 Incorporation of Provisions The following provisions of the Principal Agreement shall apply (having made all necessary changes) in this Agreement as if set out in full: 7.1.1 Clause 27.1 (Binding Agreement); 7.1.2 Clause 30 (Remedies and Waiver, Partial Invalidity); 7.1.3 Clause 35 (Governing Law); and 7.1.4 Clause 36 (Jurisdiction). 7.2 Counterparts This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. 7.3 One Agreement This Agreement and the Principal Agreement shall be read and construed as one document. References in the Principal Agreement (however expressed) to the Principal Agreement shall be read and construed as the Principal Agreement as amended by this Agreement. AS WITNESS the hands of duly authorised representatives of the parties hereto the day and year first before written. SIGNATURES Original Borrowers IMC GLOBAL (EUROPE) LIMITED By: /s/ David Goadby ------------------------------ IMC GLOBAL (UK) LIMITED By: /s/ David Goadby ------------------------------ SALT UNION LIMITED By: /s/ David Goadby ------------------------------ Guarantors IMC GLOBAL INC. By: /s/ E.Paul Dunn Jr. ------------------------------ IMC INORGANIC CHEMICALS INC. By: /s/ E. Paul Dunn Jr. ------------------------------ Agent CHASE MANHATTAN INTERNATIONAL LIMITED By: /s/ Kathryn Jepson ------------------------------ EX-10.76 16 FACILITY AGREEMENT EXHIBIT 10.76 FACILITY AGREEMENT BANQUE NATIONALE DE PARIS (ARBN 000 000 117) THE FIRST NATIONAL BANK OF CHICAGO (ARBN 065 752 918) AND PENRICE SODA PRODUCTS PTY LTD (ACN 008 206 942) AND PENRICE HOLDINGS PTY (ACN 008 125 835) AND IMC GLOBAL AUSTRALIA PTY LTD (ACN 072 639 902) AND IMC GLOBAL INC PIPER ALDERMAN Lawyers 167 Flinders Street Adelaide SA 5000 Australia Telephone: (08) 8205-3333 Facsimile: (08) 8205-3300 MG [ML]85806 TABLE OF CONTENTS Page No. 1. INTERPRETATION 1 1.1 Definitions 1 1.2 Construction 6 2. THE FACILITY 7 3. ACCOMMODATION LIMIT 7 4. PURPOSE OF THE FACILITY 7 5. DRAWDOWN 8 5.1 Time of Drawdown Notice 8 5.2 Drawdown Notice 8 5.3 Term Loan 8 5.4 Liability for Drawdown 8 5.5 Minimum Drawn 8 5.6 Provision of Funds 8 5.7 Payment to Borrower 8 6. INTEREST 9 7. FEES, EXPENSES & CHARGES 10 7.1 Establishment Fee 10 7.2 Line Fee 10 7.3 Agency Fee 11 7.4 Expenses 11 7.5 Government Charges 11 7.6 Increase in Costs by Government Action 12 7.7 Gross Up 13 8. REPAYMENTS 14 8.1 Payment of Principal 15 8.2 Redrawing 15 8.3 Early Repayment of Advances 15 8.4 Manner of Payment 16 8.5 Distribution by Administrative Agent 16 8.6 Non-receipt of funds by the Administrative Agent from the Borrower 17 9. TERMINATION OF FACILITY 17 10. CONDITIONS PRECEDENT 17 10.1 To the Facility 18 10.2 To A Drawdown 18 11. REPRESENTATIONS AND WARRANTIES 19 11.1 Status 19 11.2 This Agreement 19 11.3 Third Party Rights 19 11.4 Authorities 19 11.5 Other Commitments 20 11.6 Litigation 20 11.7 Taxation 20 11.8 Unsecured Liabilities 20 11.9 Trusts 20 11.10 Insurance Policies 20 11.11 Adverse Circumstances 20 11.12 Year 2000 Compliance 21 11.13 No Misrepresentation 21 12. GENERAL OBLIGATIONS 21 12.1 Authorities 22 12.2 Notice of Default 22 12.3 Law 22 12.4 Access 22 12.5 Negative Pledge 22 12.6 Inspection 23 12.7 Public Information 23 13. FINANCIAL INFORMATION 24 14. EVENTS OF DEFAULT 24 15. INDEMNITIES 26 16. GUARANTEE 27 17. GENERAL INDEMNITY 27 18. INDEMNITY FOR AVOIDANCE OF GUARANTEED MONEY 27 19. PAYMENT OF GUARANTEED MONEY 28 20. ACKNOWLEDGEMENT 28 21. PRINCIPAL OBLIGATION 28 22. CONTINUING GUARANTEE AND INDEMNITY 28 23. AMOUNT OF GUARANTEED MONEY 29 24. UNCONDITIONAL NATURE OF OBLIGATIONS 29 25. NO COMPETITION 30 26. PROOF BY LENDER 31 27. AVOIDANCE OF PAYMENTS 31 28. RETENTION OF AGREEMENT 32 29. EXCLUSION OF MORATORIUM 32 30. NON-EXERCISE OF GUARANTOR'S RIGHTS 32 31. PAYMENTS IN GROSS 32 32. SUSPENSE ACCOUNT 32 33. APPOINTMENT OF ADMINISTRATIVE AGENT 33 34. POWERS AND DUTIES OF ADMINISTRATIVE AGENT 33 35. GENERAL IMMUNITY 34 36. NO RESPONSIBILITY FOR LOANS ETC 34 37. ACTING ON INSTRUCTIONS OF LENDER 34 38. ADMINISTRATIVE AGENT AND LEGAL ADVISERS 35 39. RELIANCE ON DOCUMENTS AND LEGAL ADVICE 35 40. AGENT'S INDEMNIFICATION 35 41. LENDER CREDIT DECISIONS 36 42. RESIGNATION OF ADMINISTRATIVE AGENT 36 43. CERTIFICATIONS 37 44. UNLAWFULNESS 37 45. AUTHORITY TO DEBIT ACCOUNTS 38 46. NO WAIVER 38 47. MERGER 38 48. TIME OF THE ESSENCE 38 49. SET OFF 39 50. APPROPRIATION 40 51. SUCCESSORS 40 52. ASSIGNMENT 40 53. NOTICES 40 54. OTHER DOCUMENTS 41 55. AMENDMENT 42 56. GOVERNING LAW AND JURISDICTION 42 57. SEVERANCE 42 58. COUNTERPARTS 42 59. ENTIRE AGREEMENT 42 AGREEMENT made the 23 day of September, 1998 BETWEEN: BANQUE NATIONALE DE PARIS (ARBN 000 000 117) of 12 Castlereagh Street, Sydney, New South Wales (Lender) AND: THE FIRST NATIONAL BANK OF CHICAGO (ARBN 065 752 918) of 70 Hindmarsh Square, Adelaide, South Australia (Administrative Agent) AND: PENRICE SODA PRODUCTS PTY LTD (ACN 008 206 942) of Solvay Road, Osborne, South Australia 5017 (Soda) AND: PENRICE HOLDINGS PTY (ACN 008 125 835) of Solvay Road, Osborne, South Australia 5017 (Holdings) AND: IMC GLOBAL AUSTRALIA PTY LTD (ACN 072 639 902) of Solvay Road, Osborne. South Australia 5017 (IMC) AND: IMC GLOBAL INC, a Delaware Corporation of 2100 Sanders Road, Northbrook, Illinois 60062, 6142 (Guarantor) INTRODUCTION A. The Borrower and the Guarantor have requested that the Lender provide or continue to provide certain financial accommodation to the Borrower. B. The Lender desires to provide or to continue to provide such financial accommodation to the Borrower upon and subject to the terms and conditions of this Agreement. OPERATIVE PROVISIONS SECTION A 1. INTERPRETATION 1.1 Definitions In this Agreement unless the context otherwise requires: "Accommodation Limit" means: (a) in respect of the Revolving Credit Facility, A$1,666,666.67; (b) in respect of the Term Loan Facility, A$8,333,333.33; or such other amounts (expressed in Australian dollars) which the Lender and the Borrower may agree upon in writing, from time to time. "Administrative Agent" means The First National Bank of Chicago (ARBN 065 752 918) or any other person appointed as Administrative Agent for the purposes of this Agreement. "Advance" means any cash advance drawn under this Facility (including a Tenn Loan). "this Agreement" means this Agreement and any other agreement expressed to be supplemental to this Agreement to which the parties to this Agreement are parties and any amendments to any such document. "Announcement Date" means the date on which Standard and Poors Rating Agency announces a rating change of the long term unsecured debt of the Guarantor. "Approved Purposes" means the refinancing of borrowings of the Borrower at the date of this Agreement and general working capital requirements. "Authorised Officer" means: (a) in relation to the Borrower each director and secretary of the Borrower and each person from time to time notified in writing by the Borrower to the Administrative Agent to be an Authorised Officer; (b) in relation to the Lender and the Administrative Agent each director and secretary and each employee of the Lender or the Administrative Agent (as the case may be) whose title includes the word "Manager" or "Director" and includes any person acting in any such capacity; and (c) in relation to the Guarantor each person whose title is Chairman, President, Chief Executive Officer, Chief Financial Officer Senior or Treasurer and includes any person acting in any such capacity. "BBSY Rate" means in respect of any day and in respect of any Interest Period the rate per centum per annum quoted on the page numbered "BBSY" of the Reuters Monitor System under the heading "Average Bid Rate" for such Interest Period at or about 10:00 am (Sidney time) on such day or on the first day of such Interest Period (rounded up, if necessary, to the nearest two decimal places) PROVIDED THAT if in respect of any Interest Period the Average Bid Rate cannot be determined in accordance with the foregoing procedures then "Average Bid Rate" for that Interest Period shall mean such rate as is agreed between the Administrative Agent and the Borrower having regard to comparable indices then available and in the absence of any such agreement shall be the rate stipulated by the Administrative Agent having regard to such comparable indices. "Bill" has the same meaning as in the Bills of Exchange Act 1909 (Cwth) (but does not include a cheque). "the Borrower" means Soda, Holdings and IMC and includes each of their successors and permitted assigns. "Business Day" means a day on which Australian trading, banks are open for a full range of banking business in the metropolitan area of Adelaide, South Australia, Melbourne, Victoria and Sydney, New South Wales. "Drawdown" means an Advance made by the Lender to the Borrower pursuant to this Agreement. "Drawdown Date" means a date upon which an Advance is made by the Lender to the Borrower pursuant to this Agreement. "Drawdown Notice" means a notice of intention of the Borrower to borrow or redraw hereunder being a notice in the form or the effect of the form in Schedule 1. "Event of Default" means anv of the events designated as such in this Agreement. "Facility" means the Revolving Credit Facility and the Term Loan Facility made available under this Agreement and each of them separately. "Financial Year" means the period from 1 January to the next following 31 December or such other period of one (1) year as the Borrower and the Administrative Agent may agree in writing from time to time. "Guarantor" means IMC Global Inc. a Delaware Corporation. "the Lender" means [insert name of lending bank] and its successors and assigns "Interest Period" means each period of each Advance being a period of 30, 60, 90, 120, 150, or 180 days or such other period as the Lender and the Borrower may agree provided that such period shall not extend beyond the Repayment Date. "Law" means the Corporations Law or the relevant corresponding legislation applicable to companies incorporated outside of the Commonwealth of Australia. "Loans" means the aggregate of all Principal Moneys which are from time to time owing (including contingently owing) or unpaid to the Lender and all other monies from time to time owing (including contingently owing) and unpaid to the Lender or the Administrative Agent under this Agreement. "Overdraft Rate" means the rate of interest equal to 2% above the rate of interest referred to in clause 6.1.1(a). "Permitted Security" means a Security Interest which: (a) has been approved by or is in favour of the Lender; (b) is a statutory charge on any property in relation to taxes while those taxes are not due for payment unless the Lender is satisfied that the amount of or obligation to pay those taxes is being contested in good faith and on reasonable grounds; (c) secures the purchase price of goods, plant or equipment purchased by the Borrower from a third party on anns length terms and used by it in the ordinary course of its business, is in favour of such third party and is over such goods, plant or equipment; (d) is over property of a person who after the date of this document becomes a Subsidiary of the Borrower provided: (i) it existed at the time that person became a Subsidiary of the Borrower; (ii) it was not created in anticipation of or in connection with that person becoming a Subsidiary of the Borrower; and (iii) the financial indebtedness outstanding and actually secured by it at the time that person became a Subsidiary of the Borrower is not increased and the date for repayment of that financial indebtedness is not extended; (e) secures or is an operating or finance lease hire purchase or rental purchase agreement in respect of plant and equipment with unrelated third parties in the ordinary course of its business and on commercial terms provided that the total commitment of the Borrower (including any option for purchase) for the whole of the terms of such leases or hire purchase or rental purchase agreements shall not exceed A$3,500,000 at any one time. "Principal Moneys" means the aggregate of the Advances outstanding. "Quarter" means each quarter period ending on the last days of March, June, September and December in each year. "Repayment Date" means: (a) in respect of the Revolving Credit Facility the date being two years from the date of this Agreement; and (b) in respect of the Term Loan Facility the date being five years from the date of this Agreement; or such later dates as may be agreed in writing between the Lender and the Borrower. "Revolving Credit Facility" means the cash advance revolving credit facility made available under this Agreement. "Security Interest" means any security or preferential interest or arrangement of any kind in any asset or other right of or arrangement of any kind with any creditor to have its claim satisfied before other creditors with or from the proceeds of any asset and any deposit of money by way of security but does not include a Permitted Security. "Subsidiary" means: (a) a subsidiary as defined in the Law; or (b) in respect of a person any entity of which that person owns or controls, or is in a position to own or control whether directly or indirectly, more than fifty per cent (50%) of the capital or voting rights; and includes any subsidiary formed or acquired after the date of this Agreement. "Term Loan" means any term loan drawn under the Term Loan Facility. "Term Loan Facility" means the term loan facility made available under this Agreement; "Year 2000 Problem" means the risk that computer applications used by the Borrower or the Guarantor or any of their Subsidiaries. suppliers or customers may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date after 31 December 1999. 1.2 Construction In this Agreement unless the context otherwise requires: (a) A reference to any Act of Parliament or to any section or provision thereof shall be read as if the words "or any statutory modification or re- enactment thereof or any statutory provision substituted therefore" were added to such reference. (b) A reference to winding up shall when applied to individuals be deemed to refer to bankruptcy. (c) A reference to an accounting term or "Accounting Standards" is to be interpreted in accordance with approved accounting standards and practices under the Law, and, where not inconsistent with those accounting standards and practices generally accepted principles and practices in the jurisdiction under which the relevant accounts are prepared consistently applied to a body corporate or as between bodies corporate and over time. A reference to "consolidated" in relation to accounts or other financial information. data or statistics with respect to a person means treated for accounting purposes as if accounting standards and generally accepted accounting principles for the creation of consolidated accounts applicable to a holding- company and its subsidiaries applied to the person. (d) References to sub-clauses. clauses and schedules are references to sub-clauses clauses, and schedules of this Agreement. (e) References to any agreement. license or other instrument shall be deemed to include references to such agreement. license or other instrument as varied or replaced from time to time. (f) Words importing any gender shall include all other genders: words importing individuals shall include partnerships and corporations and vice versa words importing the singular number shall include the plural and vice versa, the index (if any) and headings are for convenience and shall not affect the interpretation of this Agreement. (g) Where under or pursuant to this Agreement or anything done under this Agreement the day on or by which any act, matter or thing is to be done is not a Business Day such act, matter or thing may be done on the next succeeding day which is a Business Day (except with respect to the payment of monies payable under this Agreement which shall be made on the immediately preceding, day which is a Business Day). (h) An agreement representation or warranty on the part of two or more persons binds them Jointly and each of them severally. (i) (subject to clause 5.4) where there are two or more persons included in the expression "the Borrower" a reference to "the Borrower" shall where the context so pen-nits include a reference to each of such persons separately and any two or more or such persons together. SECTION B 2. THE FACILITY 2.1 In consideration of the premises the Lender agrees to furnish to the Borrower the Facility as a committed facility upon and subject to the terms and conditions in this Agreement. 2.2 The Facility will be made available in Australian currency. 3. ACCOMMODATION LIMIT 3.1 At any one time the aggregate amount of Advances outstanding shall not exceed the Accommodation Limit. 3.2 the Lender shall not be obliaed to make any Advance to the Borrower if to so do would result in the aggregate amount of Advances outstanding exceeding the Accommodation Limit. 3.3 In the event that the Borrower is at any time in breach of clause 3.1 the Borrower will make payment to the Lender on demand of any amount necessary, to remedy such breach. 4. PURPOSE OF THE FACILITY Financial accommodation granted by the Lender to the Borrower under this Agreement shall be used solely for the Approved Purposes and the Borrower shall not use the same for any other purpose except with the prior written approval of the Lender to do otherwise. Neither the Lender nor the Administrative Agent shall have any responsibility to see to the application of the financial accommodation by the Borrower. 5. DRAWDOWN 5.1 Time of Drawdown Notice Whenever the Borrower intends to borrow or redraw hereunder it shall give the Administrative Agent a Drawdown Notice not later than 2:00 pm (Melbourne Time) two (2) Business Days before the proposed date of such borrowing, redrawing or issuing. 5.2 Drawdown Notice A Drawdown Notice shall be under the common seal of the Borrower or under the hand of an Authorised Officer of the Borrower. 5.3 Term Loan The Term Loan Facility shall be drawndown in full within seven days of the date of this Agreement. 5.4 Liability for Drawdown The only party liable as principal debtor under this Agreement in relation to any Advance is the party that draws or obtains that Advance. 5.5 Minimum Drawn Each Drawdown under the Revolving Credit Facility shall be a minimum of A$1,000,000 and shall be in multiples of A$250,000. 5.6 Provision of Funds If the Borrower gives a Drawdown Notice then, pursuant to this Agreement. the Lender must provide to the Administrative Agent in same day funds in not later than 12 noon (Melbourne time) on the specified drawdown date and in accordance with that Drawdown Notice. 5.7 Payment to Borrower On receipt of the amounts paid to it by the Lender under clause 5.5, the Administrative Agent must pay the same in same day funds to the Borrower or as directed by that Borrower. 6. INTEREST 6.1 The Borrower shall pay to the Administrative Agent for the account of the Lender interest as follows: 6.1.1 Interest Rate (a) Interest on each Advance pursuant to the Revolving Credit Facility not being an advance under the Overdraft Facility) for each Interest Period at the rate per centum per annum determined by the Lender to be the aggregate of: (i) a margin of point three per centurn (3%) per annum; and (ii) the BBSY Rate. (b) Interest on each Advance being a Tenn Loan for each Interest Period at the rate per centurn per annum determined by the Lender to be the aggregate of: (i) a margin of point three five per cent (.35%) per annum; and (ii) the BBSY Rate. 6.1.2 Calculation (a) Interest shall accrue from day to day and be payable on so much as the Lender may have advanced to the Borrower and which remains owing to the Lender from time to time. (b) All sums falling due hereunder by way of interest or fees on a per annum percentage basis shall be calculated on the basis of a 365 day year for advances or fees payable in Australian currency and a 360 day year for all other currencies for the actual number of days elapsed. 6.1.3 Payment Interest shall be paid at the end of each Interest Period (and at the expiration of each 90 day period during such Interest Period if any Interest Period is greater than 90 days)save that the last interest payment shall be made on the Repayment Date. 6.2 The Borrower shall pay interest on all monies due and unpaid by the Borrower under or pursuant to this Agreement at the rate of two (20%) per cent above the Overdraft Rate which applies as at the date such monies become due and payable. All interest which accrues under this sub-clause during any calendar month shall become due and payable on the last Business Day of that calendar month. 6.3 All interest due and unpaid at the option of the Lender shall be capitalized on a monthly basis and bear interest accordingly. 6.4 The Borrower shall on the expiration of each Interest Period in respect of a Term Loan provide to the Administrative Agent an Interest Period Notice in the form of Schedule 2 and if it shall fail to provide such Notice to the Administrative Agent. the Interest Period shall be ninety (90) days. 7. FEES, EXPENSES & CHARGES 7.1 Establishment Fee The Borrower shall pay to the Administrative Agent for the account of the Lender an establishment fee of A$12,500 such fee to be paid on the date of this Agreement and not to be refundable to the Borrower in any event. 7.2 Line Fee 7.2.1 The Borrower shall pay to the Administrative Agent for the account of the Lender:- (a) a line fee of the percentage per annum set out hereunder on the Accommodation Limit in respect of the Revolving Credit Facility; and (b) a line fee of the percentage per annum set out hereunder on the Accommodation Limit in respect of the Term Loan Facility. Rating by Standard and Poors Rating Agency Percentage of the long term unsecured debt of the Guarantor BBB+ .25% BBB .3% BBB- .35% 7.2.2 The adjustments to line fee percentage rates prescribed in clause 7.2.1 resulting from changes, if any, to the ratings by Standard Poors Rating Agency shall be effective and payable from and including the Announcement Date. If an adjustment is required because the Administrative Agent was not immediately aware of an announced change such adjustment shall be made by the Administrative Agent and shall be retroactive to the Announcement Date. The Borrower agrees to pay to the Administrative Agent for the account of the Lender its due share of, and the Lender agrees to fund the Administrative Agent and the Administrative Agent agrees to repay to the Borrower its due share of any adjustment resulting from a retroactive adjustment of ratings which shall be paid by the Administrative Agent or the Borrower, as the case may be, on or before the fifth day following the Administrative Agent's calculation of and advice to the Borrower of the amount to be adjusted. 7.2.3 The line fee shall be payable Quarterly in advance and shall accrue from the date hereof. 7.3 Agency Fee The Borrower shall pay to the Administrative Agent such agency fees as are agreed upon between the Administrative Agent and the Borrower. 7.4 Expenses Whether or not the Borrower shall draw down under this Agreement the Borrower shall forthwith reimburse the Lender and the Administrative Agent for the reasonable charges and expenses incurred by the Lender and the Administrative Agent: 7.4.1 in connection with the negotiation preparation or execution of this Agreement; and 7.4.2 in connection with the enforcement of, or the exercise or (except, to the extent proved groundless and unreasonable) the purported or attempted exercise of any right, authority or remedy conferred on the Lender or the Administrative Agent under or by virtue of this Agreement; including in each case the fees and expenses of legal advisers on a solicitor and own client basis, financial institutions duty and duty passed on to the Lender or the Administrative Agent by any bank or financial institution and all stamp duty levied on or in connection with this Agreement or any payment or the receipt of any payment under this Agreement except for those incurred or payable due to delay or negligence on the part of the Lender or the Administrative Agent or any of their servants and agents. 7.5 Government Charges The Borrower shall forthwith pay any and all taxes or charges (other than taxes on the net overall income of the Lender) imposed by governmental authorities in any jurisdiction which may have been paid or may be payable or determined to be payable in connection with: 7.5.1 the execution, delivery, performance or enforcement of this Agreement; 7.5.2 on or in respect of any transaction contemplated by this Agreement; 7.5.3 any other matter or thing done or arising out of or in connection with this Agreement; or 7.5.4 any transaction related to this Agreement; (including, without limiting the generality of the foregoing, stamp duty and financial institutions duty) and shall indemnify the Lender and the Administrative Agent against any and all liabilities with respect to or resulting from delay or omission to pay such taxes or charges including any fines or penalties (save those due to delay or negligence on the part of the Lender or the Administrative Agent). 7.6 Increase in Costs by Government Action If any law, regulation or regulatory requirement or judgment, order or direction of any court, tribunal or authority binding on the Lender in any jurisdiction not in force at the date of this Agreement, or if compliance by the Lender with any direction, request or requirement (whether or not having the force of law but which if not having the force of law it is the practice of responsible financial institutions to observe) of any competent governmental or other authority, or if observation by the Lender of any reasonable practice of commercial lenders in Australia or the United States shall: 7.6.1 subject the Lender to taxes or chance the basis of taxation of the Lender with respect to any payment under this Agreement; or 7.6.2 impose, modify or deem applicable any reserve or prudential or capital adequacy requirements or require the making or the varying of terms of any special deposits against or in respect of any assets or liabilities (whether contingent or otherwise) of, deposits with or for the account of. or loans by, the Lender; or 7.6.3 impose on the Lender any other conditions with respect to this Agreement or its obligations under this Agreement; and if, as a result of any of the foregoing: 7.6.4 the cost to the Lender of making or keeping the Facility available or otherwise performing, its obligations under this Agreement or allocating its capital resources is increased; or 7.6.5 the amount payable or the effective rate of return on its overall capital to the Lender under this Agreement is reduced; or 7.6.6 the Lender makes a payment or foregoes or suffers a reduction in a return on or calculated by reference to any amount payable to it under this Agreement; then, and in each such case, the Lender shall notify the Borrower and give the Borrower the option exercisable by notice in writing to the Lender within ten (10) Business Days of receipt of notice of the Lender of: 7.6.7 paying an amount or amounts to the Lender from time to time on demand to compensate the Lender in full for any cost or reduction of the kind referred to effective from the date on which the cost or reduction is actually incurred by the Lender; or 7.6.8 terminating this Agreement on the first to occur of the expiration of sixty days from the date of the notice of option given by the Lender to the Borrower pursuant to this Clause 7.6 and the Repayment Date by paying to the Lender the debt owing to it on that date with accrued interest and all other monies payable under this Agreement, together with an amount determined by the Lender to compensate it up to that date for any actual cost or reduction of the type referred to. If the Borrower fails to make an election the Borrower shall be deemed to have made the election in sub- paragraph 7 of this clause. The Lender's certificate in respect of any cost or reduction of the kind referred to shall be prima facie evidence of the incurring of any such cost or reduction, except in the case of manifest error. Without prejudice to the Lender's rights under clause 7.6 the Lender will at the request of the Borrower negotiate in good faith with the Borrower with a view to finding a way of minimising any increased cost. 7.7 Gross Up 7.7.1 Subject to clause 7.7.3) if at any time any applicable law, regulation or regulatory requirement of any government authority, monetary agency or central bank in Australia requires the Borrower or the Guarantor to make any deduction or withholding in respect of taxes (excluding payments made by the Borrower pursuant to notices received by the Borrower under Section 218 or 255 of the Income Tax Assessment Act or Section 74 of the Sales Tax Act or other analogous legislation relating to default by the Lender in payment of taxes due by the Lender) from any payment due under this Agreement: (a) the sum due from the Borrower or the Guarantor in respect of the payment shall be increased to the extent necessary to ensure that, after the making of the deduction or withholding, the Lender receives a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made; and (b) the Borrower and the Guarantor shall indemnify the Lender against any losses or costs incurred by the Lender by reason of any failure of the Borrower or the Guarantor to make any such deduction or withholding. The Borrower and the Guarantor shall promptly deliver to the Administrative Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any to such deduction or withholding, ether with any other information which the Administrative Agent may reasonably require. 7.7.2 If the Lender or any person on its behalf is required by any applicable law regulation or regulatory requirement of any government authority, monetary agency or central bank to make any deduction or withholding from, or any payment on or calculated by reference to, any amount received or receivable under this Agreement (other than taxes payable on the overall net income of the Lender) then (without prejudice to sub-paragraph 1 of this clause) the Borrower and the Guarantor shall upon demand indemnify and hold harmless the Lender against any such deduction, withholding or payment together with any related cost, loss, expense, interest. penalties or other liability by payment to each such person of such amounts and in such currencies as the person concerned may certify are required to compensate it for any such deduction, withholding or payment together with any related cost, loss, expense, interest, penalties or other liability. 7.7.3 If the Borrower is required by any applicable law in Australia to make any withholding in respect of taxes from any payment due under this Agreement as result of the Lender ceasing to be taxed under Australian law as the Australian branch of a foreign company the Borrower shall not be obliged to increase such payment pursuant to clause 7.7.1 until the expire of the then current Interest Period in respect of the Advance to which the payment relates. 8. REPAYMENTS 8.1 Payment of Principal 8.1.1 The Borrower shall repay to the Administrative Agent each Advance (other than a Term Loan) at the end of the term of each Interest Period or on the Repayment Date (whichever first occurs) together with interest to the day of repayment provided always that: (a) the Lender may. in its sole discretion and without prejudice to its rights contained in this Agreement, at any time and from time to time elect to extend the term of such Advance or Advances; and/or (b) in the event that the Borrower does not nominate an Interest Period the Interest Period shall be as determined by the Lender or in the absence of any such determination by the Lender that Interest Period shall be ninety (90) days. 8.1.2 The Borrower shall repay to the Administrative Agent the Term Loan by four equal annual installments of $2,083,333.33) each, the first of such installments to be paid on the date being two years from the date of this Agreement and thereafter on each anniversary of the date of this Agreement. 8.2 Redrawing 8.2.1 Any part of the Facility repaid at the conclusion of the Interest Period relative thereto shall (except in the event of any Term Loan) be available to be redrawn in whole or in part by the Borrower at any time prior to the Repayment Date subject always to the provisions of this Agreement. 8.2.2 No repayment of the Term Loan shall be available for redrawing. 8.3 Early Repayment of Advances 8.3.1 The Borrower may repay an Advance in whole (but not in part) before its due date , if, but only if: (a) the Borrower gives the Administrative Agent at least 5 Business Days (or if repayment is being made as a result of the change in the taxation status of the Lender referred to in clause 7.7.3. the lesser of 5 Business Days or the number of Business Days from the change of such status to the expire date of the then current Interest Period in respect of such Advance) irrevocable notice in writing of the Borrower's intention to repay; (b) the Advance together with all interest accrued thereon to the date of repayment are paid in full; (c) the Borrower makes payment of all moneys payable pursuant to sub-clause .3.2 of this clause; (d) the Borrower makes payment on the day of payment specified in the notice; 8.3.2 In the event that the Borrower wishes to make early repayment pursuant to sub-clause .3.1 of this clause or if by reason of an Event of Default or for any other reason early repayment of an Advance in whole or in part is made by a Borrower or is demanded by the Lender the Borrower shall pay to the Lender in addition to all other moneys then payable an amount sufficient to compensate and to indemnify the Lender for and against all losses (including loss of profits), costs, damages and expenses which the Lender determines that the Lender will or is likely to suffer or incur as a result of such early repayment. Without in any way limiting or modifying the operation of the foregoing, the Borrower acknowledges that the Lender may endeavor to arrange or enter into an interest rate swap agreement or other commitment (either in relation to an Advance in particular or generally in relation to the business of the Lender) and may as a consequence of this (whether directly or indirectly) suffer or incur loss of opportunity, losses, costs, damages or expenses in the event that early repayment of an Advance is made. 8.3.3 It is acknowledged by the Lender that no moneys shall be payable to the Lender pursuant to clause 83.2 in respect of payment of an Advance if such payment is made on the last day of an Interest Period in respect of such Advance. 8.4 Manner of Payment 8.4.1 All payments by the Borrower under this Agreement must be made: (a) in same day funds; (b) in Australian currency; (c) not later than 21.00pm (Melbourne time) on the due date, to the account of the Administrative Agent specified to the relevant Borrower or in such other manner as the Administrative Agent directs from time to time. 8.5 Distribution by Administrative Agent 8.5.1 Except to the extent otherwise expressly provided in this Agreement. or unless payment is made to the Administrative Agent for its own account, each payment received by the Administrative Agent under this Agreement is received by the Agent on account of the Lender. 8.5.2 The Administrative Agent must within two (2) Business Days of receipt distribute in same day funds amounts received on account of the Lender to the Lender. 8.6 Non-receipt of funds by the Administrative Agent from the Borrower 8.6.1 Unless the Administrative Agent has received written notice from the Borrower at least 1 Business Day before the date on which any payment is due under this Agreement that the Borrower does not intend to make that payment in full on the due date, the Administrative Agent may (but is not obliged to) assume that the Borrower has made that payment when due, and in reliance on that assumption. may make available to the Lender on that due date an amount equal to the assumed payment. 8.6.2 If the Borrower has not in fact made that payment to the Administrative Agent, and does not make that payment, together with interest, promptly on demand, the Lender must, on demand, repay to the Administrative Agent the amount so made available to the Lender on that due date an amount equal to it. together with interest on such amount accrued for each day from and including the due date but excluding the date of such repayment, at the rate per centum per annum which is determined by the Administrative Agent to be the Administrative Agent's cost of funding such payment for such period. 8.6.3 Without limiting its obligations under this Agreement, the Borrower indemnifies the Administrative Agent and the Lender against any damage. loss or expense incurred by the Lender or the Administrative Agent by reason of any failure or delay by the Borrower in making any payments referred to in this clause 8.6. 9. TERMINATION OF FACILITY The Facility shall terminate on the Repayment Date and the Borrower shall pay to the Administrative Agent the Loans forthwith. SECTION C 10. CONDITIONS PRECEDENT 10.1 To the Facility The obligations of the Lender under this Agreement are subject to the fulfillment of the conditions precedent that the Administrative Agent shall receive prior to the giving of the first Drawdown Notice all of the following in the form and substance satisfactory to the Lender: 10.1.1 A copy of each of the constituent documents of the Borrower and the Guarantor certified by an Authorized Officer thereof as being complete true and up-to-date. 10.1.2 A duly signed verification certificate in the form of the certificate in Schedule 3. 10.1.3 A copy of this Agreement duly executed by the Borrower and the Guarantor. 10.1.4 Evidence that all necessary filings and registrations have been completed and that all stamp duties and registration and other fees have been paid in order to ensure that this Agreement is valid, binding and enforceable. 10.1.5 The Establishment Fee and the first Line Fee payment (which first payment shall be calculated from the date of this Agreement to the commencement of the first Quarter after the date of this Agreement) and the first administration fee payment. 10.1.6 A legal opinion from the attorneys of the Guarantor in respect of the Guarantor and this Agreement, addressed to the Lender and the Administrative Agent. 10.1.7 A duly signed indemnity in the form of Schedule 4. 10.2 To A Drawdown The obligation of the Lender to make any Advance is subject to the fulfillment (to the reasonable satisfaction of the Administrative Agent) of the following conditions precedent: 10.2.1 The Administrative Agent has duly received from the Borrower a request for a Drawdown in the form of a Drawdown Notice. 10.2.2 No event has occurred which constitutes or with the passing of time or the giving of notice or both would constitute an Event of Default. 10.2.3 The Lender has received such other information as it may reasonably require. 11. REPRESENTATIONS AND WARRANTIES The Borrower and the Guarantor each represents and warrants to the Lender and the Administrative Agent except to the extent disclosed in writing to the Lender prior to the date of this Agreement or prior to the date on which they are deemed made or repeated: 11.1 Status It has been duly incorporated in accordance with the laws of the place of its incorporation. 11.2 This Agreement This Agreement constitutes a legal valid and immediately binding obligation on it the Borrower and the Guarantor and is enforceable in accordance with its express terms subject only to laws relating to insolvency and the enforcement of creditors rights generally and the discretionary notice of equitable remedies. 11.3 Third Party Rights Its execution, delivery and performance of this Agreement does not violate in any respect any provision of: 11.3.1 any law or regulation or any order or decree or any government authority, agency or court; or 11.3.2 its constitution; or 11.3.3 any mortgage, contract or other undertaking or instrument to which it is party or which is binding upon it. 11.4 Authorities All authorizations, approvals, consents, licenses, filings, registrations, notarizations and other requirements of any governmental judicial or public body, authority. bureau or agency now obtainable and required in connection with its execution. delivery, performance, validity or enforceability of this Agreement have been obtained or effected and are in full force and effect and true copies thereof (where applicable) have been delivered to the Lender and all fees payable in connection therewith have been paid and there has been no default in the performance of any of the terms or conditions of any of the same. 11.5 Other Commitments It is not in default under any agreement undertaking or instrument to which it is a party or by which it is bound. such default being material in the context of this Agreement and no event has occurred which with the giving of notice or lapse of time or both would constitute such a default. 11.6 Litigation No litigation or governmental proceeding is pending or, to its knowledge threatened against it which could have a material adverse effect on its ability to comply with its obligations under this Agreement. 11.7 Taxation It and each of its Subsidiaries have duly filed all taxation returns required to be filed (none of which are so far as it is aware likely to be the subject of any dispute) and have paid all taxation levied or assessed upon it (except where the amount of or the obligation to pay those taxes is being contested in good faith and upon reasonable grounds and has complied with all assessments and notices in respect thereof or have established adequate reserves for payment thereof. 11.8 Unsecured Liabilities Its obligations under this Agreement rank at least equally with all other of its unsecured and unsubordinated indebtedness except any liabilities mandatorily preferred by law. 11.9 Trusts In entering into this Agreement it is not acting as a trustee of any trust or settlement. 11.10 Insurance Policies All risks usually insured against according to sound commercial practice by persons carrying on activities similar to the Borrower's are fully insured against in amounts representing the present full replacement or reinstallation values or market values and in the name of and for the benefit of the Borrower absolutely. 11.11 Adverse Circumstances It is not aware of any fact or circumstance which would reasonably be expected to affect in any material adverse way its financial position. operations, profitability or prospects of or its business or the value of its property or affecting as a whole the industry in which it participates. 11.12 Year 2000 Compliance It:- 11.12.1 has initiated a review of all areas with its and its Subsidiaries operations that could be adversely effected by the Year 2000 Problem: 11.12.2 has developed a plan and time line for addressing the Year 2000 Problem on a timely basis and to date has and will hereafter implement such plan: 11.12.3 will use its best endeavors to ensure that the Year 2000 Problem will not have any material adverse impact on its financial position operations, profitability, prospects, business or the value of its property. 11.13 No Misrepresentation All information provided by it whether prior to or after the date of this Agreement to the Lender or the Administrative Agent is true and correct and is not, by the omission of information or otherwise, misleading and all projections contained therein were arrived at after the due and careful consideration and were based on the best information available and on fair assumptions. The representations and warranties in this clause shall be deemed to be repeated by the Borrower and the Guarantor on and as of the date of each Advance as if made with reference to the facts and circumstances existing, at such date. The Borrower and the Guarantor acknowledge that the Lender and the Administrative Agent rely on the representations and warranties made or given in this Agreement by the Borrower and the Guarantor and that the Lender and the Administrative Agent are induced by each such representation and warranty to enter into this Agreement and the rights of the Lender and the Administrative Agent in respect of a breach of any such representation or warranty shall not be affected by investigation (if any) made by the Lender or the Administrative Agent into the affairs of the Borrower or the Guarantor. 12. GENERAL OBLIGATIONS The Borrower and the Guarantor each agree that on and from the date of this Agreement and so long as any amount payable under this Agreement is outstanding: 12.1 Authorities The Borrower and the Guarantor shall take all action necessary to obtain and promptly renew from time to time all authorizations, approvals, consents, licenses and exemptions as may be required under any applicable law or regulation to enable the Borrower and the Guarantor to perform their obligations under this Agreement or required for the validity or enforceability of this Agreement or any transaction contemplated by this Agreement. 12.2 Notice of Default The Borrower and the Guarantor shall promptly notify the Lender or the Administrative Agent in writing of the occurrence or pending or threatened occurrence of any event which would cause or constitute a breach or any of the representations or warranties or agreements of the Borrower and the Guarantor in this Agreement including any event which would result in a material change in the business of the Borrower and the Guarantor and any other event which constitutes or which would with the giving of notice or lapse of time or both or other conditions constitute an Event of Default. 12.3 Law The Borrower and the Guarantor shall comply with all requirements of the Law where a failure to do so is likely to have a material adverse effect on its ability to meet its obligations under this Agreement. 12.4 Access The Borrower and the Guarantor shall permit representatives of the Lender or the Administrative Agent (or any accountants or other experts designated by it) during normal business hours and upon reasonable notice and upon reasonable grounds to visit and inspect and examine the books of account, records (excluding company minute books), reports and other papers (and to make copies and to take extracts therefrom) of the Borrower and the Guarantor and to discuss its affairs, finances and accounts with its officers, accountants and auditors, all at such times and as often as may be reasonably requested by the Lender or the Administrative Agent but only in so far as such matters relate to information as may reasonably be required by the Lender or the Administrative Agent for any purpose connected with this Agreement. 12.5 Negative Pledge 12.5.1 Except as permitted in this Agreement neither the Borrower nor any of its Subsidiaries shall without the prior written consent of the Lender either borrow further money from any lender (other than where that the lender is one of the companies included in the expression --the Borrower-- or is the Guarantor) or create or assume or permit to exist or arise any Security Interest whatsoever over any part of its present or future undertakings. property. assets uncalled capital or revenues. The Borrower represents and warrants to the Lender that there will be no such Security Interest over any part its or its Subsidiaries present or future undertakings. property. assets, uncalled capital or revenues in existence as at the date of the first drawdown under the Facility. 12.5.2 For the purposes of Clause 12.5.1 the Lender agrees that the Borrower is entitled to enter into an agreement on or about even date herewith with The First National Bank of Chicago (ARBN 065 752 918) ("FNBC") pursuant to what FNBC agrees to provide facilities to the Borrower with accommodation limits totaling A$30,000,000 and an agreement on or about even date herewith with Rabo Australia Limited ACN 060 452 217 ("Rabo"') pursuant to which Rabo agrees to provide facilities to the Borrower with accommodation limits totaling A$25,000.000. 12.6 Inspection The Borrower shall permit the Lender or the Administrative Agent upon written request of the Lender or the Administrative Agent to from time to time inspect the register of the members of the Borrower where the register or any branch register is so kept at any time during regular business hours and the Borrower shall furnish the Lender or the Administrative Agent with any information which the Lender may consider reasonably necessary to enable it to determine whether or not there has been at any time after the date of this Agreement a transfer of the effective management and control of the Borrower or the Guarantor. 12.7 Public Information 12.7.1 Subject to sub-clause .2 of this clause, the Borrower and the Guarantor shall furnish to the Administrative Agent copies of all such accounts, documents. reports, notices, circulars, particulars and certificates ("Documents") which are required to be furnished by the Borrower or the Guarantor to any stock exchange, corporate affairs office (or analogous office) or shareholder at the same time as they are furnished to that stock exchange. corporate affairs (or analogous office) or shareholder and when requested by the Administrative Agent copies of Documents required under the provision of any trust deed to which the Borrower or the Guarantor is a party to be furnished to the trustee thereunder from time to time. 12.7.2 Unless the Lender shall specifically request a particular Document or class of Documents, the Borrower and the Guarantor shall only be obliged to provide the Administrative Agent with those Documents which relate to matters which may have a material effect on the business or financial obligations of either the Borrower or the Guarantor. 13. FINANCIAL INFORMATION The Borrower and the Guarantor shall from time to time supply the Lender with all financial or other information regarding the Borrower and the Guarantor as the Lender may reasonably request in writing always including the following without request: 13.1 As soon as possible but in any event within 120 days of the end of each Financial Year copies of the audited annual profit and loss statement and balance sheet of the Guarantor and the audited consolidated annual profit and loss statement and balance sheet of the Guarantor and the unaudited annual profit and loss statement and balance sheet of the Borrower. 13.2 As soon as possible but in any event within 60 days of the end of each Quarter a copy of the management accounts and of the unaudited balance sheet and profit and loss statement of the Borrower and the Guarantor and the unaudited consolidated profit and loss statement and balance sheet of the Borrower and the Guarantor. All of the financial information referred to above shall be prepared in accordance with Accounting Standards. 14. EVENTS OF DEFAULT If any of the following, events occur ("Events of Default") the Loans and all other moneys owing to the Lender by the Borrower shall at the option of the Lender and notwithstanding any delay or previous waiver of the right to exercise such option become immediately due and payable upon written demand by the Lender to the Borrower and the obligations of the Lender under this Agreement shall be canceled: 14.1 If the Borrower falls to observe or perform any obligations to be observed or performed by it under this Agreement or in connection with any transaction contemplated by this Agreement and if such default shall in the opinion of the Lender be capable of prompt remedy. the Borrower shall not have remedied such default within seven (7) days after notification by the Lender to the Borrower requiring remedy of such default. 14.2 Any representation or statement made or deemed to be made by the Borrower or the Guarantor in this Agreement or in writing pursuant to this Agreement shall not be complied with or shall prove to be untrue in any respect which materially adversely affects the interests of the Lender on any date as of which it was made or deemed made. 14.3 If all or any part of this Agreement becomes void. illegal, invalid, unenforceable, or of limited or reduced force or effect which is likely to adversely affect the ability of the Borrower to carry out its obligations under this Agreement. 14.4 Any other present or future indebtedness of the Borrower for borrowed money in excess of A$2,000,000 shall become due and payable prior to the stated maturity thereof as a result of a default or any such indebtedness shall not be paid on the due date thereof. 14.5 If the Borrower is wound up or if a petition is presented or an order is made for the winding, up of the Borrower and is not withdrawn within fourteen (14) days or if a resolution is passed for the winding up of the Borrower otherwise than for the purpose of reconstruction or amalgamation the terms of which have previously been approved in writing by the Lender such approval not to be unreasonably withheld. 14.6 If a receiver or receiver and manager is appointed in respect of any part of the assets of the Borrower or an encumbrance takes possession of the undertaking or the property of the Borrower or any part thereof. 14.7 If the Borrower makes default under any charge or security in favor of any person other than the Lender and the holder of that charge or security elects to enforce that charge or security. 14.8 If a compromise or arrangement is proposed between the Borrower or the Guarantor and their creditors or any class of them or if an application is made to a court for an order summoning a meeting of creditors or any class of them of the Borrower or the Guarantor. 14.9 If without the prior written consent of the Lender the Borrower reduces or attempts to reduce its capital or buy back any of its shares. 14.10 If the Borrower is placed under administration pursuant to Part 5.3A of the Corporations Law or causes or proposes to cause a meeting of its creditors to be summoned for the purposes of placing the Borrower under administration pursuant to Part 5.3A of the Corporations Law. 14.11 If any of the property of the Borrower, the ownership of which is in the opinion of the Lender material to the ability of the Borrower to perform its obligations under this Agreement is seized or otherwise expropriated, nationalized, confiscated or acquired through any governmental action or intervention or if custody or control of such property shall be assumed by any Government or government agency. 14.12 If a meeting of the Borrower or the Guarantor is called for the purpose of considering and if thought fit passing any resolution the passing of which would constitute or give rise to an Event of Default. 14.13 If in the reasonable opinion of the Lender there is a change in the ownership control or management of the Borrower which is likely to adversely affect the ability of the Borrower to conduct its business in a proper manner and to carry out its obligations under this Agreement. 14.14 If the Borrower defaults in the performance or observance of any provision of any other indebtedness to or security of the Lender and the Borrower whether the indebtedness or security is collateral to this Agreement or whether it is a separate Agreement between the Lender and the Borrower and such default continues for more than seven (7) days after notification by the Lender to the Borrower requiring remedy of such default. 14.15 If the Borrower shall at any time not have an auditor appointed pursuant to the Provision of the Law. 14.16 If the Borrower makes any material change to the business it carries on which in the reasonable opinion of the Lender is likely to materially adversely affect the interests of the Lender without the prior written consent of the Lender or if the Borrower or the Guarantor ceases or threatens to cease to carry on its business. 14.17 If the Borrower or the Guarantor suffers any material adverse change in their financial condition which is likely to materially affect the interest of the Lender unless such change is agreed to in writing by the Lender. 14.18 If the Borrower ceases to be a wholly owned subsidiary of the Guarantor. 14.19 If any event occurs that results in acceleration of payments under the Credit Agreement dated December 15, 1997 between the Guarantor, the Banks listed therein Royal Bank of Canada as Documentation Agent. The Chase Manhattan Bank and Nations Bank N.A. as Co-Syndication Agents and Morgan Guaranty Trust Company of New York as Administrative Agent (or any other credit agreement in replacement thereof) provided that such acceleration has not been rescinded within five (5) days. 14.20 The cancellation or elimination by the Guarantor of the credit agreement with specified clause 14.19 and failure to replace such credit agreement with a facility substantially similar in form and substance. 15. INDEMNITIES The Borrower indemnifies the Lender and the Administrative Agent from and against all actions. suits, claims, demands, losses, liabilities, damages, costs and expenses which may be made or brought against or suffered or incurred by the Lender or the Administrative Agent arising out of or in connection with: 15.1 any Event of Default ; or 15.2 any failure by the Borrower to take an Advance in accordance with any request for a Drawdown. SECTION D 16. GUARANTEE The Guarantor unconditionally and irrevocably guarantees to the Lender and the Administrative Agent the payment of all moneys payable by the Borrower to the Lender or the Administrative Agent pursuant to this Agreement ("the Guaranteed Money") and the due observance and performance of all the covenants. terms. conditions and agreements to be observed or performed by the Borrower under this Agreement. 17. GENERAL INDEMNITY As an additional separate and independent obligation the Guarantor indemnifies the Lender and the Administrative Agent against any claim. action, damage, loss. liability, cost, charge, expense, outgoing or payment which the Lender or the Administrative Agent suffers, pays or incurs in respect of: 17.1 a failure by the Borrower to pay any Guaranteed Money when due; or 17.2 a failure by the Borrower or the Guarantor to observe, perform or comply with this Agreement; or 17.3 an Event of Default. 18. INDEMNITY FOR AVOIDANCE OF GUARANTEED MONEY 18.1 If any Guaranteed Money (or money which would be Guaranteed Money were it not irrecoverable) is irrecoverable from the Borrower. and is not recoverable by the Lender or the Administrative Agent from the Guarantor on the footing of the guarantee. the Guarantor as an additional separate and independent obligation: 18.1.1 indemnifies the Lender and the Administrative Agent against any claim, action, damage, loss, liability, cost. charge, expense, outgoing or payment which the Lender suffers. pays or incurs in respect of the non-payment of that Guaranteed Money; and 18.1.2 must pay the Lender the amount of that Guaranteed Money. 18.2 This Clause applies to the Guaranteed Money (or money which would be Guaranteed Money were it not irrecoverable) whether or not: 18.2.1 it is or may be irrecoverable by reason of any event described in Clause 24 by reason of any other similar or dissimilar fact or circumstance; 18.2.2 any transaction in respect of that money is void, avoided, illegal or unenforceable, and 18.2.3 anything in respect of the Guaranteed Money is or should be known to the Lender. 19. PAYMENT OF GUARANTEED MONEY The Guarantor must pay to the Lender any Guaranteed Money not paid by the Borrower when due immediately on demand from the Lender or the Administrative Agent (which may be made at any time and from time to time). 20. ACKNOWLEDGEMENT The Guarantor acknowledges that it has not entered into this Agreement in reliance on any representation, warranty, promise or statement made by the Lender or any person on behalf of the Lender or the Administrative Agent. 21. PRINCIPAL OBLIGATION 21.1 This Agreement is enforceable against the Guarantor: 21.1.1 without first enforcing anv securitv held bv the Lender or the Administrative Agent; 21.1.2 whether or not the Lender or the Administrative Agent has: (i) made demand upon the Borrower; (ii) given notice to the Borrower or the Guarantor; or (iii) taken any other steps against the Borrower or the Guarantor, or any other person; 21.1.3 despite the occurrence of any event described in Clause 24. 22. CONTINUING GUARANTEE AND INDEMNITY 22.1 Each guarantee and indemn1tv in this Agreement is a continuing obligation of the Guarantor despite any settlement of account or the occurrence of any other thing and remains in full force and effect until all money owing, contingently or otherwise, under this Agreement is paid in full and this Agreement is finally discharged by the Lender. 22.2 Each guarantee and each indemnity in this Agreement is an additional, separate and independent obligation of the Guarantor. 23. AMOUNT OF GUARANTEED MONEY The obligations of the Guarantor under this Agreement extend to any increase in the Guaranteed Money as a result of any alteration. variation. supplement. renewal or replacement of this Agreement made with the Guarantor's express written consent. 24. UNCONDITIONAL NATURE OF OBLIGATIONS This Agreement and the liability of the Guarantor under this Agreement are not released. discharged or otherwise affected by anything which but for this provision may have that effect including, without limitation: 24.1 the grant of any time. waiver, covenant not to sue or other indulgence to the Borrower, the Guarantor, or any other person; 24.2 the discharge or release (including without limitation a release as part of a novation) of the Borrower, or any other person; 24.3 the liquidation of the Borrower, the Guarantor, or any other person; 24.4 the Lender or the Administrative Agent: 24.4.1 exercising or enforcing; 24.4.2 failing to exercise or enforce; or 24.4.3 delaying the exercise or enforcement of; any other security or power; 24.5 the alteration, variation, supplement, replacement, extinguishment, failure, loss, release, discharge. abandonment, impairment, assignment or transfer of or other dealing in respect of, or the failure of any person to enter into any document or agreement; 24.6 this Agreement or any other document or agreement being at any time void, voidable, avoided or unenforceable; 24.7 failure by the Borrower. the Lender or the Administrative Agent to give notice to the Guarantor of any default by the Borrower under this Agreement or any other document or agreement; 24.8 a judgment against the Borrower. the Guarantor or any other person; 24.9 any legal limitation, disability, incapacity or other circumstances related to the Borrower, the Guarantor or any other person; 24.10 acceptance by the Lender or the Administrative Agent of a repudiation or termination of this Agreement or any other document or agreement; 24.11 failure of any party to properly execute this Agreement; 24.12 any Guaranteed Money being irrecoverable for any reason; 24.13 the assignment, novation or assumption by the Lender, the Administrative Agent, the Borrower or any other person of any rights or obligations under this Agreement or any other document or agreement; 24.14 any prejudice (including material prejudice) to the Guarantor as a result of any thing done or omitted to be done by the Lender or the Administrative Agent or any other person or any other thing; or 24.15 the receipt by the Lender of any dividend distribution or other payment in respect of any liquidation. This Clause applies whether or not the Lender, the Administrative Agent, the Borrower, the Guarantor or any other person, consents to, has knowledge of, fails to consent to, or have knowledge of, any event described above, or whether or not there is any rule of law or equity to the contrary. 25. NO COMPETITION 25.1 While any guarantee or indemnity in this Agreement is in effect the Guarantor may not: 25.1.1 be subrogated to the Lender or the Administrative Agent; 25.1.2 claim the benefit of any security. guarantee or other document or agreement, or any money held by the Lender or any power; 25.1.3 subject to the further provisions of this Clause either directly or indirectly prove in, claim or receive the benefit of any distribution. dividend or payment in respect of the liquidation of the Borrower or any other guarantor of the Guaranteed Money ("Surety"); 25.1.4 make a claim or exercise or enforce any right power or remedy against the Borrower or any Surety; 25.1.5 accept or procure the grant of any security from the Borrower or any Surety; or 25.1.6 raise any set-off (including. without limitation any set-off in respect of amounts due by the Lender to the Borrower) available to the Guarantor, the Borrower, any Surety or other person in reduction or discharge of its obligations under this Agreement. 25.2 If required by the Lender or the Administrative Agent. the Guarantor must: 25.2.1 prove in any liquidation of the Borrower or any Surety for all moneys owed to the Guarantor; and 25.2.2 not exercise or attempt to exercise any right of set-off against or realize any security taken from the Borrower or any Surety. 25.3 All moneys recovered by the Guarantor from any liquidation (or under any security from the Borrower or any Surety) must be held in trust by the Guarantor for the Lender to the extent of the unsatisfied liability of the Guarantor under this Agreement. 26. PROOF BY LENDER In the event of the liquidation of the Borrower or any Surety, the Guarantor authorizes the Lender to prove for all money which the Guarantor has paid or is or may be obliged to pay under this Agreement. other document or agreement or otherwise in respect of the Guaranteed Money. 27. AVOIDANCE OF PAYMENTS If any payment, conveyance, transfer or other transaction in respect of or affecting the Guaranteed Money is: 27.1 void, voidable or unenforceable; or 27.2 is claimed to be void. voidable or unenforceable and that claim is upheld, conceded or compromised; the liability of the Guarantor under this Agreement is the same as if: 27.3 that payment. conveyance. transfer or transaction; and 27.4 any release, settlement or discharge made in reliance on any thing referred to above; had not been made and the Guarantor must immediately do everything necessary or required by the Lender or the Administrative Agent to restore to the Lender or the Administrative Agent this Agreement and any security held by the Lender immediately prior to the payment, conveyance, transfer or transaction. 28. RETENTION OF AGREEMENT The Lender and the Administrative Agent may retain this Agreement for seven (7) months after full payment of the Guaranteed Money or if anything in the previous Clause has occurred or in the opinion of the Lender may occur, such longer period as the Lender determines. 29. EXCLUSION OF MORATORIUM To the extent permitted by law, a provision of any legislation which at any time directly or indirectly: 29.1 lessens or otherwise varies or affects in favor of the Guarantor any of its obligations under or any provision of this Agreement; or 29.2 stays, postpones or otherwise prevents or prejudicially affects the exercise by the Lender of any power; is negatived and excluded from this Agreement and all relief and protection conferred on the Guarantor by or under that legislation is also negatived and excluded. 30. NON-EXERCISE OF GUARANTOR'S RIGHTS The Guarantor must not exercise any rights it has inconsistent with this Agreement. 31. PAYMENTS IN GROSS All payments which the Guarantor is required to make under this Agreement must be made to the Lender to an address or account in Australia directed by the Lender or the Administrative Agent from time to time. 32. SUSPENSE ACCOUNT 32.1 The Lender may apply to the credit of an interest bearing suspense account: 32.1.1 any amounts received from the Guarantor under this Agreement; 32.1.2 any dividends. distributions or other amounts received in respect of the Guaranteed Money in any liquidation; 32.1.3 any other amounts received from the Guarantor, the Borrower. any other guarantor or any other person in respect of the Guaranteed Money. 32.2 The Lender may retain the amounts in the suspense account and may, but is not obliged to, apply them in or towards satisfaction of the Guaranteed Money. 32.3 In the event that the Lender is satisfied that it has received all of the Guaranteed Money in full and that it will not be required to repay any such moneys under any laws relating to insolvency it will refund the moneys in the suspense account and any interest accrued thereon (less any financial institution duty or debits tax payable in respect of any deposits or debits in respect of the suspense account to the Borrower or the Guarantor or any such other person as the case may be. SECTION E 33. APPOINTMENT OF ADMINISTRATIVE AGENT 33.1 The Lender irrevocably appoints the Administrative Agent as its agent. with the rights and duties expressed in this Agreement. 33.2 In acting as agent. the Administrative Agent: 33.2.1 does not assume any fiduciary duties to the Lender; 33.2.2 is an independent contractor. 33.3 The Lender waives any claim which may arise against the Administrative Agent under the law of agency or for breach of fiduciary duty. 33.4 The Administrative Agent agrees to act as Administrative Agent of the Lender on these terms. 34. POWERS AND DUTIES OF ADMINISTRATIVE AGENT 34.1 The Administrative Agent may exercise any powers which this Agreement expressly delegates to Administrative Agent, and any powers reasonably incidental thereto. 34.2 The Administrative Agent must take any action which this Agreement specifically requires the Administrative Agent to take. The Administrative Agent need not take any other action and does not have any implied duties to the Lender. 34.3 The Administrative Agent must forward to the Lender a copy of each Drawdown Notice and each Interest Period Notice under the Term Loan Facility it receives it from the Borrower. 35. GENERAL IMMUNITY Neither the Administrative Agent nor any of its directors, officers, agents or employees are liable to the Borrower, the Guarantor, or the Lender for any act or omission by any of them in respect of this Agreement. except to the extent that the act or omission arises from gross negligence or willful misconduct. 36. NO RESPONSIBILITY FOR LOANS ETC 36.1 Neither the Administrative Agent nor any of its directors, officers, agents or employees need ascertain, enquire into or verify: 36.1.1 any statement. warranty or representation made in connection with this Agreement or any borrowing under this Agreement; 36.1.2 the performance of any term of this Agreement including, any obligation to pay proof or any term requiring the provision of information directly to the Lender; 36.1.3 the enforceability, sufficiency or genuineness of this Agreement or any other writing in connection therewith; 36.1.4 the existence or possible existence of any Event of Default; 36.1.5 the financial condition of any Borrower or the Guarantor. 36.2 The Administrative Agent need not disclose to the Lender information volunteered by the Borrower or the Guarantor to the Administrative Agent (either in its capacity as agent or in its individual capacity). 37. ACTING ON INSTRUCTIONS OF LENDER 37.1 The Administrative Agent need not take any action under this Agreement unless: 37.1.1 the Lender instructs it to do so in writing; and 37.1.2 the Lender indemnifies the Administrative Agent to the Administrative Agent's satisfaction against all liability, costs and expenses it incurs in taking or continuing any action. 38. ADMINISTRATIVE AGENT AND LEGAL ADVISERS 38.1 The Administrative Agent may perform any of its duties under this Agreement by its employees. agents and legal advisers. 38.2 If the Administrative Agent selects those agents and legal advisers with reasonable care, the Administrative Agent is not liable to the Lender for any default or misconduct by those agents or legal advisers, except as to money or securities received by the Administrative Agent or its agents or legal advisers. 38.3 The Administrative Agent may obtain legal advice about this Agreement or any matter relating to or arising out of this Agreement. 39. RELIANCE ON DOCUMENTS AND LEGAL ADVICE The Administrative Agent may rely on: 39.1 any notice, consent, certificate, affidavit, letter, facsimile, statement, paper or document if the Administrative Agent believes it to be genuine and correct and to have been signed or sent by the proper person; and 39.2 in respect, of legal matters, the opinion of its legal advisers (who may be employees of the Administrative Agent). 40. AGENT'S INDEMNIFICATION 40.1 The Lender indemnifies the Administrative Agent for all losses, and all costs, liability and expenses incurred by the Administrative Agent in respect of or in any way related to or arising out of this Agreement and other related documents or any actions taken or omitted by the Administrative Agent. This may include costs which the Borrower or the Guarantor falls to pay, administration costs, agency fees, enforcement costs, and costs of a dispute between the Administrative Agent and the Lender. However, it does not include losses, costs, liability and expenses resulting from the gross negligence or willful misconduct of the Administrative Agent (as found by a court of competent jurisdiction in a final non-appealable judgment). 40.2 This obligation survives payment of all moneys payment pursuant to this Agreement and termination of this Agreement. 40.3 This section E of this Agreement does not limit the obligations of the Borrower or the Guarantor under this Agreement. 41. LENDER CREDIT DECISIONS The Lender has made its own credit analysis and decision to enter into the Agreement independently and without relying on First Chicago. 42. RESIGNATION OF ADMINISTRATIVE AGENT 42.1 The Administrative Agent may resign at any time by giving written notice thereof to the Lender. Upon resignation, the Lender shall have the right to appoint a successor Administrative Agent with the written approval of the Borrower (that approval not to be unreasonably withheld). If no successor Administrative Agent has been appointed by the Lender and accepted that appointment within thirty days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lender and with the written approval of the Borrower (that approval not to be unreasonably withheld), appoint a successor agent. 42.2 If no successor Administrative Agent has been appointed pursuant to the clause 42.1 within the thirty days following the giving of notice of resignation by the retiring Administrative Agent, the resignation shall nonetheless then become effective and the Lender shall perform the duties and be entitled to the rights of the Administrative Agent hereunder until it appoints a successor agent (which it shall not be under any obligation to so do). 42.3 Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, the successor Administrative Agent shall thereupon succeed to and become vested with all the rights. powers, privileges and duties of the retiring Administrative Agent. 42.4 Whether or not a successor Administrative Agent has been appointed, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement upon its resignation becoming effective. After any person's resignation under this Agreement as the agent, the provisions of this Agreement shall continue in effect for its benefit and for the benefit of the Lender in respect of any actions taken or omitted to be taken by the person while it was acting as the Administrative Agent. 42.5 During any period in which a successor agent is not appointed the agency fee referred to in clause 7.3 shall be payable by the Borrower to the Lender. SECTION F 43. CERTIFICATIONS 43.1 Any document or thing required to be certified by the Borrower or the Guarantor shall be certified an Authorized Officer of the Borrower or the Guarantor or in such other manner as the Lender may approve. 43.2 A certificate signed by an Authorized Officer of the Lender or the Administrative Agent stating any amount or rate for the purpose of this Agreement shall in the absence of manifest error be conclusive and binding on the Borrower. 44. UNLAWFULNESS If: 44.1 any law, regulation or regulatory requirement or judgment. order or direction of any court. tribunal or authority binding upon the Lender or its ultimate parent company in the jurisdiction in which the Lender or its ultimate parent company is formed or has its principal or lending office or in which any action is required to be performed by it for the purposes of this Agreement; or 44.2 any chance in the interpretation of any such law, regulation or regulatory requirement or judgment. order or direction of any court, tribunal or authority by any government or governmental agency charged with the administration thereof or by a court of competent jurisdiction or compliance by the Lender with any request or direction (whether or not having the force of law) of the Reserve Bank of Australia or any government or other governmental agency in accordance with whose requests or directions the Lender is accustomed to act; renders it unlawful for the Lender to meet any of its obligations under the Facility, the Lender shall promptly notify the Borrower and the following provisions shall apply: 44.3 the Borrower and the Lender shall negotiate in good faith for a period not exceeding thirty (30) days (or such longer period as is required) with a view to the Lender making arrangements to be able to meet the relevant obligations under the Facility in whole or in part in a manner which is not unlawful; and 44.4 if no such arrangements have been made by the end of such period, thereupon the Lender shall be released from its obligations under this Agreement, the Facility shall be canceled and the Borrower shall pay to the Lender the Loans under this Agreement prior to the date on which it becomes unlawful for the Lender to meets its obligations under the Facility. 45. AUTHORITY TO DEBIT ACCOUNTS The Borrower and the Guarantor irrevocably authorize and direct the Lender and the Administrative Agent to debit any account or accounts of the Borrower or the. Guarantor with the Lender or the Administrative Agent in respect of any amounts that are from time to time due and payable under this Agreement by the Borrower or the Guarantor respectively. The Lender will notify the Borrower and the Guarantor (as the case may be) of such amounts so debited other than fees charged in accordance with this Agreement and other than debits in accordance with prior arrangements between the Lender and the Borrower or the Guarantor. 46. NO WAIVER No failure to exercise and no delay in exercising on the part of the Lender any right. power or privilege under this Agreement shall operate as a waiver thereof. nor shall any single or partial exercise of any right power or privilege preclude any other or further exercise thereof, or the exercise of any other right. power or privilege. The rights and remedies of the Lender provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law or equity or legislation or regulation. 47. MERGER 47.1 The representations and warranties of the Borrower and the Guarantor in this Agreement shall survive the execution of this Agreement and the making of any Advance under this Agreement and shall ensure for the benefit of the Lender and the Administrative A2ent until the Loans have been paid in full by the Borrower to the Lender. 47.2 If the liability of the Borrower or the Guarantor to pay to the Lender or the Administrative Agent any moneys payable under this Agreement becomes merged in any deed. Judgment. order or other thing, the Borrower or the Guarantor (as the case may be) shall pay interest on the amount owing from time to time under that deed, judgment, order or other thing at the higher of the rate payable under this Agreement and that fixed by or payable under that deed, judgment. order or other thing. 48. TIME OF THE ESSENCE Time shall be of the essence as regards any date or period determined under this Agreement save only to the extent that any such date or period may be altered by mutual agreement between the parties whereupon time shall be of the essence as regards such altered date or period. 49. SET OFF 49.1 The Borrower and the Lender do expressly acknowledge and agree that: 49.1.1 Where the Lender now or at any time in the future is indebted on any account to the Borrower pursuant to arrangements made between them such arrangements are hereinafter referred to as the "Arrangements". 49.1.2 Notwithstanding the Arrangements and any other provision of this Agreement (and without prejudice to the Lender's other rights and remedies) any monies (whether by way of principal interest or otherwise and whether present future actual or contingent) which the Lender may now or may hereafter owe to the Borrower under the Arrangements may be applied to and set off by the Lender as and when the same may become due and payable pro rata against the Loans as and when they become due and payable to the intent and effect: (i) first that the Lender may at any time and from time to time deduct from and retain out of the monies otherwise payable by the Lender to the Borrower pursuant to the Arrangements such amounts as the Lender may think fit and apply or set off such amounts in or toward or against satisfaction of the Loans; and (ii) secondly that upon default by the Borrower hereunder the Lender shall not be obliged to pay any monies to the Borrower under the Arrangements until the obligations of the Borrower to the Lender to pay any monies to the Lender hereunder are paid and satisfied in full. 49.2 The contractual rights of set off conferred on the Lender under sub-clause .1 of this clause are in addition to. and not in substitution for any rights of set off otherwise conferred on or available to the Lender at law or in equity including (without limitation) any banker's rights of set off or right of combination of accounts or banker's lien. 49.3 For the avoidance of doubt the Lender and the Borrower further declare and acknowledge that the debts and liabilities arising or created hereunder and pursuant hereto and under and pursuant to the Arrangements are mutual debts within the meaning of Section 86(l) of the Bankruptcy Act 1966 (Cwth) (as incorporated in the Corporations Law) and that upon the liquidation or bankruptcy of the Borrower the provisions of Section 86 of the said Bankruptcy Act shall apply so that any sum due from the Borrower to the Lender hereunder shall be set off against any sum due from the Lender to the Borrower under the Arrangements. 49.4 The Borrower acknowledges and agrees that it will not and will not attempt to prevent the Lender from exercising its rights of set off as aforesaid in the circumstances contemplated in respect thereof. 50. APPROPRIATION The Lender or the Administrative Agent may appropriate any payment towards the satisfaction of any moneys due by the Borrower in any way that the Lender or the Administrative Agent thinks fit and notwithstanding any purported appropriation by the Borrower. 51. SUCCESSORS This Agreement shall bind the parties and their respective heirs executors administrators successors and assigns. 52. ASSIGNMENT 52.1 The Lender may not at any time assign the benefits and obligations on its part to be enjoyed or performed under this Agreement without the consent in writing of the Borrower which shall not be unreasonably delayed or withheld. Neither the Borrower nor the Guarantor shall assign or purport to assign any of the benefits or obligations on its part to be enjoyed or performed under this Agreement without the consent in writing of the Lender. 52.2 The Lender may (subject to prior notification to the Borrower) disclose to any prospective assignee, on a confidential basis, such information concerning the Borrower as it considers appropriate without incurring any liability for any breach of the duty of banker- customer confidentiality. 53. NOTICES Any notice demand consent or other communication to be in writing under or in connection with this Agreement shall be in writing or if it is to be given by the Lender or the Administrative Agent may be signed by any Authorized Officer of the Lender or the Administrative Agent or any solicitor for the time being acting for the Lender or the Administrative Agent and if it is to be given by the Borrower shall be under the common seal of the Borrower or the hand of an Authorized Officer of the Borrower and may be served either: 53.1 personally; or 53.2 by posting the same by registered or certified mail to the party to whom the notice is directed at its address appearing in this Agreement or at any other address of which prior notification shall have been given by the addressee prior to the dispatch of the said notice and any notice given by post shall be deemed to have been received by the party to whom it is addressed at the expiration of forty eight (48) hours (ten Business Days where the addressee is the Guarantor) after the same has been properly posted; or 53.3 by facsimile transmission: To the Lender: (02) 922 1 8005 Attention: Manager Corporate To the Administrative Agent: (08) 82223 2948 Attention: Loan Administrator To the Borrower: (08) 8248 8250 Attention: Treasurer To the Guarantor: 1 (847) 205 4894 Attention: Treasurer or any other facsimile number of which prior notification shall have been given to the sender prior to the transmission of the facsimile and any facsimile transmission shall be deemed to have been served on the date of transmission by the sender if the sender shall receive confirmation of receipt of the notice in its entirety from the recipient. The original of any facsimile transmission shall be posted in accordance with sub-clause .2 of this clause on the date of transmission or if transmitted after usual posting hours the next Business Day. If the date of dispatch is not a Business Day in the place to which such notice, request demand or other communication is sent it shall be deemed to have been received at the commencement of business on the next following Business Day in such place. Notice given to any one or more of the persons (if more than one) comprised in the expressions "the Borrower" shall be deemed notice to all such persons. Signatures may be manuscript or may be printed or reproduced by other mechanical means. 54. OTHER DOCUMENTS The Borrower and the Guarantor shall either before or after the making of any Advance under this Agreement do all such acts matters and things and shall sign or execute and deliver all such documents or writing or assurances as may in the reasonable opinion of the Lender or the Administrative Agent be necessary or expedient to further and more effectually carry into full effect the provisions of this Agreement and for conferring the full benefit thereof upon the Lender and the Administrative Agent. 55. AMENDMENT No amendment of this Agreement shall bind the parties unless made in writing expressed to be supplemental to or in substitution for the whole or part of this Agreement. 56. GOVERNING LAW AND JURISDICTION This Agreement and the rights and obligations of the parties shall be governed by and construed in accordance with the laws in force in the State of South Australia and the parties agree by the execution of this Agreement to irrevocably submit to the non-exclusive jurisdiction of the Courts in the State of South Australia in respect of all matters arising under or in connection with this Agreement provided always that the Lender may proceed in the Courts of any Territory State or country having or claiming jurisdiction in respect of the matter which is the subject of the proceedings. 57. SEVERANCE Any provision of this Agreement which is or becomes prohibited invalid unlawful void or unenforceable in any jurisdiction shall. as to such jurisdiction, be ineffective and capable of severance without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 58. COUNTERPARTS This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 59. ENTIRE AGREEMENT This Agreement contains all of the terms and conditions upon which the Lender will provide financial accommodation to the Borrower and supersedes any previous or extant arrangements with respect to the same. EXECUTED AS AN AGREEMENT SIGNED for and on behalf of ) BANQUE NATIONALE DE PARIS BANQUE NATIONALE DE PARIS ) by its Attorney who states that at by ) the time of executing this ) instrument the attorney has no ) notice of the revocation of the ) Power of Attorney dated its Attorney ) 15 January 1998 under the authority ) of which the Attorney has executed ) this instrument ) ) /s/ Geoffrey Lleuellyn Carrel ) ---------------------------------- Attorney Geoffrey Lleuellyn Carrel ---------------------------------- Name/Position SIGNED for and on behalf of ) /s/ Craig Scefi Jensen THE FIRST NATIONAL BANK ) ---------------------------------- OF CHICAGO by its Authorized ) Authorized Officer Officers ) Craig Scefi Jensen Asst.Vice Pres ---------------------------------- Name/Position /s/ S.K. Milne ---------------------------------- Authorized Officer S.K. Milne Associate Underwriter ---------------------------------- Name/Position THE COMMON SEAL of ) PENRICE SODA PRODUCTS PTY LTD ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - ------------------------------------ Director David Reid - - ------------------------------------ Print name of Director /s/ Liendik Michael Alksnis - - ------------------------------------ Director or Secretary Liendik Michael Alksnis - - ------------------------------------ Print name of Director or Secretary THE COMMON SEAL of ) PENRICE HOLDINGS PTY ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - ------------------------------------ Director David Reid - - ------------------------------------ Print name of Director /s/ Henrik Michael Alksnis - - ------------------------------------ Director or Secretary Henrik Michael Alksnis - - ------------------------------------ Print name of Director or Secretary THE COMMON SEAL of ) IMC GLOBAL AUSTRALIA PTY LTD ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - ------------------------------------ Director David Reid - - ------------------------------------ Print name of Director /s/ Henrik Michael Alksnis - - ------------------------------------ Director or Secretary Henrik Michael Alksnis - - ------------------------------------ Print name of Director or Secretary SIGNED for and on behalf of ) IMC GLOBAL INC. ) By /s/ E. Paul Dunn Jr. ------------------------------- Name E.Paul Dunn, Jr. ------------------------------- Title Vice President & Treasurer ------------------------------- SCHEDULE 1 FORM OF DRAWDOWN NOTICE NOTICE TO: THE FIRST NATIONAL BANK OF CHICAGO 70 Hindmarsh Square ADELAIDE SA 5000 Facility Agreement dated 1998 ("the Agreement"). The undersigned refers to the above Agreement and irrevocably gives you notice of drawdown under the Facility as follows: CASH ADVANCE/TERM LOAN 1 Drawdown Date: 19 ----------------- ---- 2 Amount to be drawn: $ (Australian Dollars) --------------- 3 Period of the borrowing: days -------------- 4 Payment Account: ----------------- 5 Interest Period: days --------------- The Borrower by its execution of this Notice reaffirms and reconstitutes all representations and warranties or agreements of the Borrower in the Agreement as if made at the date of this Notice (except to the extent disclosed in writing, to the Lender prior to the date of this Drawdown Notice) and certifies that no Event of Default (as defined in the Agreement) has occurred or is continuing or is likely to result from this transaction. DATED this day of 19 SIGNED by ) an Authorized Officer of ) ) ------------------------------- ) - - --------------------------------- SCHEDULE 2 INTEREST PERIOD NOTICE TO: THE FIRST NATIONAL BANK OF CHICAGO Facility Agreement dated 1998 ("the Agreement") [insert name of relevant borrower] refers to the above Agreement and irrevocably gives you notice of the required Interest Period under the Term Loan Facility as follows: Interest Period: commencing on ------------------ SIGNED by ) an Authorized Officer of ) [insert name of relevant ) borrower] ) ------------------------------------ Authorized Officer SCHEDULE 3 VERIFICATION CERTIFICATE TO: BANQUE NATIONALE DE PARIS ("the Lender") I, of am a director/company secretary of PENRICE SODA PRODUCTS PTY LIMITED (ACN 008 206 942), PENRICE HOLDINGS PTY (ACN 008 125 835) and IMC GLOBAL AUSTRALIA PTY LIMITED (ACN 072 639 902) (each separately hereafter referred to as "the Company") CERTIFY as follows:- I certify that: 1. The company is not the trustee of any trust fund or settlement and all its assets are legally and beneficially owned by it. 2. The Company is not a subsidiary of. or controlled by, an Australian public company. 3. The assets of the Company are or will at the time of first drawdown under the Agreement be free of any Security Interest other than as consented to by the Lender in writing. 4. No meeting has been called to consider a resolution. no resolution has been passed, no application is pending, and no order has been made for the winding up or administration of the Company. 5. The Company is not insolvent and it is not aware of any circumstances, and has not received any demand which remains unsatisfied, which is likely to lead to the winding up of the Company under the Corporations Law. 6. No receiver, receiver and manager or administrator has been appointed to the Company or any of its assets and the Company is not a party to any current legal proceedings which is likely to adversely affect the ability of the Borrower to carry out its obligations under the Agreement. 7. A resolution of the directors of the Company: (a) authorizing the acceptance and execution of the facility agreement ("Agreement") governing the terms and conditions of a year revolving credit facility and a 5 year term loan facility ("Facility") agreed to be provided by the Lender to the Company; and (b) appointing each of the persons set out in Annexure "A" as an authorized officer of the Company to prepare, complete and sign letters and notices on behalf of the Company for the purposes of the Agreement and to do everything else that may be necessary for the purposes of the Agreement or the facility including agreeing any amendments to the provisions of the Agreement including the amount and term, was passed in accordance with the Articles of Association of the Company and an extract thereof is set out in Annexures "B, C and D". 8. Set out in Annexure "A" are the normal signatures of each of the authorized officers referred to above. 9. Neither the execution of the Agreement nor the passing of the resolution referred to above has infringed or will infringe the constitution of the Company or contravene any obligation to which it is a party. 10. I am aware the Lender will rely on this certificate in providing the Facility to the Company. 11. A word or phrase defined in the Agreement has the same meaning in this certificate. 12. A current and up to date copy of the Constitution of the company is attached hereto as Annexures E, F and G. DATED the day of 1998 - - ------------------------------ Signature - - ------------------------------ Position "A" This is Annexure "A" referred to in the attached Verification Certificate AUTHORIZED OFFICERS OF PENRICE SODA PRODUCTS PTY LIMITED (ACN 008 206 942), PENRICE HOLDINGS PTY (ACN 008 125 835) AND IMC GLOBAL AUSTRALIA PTY LIMITED (ACN 072 639 902) ("the Company") The following are the names and signatures of the authorized officers of the Company. NAME SIGNATURE (Please print) "B" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF PENRICE SODA PRODUCTS PTY LTD (ACN 008 206 942) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents") were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 13 the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 14 the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document. ancillary document or other document considered necessary or desirable by that Director; and 15 [ * ] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorized to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - -------------------------------- Chairman - - -------------------------------- Print Name "C" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF PENRICE HOLDINGS PTY (ACN 008 125 835) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents") were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 13 the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 14 the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document. ancillary document or other document considered necessary or desirable by that Director; and 15 [ * ] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorized to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - -------------------------------- Chairman - - -------------------------------- Print Name "D" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF IMC GLOBAL AUSTRALIA PTY LTD (ACN 072 639 902) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents") were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 13 the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 14 the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document. ancillary document or other document considered necessary or desirable by that Director; and 15 [ * ] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorized to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - -------------------------------- Chairman - - -------------------------------- Print Name SCHEDULE 4 FACSIMILE INDEMNITY TO: BANQUE NATIONALE DE PARIS (the Financier) FROM: PENRICE SODA PRODUCTS PTY LTD ACN 008 206 942 PENRICE HOLDINGS PTY ACN 008 125 835 IMC GLOBAL AUSTRALIA PTY LTD ACN 072 639 902 (each separately referred to as "the Customer") IN CONSIDERATION of the Financier (which expression includes its successors and assigns) agreeing to act on the basis of instructions given by the Customer by Electronic Means, the Customer agrees as follows: 1. In this indemnity 'Electronic Means' means telephone, telex. facsimile or any other electronic means. 2. The Customer agrees: (a) that the Customer. and not the Financier, will bear all risks in relation to any unauthorized or fraudulent notice or communication given to the Financier by Electronic Means; (b) that the Financier may, without further inquiry or reference to the Customer, act on that notice or communication if it includes a reference to the Customer and on its face purports to be signed or given by an authorized signatory of the Customer being a person notified as such in writing by the Customer to the Financier from time to time; (c) that the Financier, despite any other term of this indemnity, may, in its absolute discretion, defer acting in accordance with the whole or any part of a notice or communication received by it pending further inquiry to and/or confirmation by the Customer, but the Customer expressly agrees that the Financier will not be under any responsibility to so defer in any case. 3. The Customer: (a) release the Financier from all actions and claims in connection with the Financier in good faith acting on instructions given by Electronic Means or deferring to act under paragraph 2(c) above; and (b) indemnifies the Financier against all losses, costs and expenses suffered as a result of any actions or claims in connection with the Financier in good faith acting on instructions given by Electronic Means. EX-10.77 17 FACILITY AGREEMENT EXHIBIT 10.77 FACILITY AGREEMENT RABO AUSTRALIA LIMITED (CAN 060 452 217) THE FIRST NATIONAL BANK OF CHICAGO (ARBN 065 752 918) AND PENRICE SODA PRODUCTS PTY LTD (CAN 008 206 942) AND PENRICE HOLDINGS PTY (CAN 008 125 835) AND IMC GLOBAL AUSTRALIA PTY LTD (CAN 072 639 902) AND IMC GLOBAL INC. PIPER ALDERMAN Lawyers 167 Flinders Street Adelaide SA 50000 Australia Telephone: (08) 8205-3333 Facsimile: (08) 8205-3300 TABLE OF CONTENTS Page No. 1. INTERPRETATION 2 1.1 Definitions 2 1.2 Construction 6 2. THE FACILITY 8 3. ACCOMMODATION LIMIT 8 4. PURPOSE OF THE FACILITY 8 5. DRAWDOWN8 7 5.1 Time of Drawdown Notice 8 5.2 Drawdown Notice 8 5.3 Term Loan 9 5.4 Liability for Drawdown 9 5.5 Minimum Drawn 9 5.6 Provision of Funds 9 5.7 Payment to Borrower 9 6. INTEREST 9 7. FEES, EXPENSES & CHARGES 11 7.1 Establishment Fee 11 7.2 Line Fee 11 7.3 Agency Fee 12 7.4 Expenses 12 7.5 Government Charges 12 7.6 Increase in Costs by Government Action 13 7.7 Gross Up 14 8. REPAYMENTS 15 8.1 Payment of Principal 15 8.2 Redrawing 16 8.3 Early Repayment of Advances 16 8.4 Manner of Payment 17 8.5 Distribution by Administrative Agent 17 8.6 Non-receipt of funds by the Administrative Agent from the Borrower 17 9. TERMINATION OF FACILITY 18 10. CONDITIONS PRECEDENT 18 10.1 To the Facility 18 10.2 To A Drawdown 19 11. REPRESENTATIONS AND WARRANTIES 19 11.1 Status 19 11.2 This Agreement 19 11.3 Third Party Rights 19 11.4 Authorities 20 11.5 Other Commitments 20 11.6 Litigation 20 11.7 Taxation 20 11.8 Unsecured Liabilities 20 11.9 Trusts 21 11.10 Insurance Policies 21 11.11 Adverse Circumstances 21 11.12 Year 2000 Compliance 21 11.13 No Misrepresentation 21 12. GENERAL OBLIGATIONS 22 12.1 Authorities 22 12.2 Notice of Default 22 12.3 Law 22 12.4 Access 22 12.5 Negative Pledge 23 12.6 Inspection 23 12.7 Public Information 24 13. FINANCIAL INFORMATION 24 14. EVENTS OF DEFAULT 24 15. INDEMNITIES 27 16. GUARANTEE 27 17. GENERAL INDEMNITY 27 18. INDEMNITY FOR AVOIDANCE OF GUARANTEED MONEY 28 19. PAYMENT OF GUARANTEED MONEY 28 20. ACKNOWLEDGMENT 28 21. PRINCIPAL OBLIGATION 28 22. CONTINUING GUARANTEE AND INDEMNITY 29 23. AMOUNT OF GUARANTEED MONEY 29 24. UNCONDITIONAL NATURE OF OBLIGATIONS 29 25. NO COMPETITION 31 26. PROOF BY LENDER 31 27. AVOIDANCE OF PAYMENTS 32 28. RETENTION OF AGREEMENT 32 29. EXCLUSION OF MORATORIUM 32 30. NON-EXERCISE OF GUARANTOR'S RIGHTS 33 31. PAYMENTS IN GROSS 33 32. SUSPENSE ACCOUNT 33 33. APPOINTMENT OF ADMINISTRATIVE AGENT 33 34. POWERS AND DUTIES OF ADMINISTRATIVE AGENT 34 35. GENERAL IMMUNITY 34 36. NO RESPONSIBILITY FOR LOANS ETC 34 37. ACTING ON INSTRUCTIONS OF LENDER 35 38. ADMINISTRATIVE AGENT AND LEGAL ADVISERS 35 39. RELIANCE ON DOCUMENTS AND LEGAL ADVICE 35 40. AGENT'S INDEMNIFICATION 35 41. LENDER CREDIT DECISIONS 36 42. RESIGNATION OF ADMINISTRATIVE AGENT 36 43. CERTIFICATIONS 37 44. UNLAWFULNESS 37 45. AUTHORITY TO DEBIT ACCOUNTS 38 46. NO WAIVER 38 47. MERGER 38 48. TIME OF THE ESSENCE 38 49. SET OFF 39 50. APPROPRIATION 40 51. SUCCESSORS 40 52. ASSIGNMENT 40 53. NOTICES 40 54. OTHER DOCUMENTS 41 55. AMENDMENT 41 56. GOVERNING LAW AND JURISDICTION 42 57. SEVERANCE 42 58. COUNTERPARTS 42 59. ENTIRE AGREEMENT 42 AGREEMENT made the 23 day of September 1998 BETWEEN: RABO AUSTRALIA LIMITED (ACN 060 452 217) of Level 2,446 Collins Street, Melbourne, Victoria (Lender) AND: THE FIRST NATIONAL BANK OF CHICAGO (ARBN 065 752 918) of 70 Hindmarsh Square, Adelaide, South Australia (Administrative Agent) AND: PENRICE SODA PRODUCTS PTY LTD (ACN 008 206 942) of Solvay Road, Osborne, South Australia 5017 (Soda) AND: PENRICE HOLDINGS PTY (ACN 008 125 835) of Solvay Road, Osborne, South Australia 5017 (Holdings) AND: IMC GLOBAL AUSTRALIA PTY LTD (ACN 072 639 902) of Solvay Road, Osborne, South Australia 5017 (IMC) AND: IMC GLOBAL INC, a Delaware Corporation of 2100 Sanders Road, Northbrook, Illinois 60062, 6142 (Guarantor) INTRODUCTION A. The Borrower and the Guarantor have requested that the Lender provide or continue to provide certain financial accommodation to the Borrower. B. The Lender desires to provide or to continue to provide such financial accommodation to the Borrower upon and subject to the terms and conditions of this Agreement. OPERATIVE PROVISIONS SECTION A 1. INTERPRETATION 1.1 Definitions In this Agreement unless the context otherwise requires: "Accommodation Limit" means: (a) in respect of the Revolving Credit Facility, A$16,66.666.67; (b) in respect of the Term Loan Facility A$8,333.333,33; or such other amounts (expressed in Australian dollars) which the Lender and the Borrower may agree upon in writing from time to time. "Administrative Agent" means The First National Bank of Chicago (ARBN 065 752 918) or any other person appointed as Administrative Agent for the purposes of this Agreement. "Advance" means any cash advance drawn under this Facility (including a Term Loan). "this Agreement" means this Agreement and any other agreement expressed to be supplemental to this Agreement to which the parties to this Agreement are parties and any amendments to any such document. "Announcement Date" means the date on which Standard and Poors Rating Agency announces a rating change of the long term unsecured debt of the Guarantor. "Approved Purposes" means the refinancing of borrowings of the Borrower at the date of this Agreement and general working capital requirements. "Authorized Officer" means: (a) in relation to the Borrower each director and secretary of the Borrower and each person from time to time notified in writing by the Borrower to the Administrative Agent to be an Authorized Officer; (b) in relation to the Lender and the Administrative Agent each director and secretary and each employee of the Lender or the Administrative Agent (as the case may be) whose title includes the word "Manager" or "Director" and includes any person acting in any such capacity; and (c) in relation to the Guarantor each person whose title is Chairman, President, Chief Executive Officer, Chief Financial Officer Senior or Treasurer and includes any person acting in any such capacity. "BBSY Rate" means in respect of any day and in respect of any Interest Period the rate per centum per annum quoted on the page numbered "BBSY" of the Reuters Monitor System under the heading "Average Bid Rate" for such Interest Period at or about 10:00 am (Sydney time) on such day or on the first day of such Interest Period (rounded up, if necessary, to the nearest two decimal places) PROVIDED THAT if in respect of any Interest Period the Average Bid Rate cannot be determined in accordance with the foregoing procedures then "Average Bid Rate" for that Interest Period shall mean such rate as is agreed between the Administrative Agent and the Borrower having regard to comparable indices then available and in the absence of any such agreement shall be the rate stipulated by the Administrative Agent having regard to such comparable indices. "Bill" has the same meaning as in the Bills of Exchange Act 1909 (Cwth) (but does not include a cheque). "the Borrower" means Soda, Holdings and IMC and includes each of their successors and permitted assigns. "Business Day" means a day on which Australian trading banks are open for a full range of banking business in the metropolitan area of Adelaide, South Australia, Melbourne, Victoria and Sydney, New South Wales. "Drawdown" means an Advance made by the Lender to the Borrower pursuant to this Agreement. "Drawdown Date" means a date upon which an Advance is made by the Lender to the Borrower pursuant to this Agreement. "Drawdown Notice" means a notice of intention of the Borrower to borrow or redraw hereunder being a notice in the form or the effect of the form in Schedule 1. "Event of Default" means any of the events designated as such in this Agreement. "Facility" means the Revolving Credit Facility and the Term Loan Facility made available under this Agreement and each of them separately. "Financial Year" means the period from 1 January to the next following 31 December or such other period of one (1) year as the Borrower and the Administrative Agent may agree in writing from time to time. "Guarantor" means IMC Global Inc, a Delaware Corporation. "the Lender" means [insert name of lending bank] and its successors and assigns "Interest Period" means each period of each Advance being a period of 30, 60, 90, 120, 150, or 180 days or such other period as the Lender and the Borrower may agree provided that such period shall not extend beyond the Repayment Date. "Law" means the Corporations Law or the relevant corresponding legislation applicable to companies incorporated outside of the Commonwealth of Australia. "Loans" means the aggregate of all Principal Moneys which are from time to time owing (including contingently owing) or unpaid to the Lender and all other monies from time to time owing (including contingently owing) and unpaid to the Lender or the Administrative Agent under this Agreement. "Overdraft Rate" means the rate of interest equal to 2% above the rate of interest referred to in clause 6.1.1(a). "Permitted Security" means a Security Interest which: (a) has been approved by or is in favour of the Lender; (b) is a statutory charge on any property in relation to taxes while those taxes are not due for payment unless the Lender is satisfied that the amount of or obligation to pay those taxes is being contested in good faith and on reasonable grounds; (c) secures the purchase price of goods, plant or equipment purchased by the Borrower from a third party on arms length terms and used by it in the ordinary course of its business, is in favour of such third party and is over such goods, plant or equipment; (d) is over property of a person who, after the date of this document becomes a Subsidiary of the Borrower provided: (i) it existed at the time that person became a Subsidiary of the Borrower; (ii) it was not created in anticipation of or in connection with that person becoming a Subsidiary of the Borrower; and (iii) the financial indebtedness outstanding and actually secured by it at the time that person became a Subsidiary of the Borrower is not increased and the date for repayment of that financial indebtedness is not extended; (e) secures or is an operating or finance lease hire purchase or rental purchase agreement in respect of plant and equipment with unrelated third parties in the ordinary course of its business and on commercial terms provided that the total commitment of the Borrower (including any option for purchase) for the whole of the terms of such leases or hire purchase or rental purchase agreements shall not exceed A$3,500,000 at any one time. "Principal Moneys" means the aggregate of the Advances outstanding. "Quarter" means each quarter period ending on the last days of March, June, September and December in each year. "Repayment Date" means: (a) in respect of the Revolving Credit Facility the date being two years from the date of this Agreement; and (b) in respect of the Term Loan Facility the date being five years from the date of this Agreement; or such later dates as may be agreed in writing between the Lender and the Borrower. "Revolving Credit Facility" means the cash advance revolving credit facility made available under this Agreement. "Security, Interest" means any security or preferential interest or arrangement of any kind in any asset or other right of or arrangement of any kind with any creditor to have its claim satisfied before other creditors with or from the proceeds of any asset and any deposit of money by way of security but does not include a Permitted Security. "Subsidiary" means: (a) a subsidiary as defined in the Law; or (b) in respect of a person any entity of which that person owns or controls, or is in a position to own or control whether directly or indirectly, more than fifty per cent (50%) of the capital or voting rights; and includes any subsidiary formed or acquired after the date of this Agreement. "Term Loan" means any term loan drawn under the Term Loan Facility. "Term Loan Facility" means the term loan facility made available under this Agreement; "Year 2000 Problem" means the risk that computer applications used by the Borrower or the Guarantor or any of their Subsidiaries, suppliers or customers may be unable to recognise and perform properly date-sensitive functions involving certain dates prior to and any date after 31 December 1999. 1.2 Construction In this Agreement unless the context otherwise requires: (a) A reference to any Act of Parliament or to any section or provision thereof shall be read as if the words "or any statutory modification or re- enactment thereof or any statutory provision substituted therefore" were added to such reference. (b) A reference to winding up shall when applied to individuals be deemed to refer to bankruptcy. (c) A reference to an accounting term or "Accounting Standards" is to be interpreted in accordance with approved accounting standards and practices under the Law, and, where not inconsistent with those accounting standards and practices generally accepted principles and practices in the jurisdiction under which the relevant accounts are prepared consistently applied to a body corporate or as between bodies corporate and over time. A reference to "consolidated" in relation to accounts or other financial information, data or statistics with respect to a person means treated for accounting purposes as if accounting standards and generally accepted accounting principles for the creation of consolidated accounts applicable to a holding company and its subsidiaries applied to the person. (d) References to sub-clauses, clauses and schedules are references to sub-clauses, clauses and schedules of this Agreement. (e) References to any agreement, licence or other instrument shall be deemed to include references to such agreement, licence or other instrument as varied or replaced from time to time. (f) Words importing any gender shall include all other genders; words importing individuals shall include partnerships and corporations and vice versa; words importing the singular number shall include the plural and vice versa; the index (if any) and headings are for convenience and shall not affect the interpretation of this Agreement. (g) Where under or pursuant to this Agreement or anything done under this Agreement the day on or by which any act, matter or thing is to be done is not a Business Day such act, matter or thing may be done on the next succeeding day which is a Business Day (except with respect to the payment of monies payable under this Agreement which shall be made on the immediately preceding day which is a Business Day). (h) An agreement, representation or warranty on the part of two or more persons binds them jointly and each of them severally. (i) (subject to clause 5.4) where there are two or more persons included in the expression "the Borrower" a reference to "the Borrower" shall where the context so permits include a reference to each of such persons separately and any two or more or such persons together. SECTION B 2. THE FACILITY 2.1 In consideration of the premises the Lender agrees to furnish to the Borrower the Facility as a committed facility upon and subject to the terms and conditions in this Agreement. 2.2 The Facility will be made available in Australian currency. 3. ACCOMMODATION LIMIT 3.1 At any one time the aggregate amount of Advances outstanding shall not exceed the Accommodation Limit. 3.2 the Lender shall not be obliged to make any Advance to the Borrower if to so do would result in the aggregate amount of Advances outstanding exceeding the Accommodation Limit. 3.3 In the event that the Borrower is at any time in breach of clause 3.1 the Borrower will make payment to the Lender on demand of any amount necessary to remedy such breach. 4. PURPOSE OF THE FACILITY Financial accommodation granted by the Lender to the Borrower under this Agreement shall be used solely for the Approved Purposes and the Borrower shall not use the same for any other purpose except with the prior written approval of the Lender to do otherwise. Neither the Lender nor the Administrative Agent shall have any responsibility to see to the application of the financial accommodation by the Borrower. 5. DRAWDOWN 5.1 Time of Drawdown Notice Whenever the Borrower intends to borrow or redraw hereunder it shall give the Administrative Agent a Drawdown Notice not later than 2:00 pm (Melbourne Time) two (2) Business Days before the proposed date of such borrowing, redrawing or issuing. 5.2 Drawdown Notice A Drawdown Notice shall be under the common seal of the Borrower or under the hand of an Authorised Officer of the Borrower. 5.3 Term Loan The Term Loan Facility shall be drawndown in full within seven days of the date of this Agreement. 5.4 Liability for Drawdown The only party liable as principal debtor under this Agreement in relation to any Advance is the party that draws or obtains that Advance. 5.5 Minimum Drawn Each Drawdown under the Revolving Credit Facility shall be a minimum of A$1,000,000 and shall be in multiples of A$250,000. 5.6 Provision of Funds If the Borrower gives a Drawdown Notice then, pursuant to this Agreement, the Lender must provide to the Administrative Agent in same day funds in not later than 12 noon (Melbourne time) on the specified drawdown date and in accordance with that Drawdown Notice. 5.7 Payment to Borrower On receipt of the amounts paid to it by the Lender under clause 5.5, the Administrative Agent must pay the same in same day funds to the Borrower or as directed by that Borrower. 6. INTEREST 6.1 The Borrower shall pay to the Administrative Agent for the account of the Lender interest as follows: 6.1.1 Interest Rate (a) Interest on each Advance pursuant to the Revolving Credit Facility (not being an advance under the Overdraft Facility) for each Interest Period at the rate per centum per annum determined by the Lender to be the aggregate of: (i) a margin of point three per centum (.3 %) per annum; and (ii) the BBSY Rate. (b) Interest on each Advance being a Term Loan for each Interest Period at the rate per centum per annum determined by the Lender to be the aggregate of: (i) a margin of point three five per centum (.35%) per annum; and (ii) the BBSY Rate. 6.1.2 Calculation (a) Interest shall accrue from day to day and be payable on so much as the Lender may have advanced to the Borrower, and which remains owing to the Lender from time to time. (b) All sums falling due hereunder by way of interest or fees on a per annum percentage basis shall be calculated on the basis of a 365 day year for Advances or fees payable in Australian currency and a 360 day year for all other currencies for the actual number of days elapsed. 6.1.3 Payment Interest shall be paid at the end of each Interest Period (and at the expiration of each 90 day period during such Interest Period if any Interest Period is greater than 90 days) save that the last interest payment shall be made on the Repayment Date. 6.2 The Borrower shall pay interest on all monies due and unpaid by the Borrower under or pursuant to this Agreement at the rate of two (2%) per cent above the Overdraft Rate which applies as at the date such monies become due and payable. All interest which accrues under this sub-clause during any calendar month shall become due and payable on the last Business Day of that calendar month. 6.3 All interest due and unpaid at the option of the Lender shall be capitalized on a monthly basis and bear interest accordingly. 6.4 The Borrower shall on the expiration of each Interest Period in respect of a Term Loan provide to the Administrative Agent an Interest Period Notice in the form of Schedule 2 and if it shall fail to provide such Notice to the Administrative Agent, the Interest Period shall be ninety (90) days. 7. FEES, EXPENSES & CHARGES 7.1 Establishment Fee The Borrower shall pay to the Administrative Agent for the account of the Lender an establishment fee of A$12,500 such fee to be paid on the date of this Agreement and not to be refundable to the Borrower in any event. 7.2 Line Fee 7.2.1 The Borrower shall pay to the Administrative Agent for the account of the Lender:- (a) a line fee of the percentage per annum set out hereunder on the Accommodation Limit in respect of the Revolving Credit Facility; and (b) a line fee of the percentage per annum set out hereunder on the Accommodation Limit in respect of the Term Loan Facility. Rating, by Standard and Poors Rating Agency of the long term unsecured debt of the Guarantor Percentage BBB+ .25% BBB .3% BBB- .35% 7.2.2 The adjustments to line fee percentage rates prescribed in clause 7.2.1 resulting from changes, if any, to the ratings by Standard Poors Rating Agency shall be effective and payable from and including the Announcement Date. If an adjustment is required because the Administrative Agent was not immediately aware of an announced change such adjustment shall be made by the Administrative Agent and shall be retroactive to the Announcement Date. The Borrower agrees to pay to the Administrative Agent for the account of the Lender its due share of, and the Lender agrees to fund the Administrative Agent and the Administrative Agent agrees to repay to the Borrower its due share of, any adjustment resulting from a retroactive adjustment of ratings which shall be paid by the Administrative Agent or the Borrower, as the case may be, on or before the fifth day following the Administrative Agent's calculation of and advice to the Borrower of the amount to be adjusted. 7.2.3 The line fee shall be payable Quarterly in advance and shall accrue from the date hereof. 7.3 Agency Fee The Borrower shall pay to the Administrative Agent such agency fees as are agreed upon between the Administrative Agent and the Borrower. 7.4 Expenses Whether or not the Borrower shall draw down under this Agreement the Borrower shall forthwith reimburse the Lender and the Administrative Agent for the reasonable charges and expenses incurred by the Lender and the Administrative Agent: 7.4.1 in connection with the negotiation preparation or execution of this Agreement; and 7.4.2 in connection with the enforcement of, or the exercise or (except to the extent proved groundless and unreasonable) the purported or attempted exercise of any right, authority or remedy conferred on the Lender or the Administrative Agent under or by virtue of this Agreement; including in each case the fees and expenses of legal advisers on a solicitor and own client basis, financial institutions duty and duty passed on to the Lender or the Administrative Agent by any bank or financial institution and all stamp duty levied on or in connection with this Agreement or any payment or the receipt of any payment under this Agreement except for those incurred or payable due to delay or negligence on the part of the Lender or the Administrative Agent or any of their servants and agents. 7.5 Government Charges The Borrower shall forthwith pay any and all taxes or charges (other than taxes on the net overall income of the Lender) imposed by governmental authorities in any jurisdiction which may have been paid or may be payable or determined to be payable in connection with: 7.5.1 the execution, delivery, performance or enforcement of this Agreement; 7.5.2 on or in respect of any transaction contemplated by this Agreement; 7.5.3 any other matter or thing done or arising out of or in connection with this Agreement; or 7.5.4 any transaction related to this Agreement; (including, without limiting the generality of the foregoing, stamp duty and financial institutions duty) and shall indemnify the Lender and the Administrative Agent against any and all liabilities with respect to or resulting from delay or omission to pay such taxes or charges including any fines or penalties (save those due to delay or negligence on the part of the Lender or the Administrative Agent). 7.6 Increase in Costs by Government Action If any law, regulation or regulatory requirement or judgment, order or direction of any court, tribunal or authority binding on the Lender in any jurisdiction not in force at the date of this Agreement, or if compliance by the Lender with any direction, request or requirement (whether or not having the force of law but which if not having the force of law it is the practice of responsible financial institutions to observe) of any competent governmental or other authority, or if observation by the Lender of any reasonable practice of commercial lenders in Australia or the United States shall: 7.6.1 subject the Lender to taxes or change the basis of taxation of the Lender with respect to any payment under this Agreement; or 7.6.2 impose, modify or deem applicable any reserve or prudential or capital adequacy requirements or require the making or the varying of terms of any special deposits against or in respect of any assets or liabilities (whether contingent or otherwise) of, deposits with or for the account of, or loans by, the Lender; or 7.6.3 impose on the Lender any other conditions with respect to this Agreement or its obligations under this Agreement, and if, as a result of any of the foregoing: 7.6.4 the cost to the Lender of making or keeping the Facility available or otherwise performing its obligations under this Agreement or allocating its capital resources is increased; or 7.6.5 the amount payable or the effective rate of return on its overall capital to the Lender under this Agreement is reduced; or 7.6.6 the Lender makes a payment or foregoes or suffers a reduction in a return on or calculated by reference to any amount payable to it under this Agreement; then, and in each such case, the Lender shall notify the Borrower and give the Borrower the option exercisable by notice in writing to the Lender within ten (10) Business Days of receipt of notice of the Lender of: 7.6.7 paying an amount or amounts to the Lender from time to time on demand to compensate the Lender in full for any cost or reduction of the kind referred to effective from the date on which the cost or reduction is actually incurred by the Lender; or 7.6.8 terminating this Agreement on the first to occur of the expiration of sixty days from the date of the notice of option given by the Lender to the Borrower pursuant to this Clause 7.6 and the Repayment Date by paying to the Lender the debt owing to it on that date with accrued interest and all other monies payable under this Agreement, together with an amount determined by the Lender to compensate it up to that date for any actual cost or reduction of the type referred to. If the Borrower fails to make an election the Borrower shall be deemed to have made the election in sub- paragraph .7 of this clause. The Lender's certificate in respect of any cost or reduction of the kind referred to shall be prima facie evidence of the incurring of any such cost or reduction, except in the case of manifest error. Without prejudice to the Lender's rights under clause 7.6 the Lender will at the request of the Borrower negotiate in good faith with the Borrower with a view to finding a way of minimising any increased cost. 7.7 Gross Up 7.7.1 if at any time any applicable law, regulation or regulatory requirement of any government authority, monetary agency or central bank in Australia requires the Borrower or the Guarantor to make any deduction or withholding in respect of taxes (excluding payments made by the Borrower pursuant to notices received by the Borrower under Section 218 or 255 of the Income Tax Assessment Act or Section 74 of the Sales Tax Act or other analogous legislation relating to default by the Lender in payment of taxes due by the Lender) from any payment due under this Agreement: (a) the sum due from the Borrower or the Guarantor in respect of the payment shall be increased to the extent necessary to ensure that, after the making of the deduction or withholding, the Lender receives a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made; and (b) the Borrower and the Guarantor shall indemnify the Lender against any losses or costs incurred by the Lender by reason of any failure of the Borrower or the Guarantor to make any such deduction or withholding. The Borrower and the Guarantor shall promptly deliver to the Administrative Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any such deduction or withholding, together with any other information which the Administrative Agent may reasonably require. 7.7.2 If the Lender or any person on its behalf is required by any applicable law regulation or regulatory requirement of any government authority, monetary agency or central bank to make any deduction or withholding from, or any payment on or calculated by reference to, any amount received or receivable under this Agreement (other than taxes payable on the overall net income of the Lender) then (without prejudice to sub-paragraph .1 of this clause) the Borrower and the Guarantor shall upon demand indemnify and hold harmless the Lender against any such deduction, withholding or payment together with any related cost, loss, expense, interest, penalties or other liability by payment to each such person of such amounts and in such currencies as the person concerned may certify are required to compensate it for any such deduction, withholding or payment together with any related cost, loss, expense, interest, penalties or other liability. 8. REPAYMENTS 8.1 Payment of Principal 8.1.1 The Borrower shall repay to the Administrative Agent each Advance (other than a Term Loan) at the end of the term of each Interest Period or on the Repayment Date (whichever first occurs) together with interest to the day of repayment provided always that: (a) the Lender may, in its sole discretion and without prejudice to its rights contained in this Agreement, at any time and from time to time elect to extend the term of such Advance or Advances; and/or (b) in the event that the Borrower does not nominate an Interest Period the Interest Period shall be as determined by the Lender or in the absence of any such determination by the Lender that Interest Period shall be ninety (90) days. 8.1.2 The Borrower shall repay to the Administrative Agent the Term Loan by four equal annual installments of $2,083,333.33 each, the first of such installments to be paid on the date being two years from the date of this Agreement and thereafter on each anniversary of the date of this Agreement. 8.2 Redrawing 8.2.1 Any part of the Facility repaid at the conclusion of the Interest Period relative thereto shall (except in the event of any Term Loan) be available to be redrawn in whole or in part by the Borrower at any time prior to the Repayment Date subject always to the provisions of this Agreement. 8.2.2 No repayment of the Term Loan shall be available for redrawing. 8.3 Early Repayment of Advances 8.3.1 The Borrower may repay an Advance in whole (but not in part) before its due date if, but only if: (a) the Borrower gives the Administrative Agent at least 5 Business Days irrevocable notice in writing of the Borrower's intention to repay; (b) the Advance together with all interest accrued thereon to the date of repayment are paid in full; (c) the Borrower makes payment of all moneys payable pursuant to sub-clause .3.2 of this clause; (d) the Borrower makes payment on the day of payment specified in the notice; 8.3.2 In the event that the Borrower wishes to make early repayment pursuant to sub-clause .3.1 of this clause or if by reason of an Event of Default or for any other reason early repayment of an Advance in whole or in part is made by a Borrower or is demanded by the Lender the Borrower shall pay to the Lender in addition to all other moneys then payable an amount sufficient to compensate and to indemnify the Lender for and against all losses (including loss of profits), costs, damages and expenses which the Lender determines that the Lender will or is likely to suffer or incur as a result of such early repayment. Without in any way limiting or modifying the operation of the foregoing, the Borrower acknowledges that the Lender may endeavour to arrange or enter into an interest rate swap agreement or other commitment (either in relation to an Advance in particular or generally in relation to the business of the Lender) and may as a consequence of this (whether directly or indirectly) suffer or incur loss of opportunity, losses, costs, damages or expenses in the event that early repayment of an Advance is made. 8.3.3 It is acknowledged by the Lender that no moneys shall be payable to the Lender pursuant to clause 8.3.2 in respect of payment of an Advance if such payment is made on the last day of an Interest Period in respect of such Advance. 8.4 Manner of Payment 8.4.1 All payments by the Borrower under this Agreement must be made: (a) in same day funds; (b) in Australian currency; (c) not later than 2.00pm (Melbourne time) on the due date, to the account of the Administrative Agent specified to the relevant Borrower or in such other manner as the Administrative Agent directs from time to time. 8.5 Distribution by Administrative Agent 8.5.1 Except to the extent otherwise expressly provided in this Agreement, or unless payment is made to the Administrative Agent for its own account, each payment received by the Administrative Agent under this Agreement is received by the Agent on account of the Lender. 8.5.2 The Administrative Agent must within two (2) Business Days of receipt distribute in same day funds amounts received on account of the Lender to the Lender. 8.6 Non-receipt of funds by the Administrative Agent from the Borrower 8.6.1 Unless the Administrative Agent has received written notice from the Borrower at least 1 Business Day before the date on which any payment is due under this Agreement that the Borrower does not intend to make that payment in full on the due date, the Administrative Agent may (but is not obliged to) assume that the Borrower has made that payment when due, and in reliance on that assumption, may make available to the Lender on that due date an amount equal to the assumed payment. 8.6.2 If the Borrower has not in fact made that payment to the Administrative Agent, and does not make that payment, together with interest, promptly on demand, the Lender must, on demand, repay to the Administrative Agent the amount so made available to the Lender on that due date an amount equal to it, together with interest on such amount accrued for each day from and including the due date but excluding the date of such repayment, at the rate per centum per annum which is determined by the Administrative Agent to be the Administrative Agent's cost of funding such payment for such period. 8.6.3 Without limiting its obligations under this Agreement, the Borrower indemnifies the Administrative Agent and the Lender against any damage, loss or expense incurred by the Lender or the Administrative Agent by reason of any failure or delay by the Borrower in making any payments referred to in this clause 8.6. 9. TERMINATION OF FACILITY The Facility shall terminate on the Repayment Date and the Borrower shall pay to the Administrative Agent the Loans forthwith. SECTION C 10. CONDITIONS PRECEDENT 10.1 To the Facility The obligations of the Lender under this Agreement are subject to the fulfillment of the conditions precedent that the Administrative Agent shall receive prior to the giving of the first Drawdown Notice all of the following in the form and substance satisfactory to the Lender: 10.1.1 A copy of each of the constituent documents of the Borrower and the Guarantor certified by an Authorized Officer thereof as being complete true and up-to-date. 10.1.2 A duly signed verification certificate in the form of the certificate in Schedule 3. 10.1.3 A copy of this Agreement duly executed by the Borrower and the Guarantor. 10.1.4 Evidence that all necessary filings and registrations have been completed and that all stamp duties and registration and other fees have been paid in order to ensure that this Agreement is valid, binding and enforceable. 10.1.5 The Establishment Fee and the first Line Fee payment (which first payment shall be calculated from the date of this Agreement to the commencement of the first Quarter after the date of this Agreement) and the first administration fee payment. 10.1.6 A legal opinion from the attorneys of the Guarantor in respect of the Guarantor and this Agreement, addressed to the Lender and the Administrative Agent. 10.1.7 A duly signed indemnity in the form of Schedule 4. 10.2 To A Drawdown The obligation of the Lender to make any Advance is subject to the fulfillment (to the reasonable satisfaction of the Administrative Agent) of the following conditions precedent: 10.2.1 The Administrative Agent has duly received from the Borrower a request for a Drawdown in the form of a Drawdown Notice. 10.2.2 No event has occurred which constitutes or with the passing of time or the giving of notice or both would constitute an Event of Default. 10.2.3 The Lender has received such other information as it may reasonably require. 11. REPRESENTATIONS AND WARRANTIES The Borrower and the Guarantor each represents and warrants to the Lender and the Administrative Agent except to the extent disclosed in writing to the Lender prior to the date of this Agreement or prior to the date on which they are deemed made or repeated: 11.1 Status It has been duly incorporated in accordance with the laws of the place of its incorporation. 11.2 This Agreement This Agreement constitutes a legal valid and immediately binding obligation on it the Borrower and the Guarantor and is enforceable in accordance with its express terms subject only to laws relating to insolvency and the enforcement of creditors rights generally and the discretionary notice of equitable remedies. 11.3 Third Party Rights Its execution, delivery and Performance of this Agreement does not violate in any respect any provision of: 11.3.1 any law or regulation or any order or decree or any government authority, agency or court or; 11.3.2 its constitution ; or 11.3.3 any mortgage, contract or other undertaking or instrument to which it is party or which is binding upon it. 11.4 Authorities All authorizations, approvals, consents, licenses, filings, registrations, notarizations and other requirements of any governmental judicial or public body, authority, bureau or agency now obtainable and required in connection with its execution, delivery, performance, validity or enforceability of this Agreement have been obtained or effected and are in full force and effect and true copies thereof (where applicable) have been delivered to the Lender and all fees payable in connection therewith have been paid and there has been no default in the performance of any of the terms or conditions of any of the same. 11.5 Other Commitments It is not in default under any agreement undertaking or instrument to which it is a party or by which it is bound, such default being material in the context of this Agreement and no event has occurred which with the giving of notice or lapse of time or both would constitute such a default. 11.6 Litigation No litigation or governmental proceeding is pending or, to its knowledge threatened against it which could have a material adverse effect on its ability to comply with its obligations under this Agreement. 11.7 Taxation It and each of its Subsidiaries have duly filed all taxation returns required to be filed (none of which are so far as it is aware likely to be the subject of any dispute) and have paid all taxation levied or assessed upon it (except where the amount of or the obligation to pay those taxes is being contested in good faith and upon reasonable grounds and has complied with all assessments and notices in respect thereof or have established adequate reserves for payment thereof 11.8 Unsecured Liabilities Its obligations under this Agreement rank at least equally with all other of its unsecured and unsubordinated indebtedness except any liabilities mandatorily preferred by law. 11.9 Trusts In entering into this Agreement it is not acting as a trustee of any trust or settlement. 11.10 Insurance Policies All risks usually insured against according to sound commercial practice by persons carrying on activities similar to the Borrower's are fully insured against in amounts representing the present full replacement or reinstallation values or market values and in the name of and for the benefit of the Borrower absolutely. 11.11 Adverse Circumstances It is not aware of any fact or circumstance which would reasonably be expected to affect in any material adverse way its financial position, operations, profitability or prospects of or its business or the value of its property or affecting as a whole the industry in which it participates. 11.12 Year 2000 Compliance It:- 11.12.1 has initiated a review of all areas with its and its Subsidiaries operations that could be adversely effected by the Year 2000 Problem; 11.12.2 has developed a plan and time line for addressing the Year 2000 Problem on a timely basis and to date has and will hereafter implement such plan; 11.12.3 will use its best endeavours to ensure that the Year 2000 Problem will not have any material adverse impact on its financial position operations, profitability, prospects, business or the value of its property. 11.13 No Misrepresentation All information provided by it whether prior to or after the date of this Agreement to the Lender or the Administrative Agent is true and correct and is not, by the omission of information or otherwise, misleading and all projections contained therein were arrived at after the due and careful consideration and were based on the best information available and on fair assumptions. The representations and warranties in this clause shall be deemed to be repeated by the Borrower and the Guarantor on and as of the date of each Advance as if made with reference to the facts and circumstances existing at such date. The Borrower and the Guarantor acknowledge that the Lender and the Administrative Agent rely on the representations and warranties made or given in this Agreement by the Borrower and the Guarantor and that the Lender and the Administrative Agent are induced by each such representation and warranty to enter into this Agreement and the rights of the Lender and the Administrative Agent in respect of a breach of any such representation or warranty shall not be affected by investigation (if any) made by the Lender or the Administrative Agent into the affairs of the Borrower or the Guarantor. 12. GENERAL OBLIGATIONS The Borrower and the Guarantor each agree that on and from the date of this Agreement and so long as any amount payable under this Agreement is outstanding: 12.1 Authorities The Borrower and the Guarantor shall take all action necessary to obtain and promptly renew from time to time all authorizations, approvals, consents, licenses and exemptions as may be required under any applicable law or regulation to enable the Borrower and the Guarantor to perform their obligations under this Agreement or required for the validity or enforceability of this Agreement or any transaction contemplated by this Agreement. 12.2 Notice of Default The Borrower and the Guarantor shall promptly notify the Lender or the Administrative Agent in writing of the occurrence or pending or threatened occurrence of any event which would cause or constitute a breach of any of the representations or warranties or agreements of the Borrower and the Guarantor in this Agreement including any event which would result in a material change in the business of the Borrower and the Guarantor and any other event which constitutes or which would with the giving of notice or lapse of time or both or other conditions constitute an Event of Death. 12.3 Law The Borrower and the Guarantor shall comply with all requirements of the Law where a failure to do so is likely to have a material adverse effect on its ability to meet its obligations under this Agreement. 12.4 Access The Borrower and the Guarantor shall permit representatives of the Lender or the Administrative Agent (or any accountants or other experts designated by it) during normal business hours and upon reasonable notice and upon reasonable grounds to visit and inspect and examine the books of account, records (excluding company minute books), reports and other papers (and to make copies and to take extracts therefrom) of the Borrower and the Guarantor and to discuss its affairs, finances and accounts with its officers, accountants and auditors, all at such times and as often as may be reasonably requested by the Lender or the Administrative Agent but only in so far as such matters relate to information as may reasonably be required by the Lender or the Administrative Agent for any purpose connected with this Agreement. 12.5 Negative Pledge Except as permitted in this Agreement neither the Borrower nor any of its Subsidiaries shall without the prior written consent of the Lender either borrow further money from any lender (other than where that the lender is one of the companies included in the expression "the Borrower" or is the Guarantor) or create or assume or permit to exist or arise any Security Interest whatsoever over any part of its present or future undertakings, property, assets uncalled capital or revenues. The Borrower represents and warrants to the Lender that there will be no such Security Interest over any part its or its Subsidiaries present or future undertakings, property, assets, uncalled capital or revenues in existence as at the date of the first drawdown under the Facility. 12.5.2 For the purposes of Clause 12.5.1 the Lender agrees that the Borrower is entitled to enter into an agreement on or about even date herewith with The First National Bank of Chicago (ARBN 065 752 918) ("FNBC") pursuant to what FNBC agrees to provide facilities to the Borrower with accommodation limits totaling A$30,000,000 and an agreement on or about even date herewith with Banque Nationale de Paris ARBN 000 000 117 ("BNP") pursuant to which BNP agrees to provide facilities to the Borrower with accommodation limits totaling A$25,000,000. 12.6 Inspection The Borrower shall permit the Lender or the Administrative Agent upon, written request of the Lender or the Administrative Agent to from time to time inspect the register of the members of the Borrower where the register or any branch register is so kept at any time during regular business hours and the Borrower shall furnish the Lender or the business hours and the Borrower shall furnish the Lender or the Administrative Agent with any information which the Lender may consider reasonably necessary to enable it to determine whether or not there has been at any time after the date of this Agreement a transfer of the effective management and control of the Borrower or the Guarantor. 12.7 Public Information 12.7.1 Subject to sub-clause .2 of this clause, the Borrower and the Guarantor shall furnish to the Administrative Agent copies of all such accounts, documents, reports, notices, circulars, particulars and certificates ("Documents") which are required to be furnished by the Borrower or the Guarantor to any stock exchange, corporate affairs office (or analogous office) or shareholder at the same time as they are furnished to that stock exchange, corporate affairs (or analogous office) or shareholder and when requested by the Administrative Agent copies of Documents required under the provision of any trust deed to which the Borrower or the Guarantor is a party to be furnished to the trustee thereunder from time to time. 12.7.2 Unless the Lender shall specifically request a particular Document or class of Documents, the Borrower and the Guarantor shall only be obliged to provide the Administrative Agent with those Documents which relate to matters which may have a material effect on the business or financial obligations of either the Borrower or the Guarantor. 13. FINANCIAL INFORMATION The Borrower and the Guarantor shall from time to time supply the Lender with all financial or other information regarding the Borrower and the Guarantor as the Lender may reasonably request in writing always including the following without request: 13.1 As soon as possible but in any event within 120 days of the end of each Financial Year copies of the audited annual profit and loss statement and balance sheet of the Guarantor and the audited consolidated annual profit and loss statement and balance sheet of the Guarantor and the unaudited annual profit and loss statement and balance sheet of the Borrower. 13.2 As soon as possible but in any event within 60 days of the end of each Quarter a copy of the management accounts and of the unaudited balance sheet and profit and loss statement of the Borrower and the Guarantor and the unaudited consolidated profit and loss statement and balance sheet of the Borrower and the Guarantor. All of the financial information referred to above shall be prepared in accordance with Accounting Standards. 14. EVENTS OF DEFAULT If any of the following events occur ("Events of Default") the Loans and all other moneys owing to the Lender by the Borrower shall at the option of the Lender and notwithstanding any delay or previous waiver of the right to exercise such option become immediately due and payable upon written demand by the Lender to the Borrower and the obligations of the Lender under this Agreement shall be cancelled: 14.1 If the Borrower fails to observe or perform any obligations to be observed or performed by it under this Agreement or in connection with any transaction contemplated by this Agreement and if such default shall in the opinion of the Lender be capable of prompt remedy, the Borrower shall not have remedied such default within seven (7) days after notification by the Lender to the Borrower requiring remedy of such default. 14.2 Any representation or statement made or deemed to be made by the Borrower or the Guarantor in this Agreement or in writing pursuant to this Agreement shall not be complied with or shall prove to be untrue in any respect which materially adversely affects the interests of the Lender on any date as of which it was made or deemed made. 14.3 If all or any part of this Agreement becomes void, illegal, invalid, unenforceable, or of limited or reduced force or effect which is likely to adversely affect the ability of the Borrower to carry out its obligations under this Agreement. 14.4 Any other present or future indebtedness of the Borrower for borrowed money in excess of A$2,000,000 shall become due and payable prior to the stated maturity thereof as a result of a default or any such indebtedness shall not be paid on the due date thereof. 14.5 If the Borrower is wound up or if a petition is presented or an order is made for the winding up of the Borrower and is not withdrawn within fourteen (14) days or if a resolution is passed for the winding up of the Borrower otherwise than for the purpose of reconstruction or amalgamation the terms of which have previously been approved in writing by the Lender such approval not to be unreasonably withheld. 14.6 If a receiver or receiver and manager is appointed in respect of any part of the assets of the Borrower or an encumbrancer takes possession of the undertaking or the property of the Borrower or any part thereof. 14.7 If the Borrower makes default under any charge or security in favour of any person other than the Lender and the holder of that charge or security elects to enforce that charge or security. 14.8 If a compromise or arrangement is proposed between the Borrower or the Guarantor and their creditors or any class of them or if an application is made to a court for an order summoning a meeting of creditors or any class of them of the Borrower or the Guarantor. 14.9 If without the prior written consent of the Lender the Borrower reduces or attempts to reduce its capital or buy back any of its shares. 14.10 If the Borrower is placed under administration pursuant to Part 5.3A of the Corporations Law or causes or proposes to cause a meeting of its creditors to be summoned for the purposes of placing the Borrower under administration pursuant to Part 5.3A of the Corporations Law. 14.11 If any of the property of the Borrower, the ownership of which is in the opinion of the Lender material to the ability of the Borrower to perform its obligations under this Agreement, is seized or otherwise expropriated, nationalized, confiscated or acquired through any governmental action or intervention or if custody or control of such property shall be assumed by any government or government agency. 14.12 If a meeting of the Borrower or the Guarantor is called for the purpose of considering and if thought fit passing any resolution the passing of which would constitute or give rise to an Event of Default. 14.13 If in the reasonable opinion of the Lender there is a change in the ownership control or management of the Borrower which is likely to adversely affect the ability of the Borrower to conduct its business in a proper manner and to carry out its obligations under this Agreement. 14.14 If the Borrower defaults in the performance or observance of any provision of any other indebtedness to or security of the Lender and the Borrower whether the indebtedness or security is collateral to this Agreement or whether it is a separate agreement between the Lender and the Borrower and such default continues for more than seven (7) days after notification by the Lender to the Borrower requiring remedy of such default. 14.15 If the Borrower shall at any time not have an auditor appointed pursuant to the provision of the Law. 14.16 If the Borrower makes any material change to the business it carries on which in the reasonable opinion of the Lender is likely to materially adversely affect the interests of the Lender without the prior written consent of the Lender or if the Borrower or the Guarantor ceases or threatens to cease to carry on its business. 14.17 If the Borrower or the Guarantor suffers any material adverse change in their financial condition which is likely, to materially affect the interest of the Lender unless such change is agreed to in writing by the Lender. 14.18 If the Borrower ceases to be a wholly owned subsidiary of the Guarantor. 14.19 If any event occurs that results in acceleration of payments under the Credit Agreement dated December 15, 1997 between the Guarantor, the Banks listed therein Royal Bank of Canada as Documentation Agent, The Chase Manhattan Bank and Nations Bank N.A. as Co-Syndication Agents and Morgan Guaranty Trust Company of New York as Administrative Agent (or any other credit agreement in replacement thereof) provided that such acceleration has not been rescinded within five (5) days. 14.20 The cancellation or elimination by the Guarantor of the credit agreement specified in clause 14.19 and failure to replace such credit agreement with a facility substantially, similar in form and substance. 15. INDEMNITIES The Borrower indemnifies the Lender and the Administrative Agent from and against all actions, suits, claims, demands, losses, liabilities, damages, costs and expenses which may be made or brought against or suffered or incurred by the Lender or the Administrative Agent arising, out of or in connection with: 15.1 any Event of Default ; or 15.2 any failure by the Borrower to take an Advance in accordance with any request for a Drawdown. SECTION D 16. GUARANTEE The Guarantor unconditionally and irrevocably guarantees to the Lender and the Administrative Agent the payment of all moneys payable by the Borrower to the Lender or the Administrative Agent pursuant to this Agreement ("the Guaranteed Money") and the due observance and performance of all the covenants, terms, conditions and agreements to be observed or performed by the Borrower under this Agreement. 17. GENERAL INDEMNITY As an additional separate and independent obligation the Guarantor indemnifies the Lender and the Administrative Agent against any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment which the Lender or the Administrative Agent suffers, pays or incurs in respect of: 17.1 a failure by the Borrower to pay any Guaranteed Money when due; or 17.2 a failure by the Borrower or the Guarantor to observe, perform or comply with this Agreement: or 17.3 an Event of Default. 18. INDEMNITY FOR AVOIDANCE OF GUARANTEED MONEY 18.1 If any Guaranteed Money (or money which would be Guaranteed Money were it not irrecoverable) is irrecoverable from the Borrower, and is not recoverable by the Lender or the Administrative Agent from the Guarantor on the footing of the guarantee, the Guarantor as an additional separate and independent obligation: 18.1.1 indemnifies the Lender and the Administrative Agent against any claim, action, damage, loss, liability, cost, charge, expense, outgoing or payment which the Lender suffers, pays or incurs in respect of the non-payment of that Guaranteed Money; and 18.1.2 must pay the Lender the amount of that Guaranteed Money. 18.2 This Clause applies to the Guaranteed Money (or money which would be Guaranteed Money were it not irrecoverable) whether or not: 18.2.1 it is or may be irrecoverable by reason of any event described in Clause 24 by reason of any other similar or dissimilar fact or circumstance; 18.2.2 any transaction in respect of that money is void, avoided, illegal or unenforceable; and 18.2.3 any thing, in respect of the Guaranteed Money is or should be known to the Lender. 19. PAYMENT OF GUARANTEED MONEY The Guarantor must pay to the Lender any Guaranteed Money not paid by the Borrower when due immediately on demand from the Lender or the Administrative Agent (which may be made at any time and from time to time). 20. ACKNOWLEDGMENT The Guarantor acknowledges that it has not entered into this Agreement in reliance on any representation, warranty, promise or statement made by the Lender or any person on behalf of the Lender or the Administrative Agent. 21. PRINCIPAL OBLIGATION 21.1 This Agreement is enforceable against the Guarantor: 21.1.1 without first enforcing any security held by the Lender or the Administrative Agent; 21.1.2 whether or not the Lender or the Administrative Agent has: (i) made demand upon the Borrower; (ii) given notice to the Borrower or the Guarantor; or (iii) taken any other steps against the Borrower or the Guarantor, or any other person; 21.1.3 despite the occurrence of any event described in Clause 24. 22. CONTINUING GUARANTEE AND INDEMNITY 22.1 Each guarantee and indemnity in this Agreement is a continuing obligation of the Guarantor despite any settlement of account or the occurrence of any other thing and remains in full force and effect until all money owing, contingently or otherwise, under this Agreement is paid in full and this Agreement is finally discharged by the Lender. 22.2 Each guarantee and each indemnity in this Agreement is an additional, separate and independent obligation of the Guarantor. 23. AMOUNT OF GUARANTEED MONEY The obligations of the Guarantor under this Agreement extend to any increase in the Guaranteed Money as a result of any alteration, variation, supplement, renewal or replacement of this Agreement made with the Guarantor's express written consent. 24. UNCONDITIONAL NATURE OF OBLIGATIONS This Agreement and the liability of the Guarantor under this Agreement are not released, discharged or otherwise affected by anything which but for this provision may have that effect including, without limitation: 24.1 the grant of any time, waiver, covenant not to sue or other indulgence to the Borrower, the Guarantor, or any other person; 24.2 the discharge or release (including without limitation a release as part of a novation) of the Borrower, or any other person; 24.3 the liquidation of the Borrower, the Guarantor, or any other person: 24.4 the Lender or the Administrative Agent; 24.4.1 exercising or enforcing; 24.4.2 failing to exercise or enforce; or 24.4.3 delaying the exercise or enforcement of; any other security or power; 24.5 the alteration, variation, supplement, replacement, extinguishment, failure, loss, release, discharge, abandonment, impairment, assignment or transfer of or other dealing in respect of, or the failure of any person to enter into any document or agreement; 24.6 this Agreement or any other document or agreement being at any time void, voidable, avoided or unenforceable; 24.7 failure by the Borrower, the Lender or the Administrative Agent to give notice to the Guarantor of any default by the Borrower under this Agreement or any other document or agreement; 24.8 a judgment against the Borrower, the Guarantor or any other person; 24.9 any legal limitation, disability, incapacity or other circumstances related to the Borrower, the Guarantor or any other person; 24.10 acceptance by the Lender or the Administrative Agent of a repudiation or termination of this Agreement or any other document or agreement; 24.11 failure of any party to properly execute this Agreement; 24.12 any Guaranteed Money being irrecoverable for any reason; 24.13 the assignment, novation or assumption by the Lender, the Administrative Agent, the Borrower or any other person of any rights or obligations under this Agreement or any other document or agreement; 24.14 any prejudice (including material prejudice) to the Guarantor as a result of any thing done, or omitted to be done by the Lender or the Administrative Agent or any other person or any other thing: or 24.15 the receipt by the Lender of any dividend distribution or other payment in respect of any liquidation. This Clause applies whether or not the Lender, the Administrative Agent, the Borrower, the Guarantor or any other person, consents to, has knowledge of, fails to consent to, or have knowledge of, any event described above, or whether or not there is any rule of law or equity to the contrary. 25. NO COMPETITION 25.1 While any guarantee or indemnity in this Agreement is in effect the Guarantor may not: 25.1.1 be subrogated to the Lender or the Administrative Agent; 25.1.2 claim the benefit of any security, guarantee or other document or agreement, or any money held by the Lender or any power; 25.1.3 subject to the further provisions of this Clause either directly or indirectly prove in, claim or receive the benefit of any distribution, dividend or payment in respect of the liquidation of the Borrower or any other guarantor of the Guaranteed Money ("Surety"); 25.1.4 make a claim or exercise or enforce any right power or remedy against the Borrower or any Surety; 24.1.5 accept or procure the grant of any security from the Borrower or any Surety; or 24.1.6 raise any set-off (including, without limitation any set-off in respect of amounts due by the Lender to the Borrower) available to the Guarantor, the Borrower, any Surety or other person in reduction or discharge of its obligations under this Agreement. 25.2 If required by the Lender or the Administrative Agent, the Guarantor must: 25.2.1 prove in any liquidation of the Borrower or any Surety for all moneys owed to the Guarantor; and 25.2.2 not exercise or attempt to exercise any right of set-off against or realize any security taken from the Borrower or any Surety. 25.3 All moneys recovered by the Guarantor from any liquidation (or under any security from the Borrower or any Surety) must be held in trust by the Guarantor for the Lender to the extent of the unsatisfied liability of the Guarantor under this Agreement. 26. PROOF BY LENDER In the event of the liquidation of the Borrower or any Surety, the Guarantor authorizes the Lender to prove for all money which the Guarantor has paid or is or may be obliged to pay under this Agreement, other document or agreement or otherwise in respect of the Guaranteed Money. 27. AVOIDANCE OF PAYMENTS If any payment, conveyance, transfer or other transaction in respect of or affecting the Guaranteed Money is: 27.1 void, voidable or unenforceable: or 27.2 is claimed to be void, voidable or unenforceable and that claim is upheld, conceded or compromised; the liability of the Guarantor under this Agreement is the same as if: 27.3 that payment, conveyance, transfer or transaction; and 27.4 any release, settlement or discharge made in reliance on any thing referred to above; had not been made and the Guarantor must immediately do everything necessary or required by the Lender or the Administrative Agent to restore to the Lender or the Administrative Agent this Agreement and any security held by the Lender immediately prior to the payment, conveyance, transfer or transaction. 28. RETENTION OF AGREEMENT The Lender and the Administrative Agent may retain this Agreement for seven (7) months after full payment of the Guaranteed Money or if anything in the previous Clause has occurred or in the opinion of the Lender may occur, such longer period as the Lender determines. 29. EXCLUSION OF MORATORIUM To the extent permitted by law, a provision of any legislation which at any time directly or indirectly: 29.1 lessens or otherwise varies or affects in favour of the Guarantor any of its obligations under or any provision of this Agreement; or 29.2 stays, postpones or otherwise prevents or prejudicially affects the exercise by the Lender of any power; is negatived and excluded from this Agreement and all relief and protection conferred on the Guarantor by or under that legislation is also negatived and excluded. 30. NON-EXERCISE OF GUARANTOR'S RIGHTS The Guarantor must not exercise any rights it has inconsistent with this Agreement. 31. PAYMENTS IN GROSS All payments which the Guarantor is required to make under this Agreement must be made to the Lender to an address or account in Australia directed by the Lender or the Administrative Agent from time to time. 32. SUSPENSE ACCOUNT 32.1 The Lender may apply to the credit of an interest bearing suspense account: 32.1.1 any amounts received from the Guarantor under this Agreement; 32.1.2 any dividends, distributions or other amounts received in respect of the Guaranteed Money in any liquidation; 32.1.3 any other amounts received from the Guarantor, the Borrower, any other guarantor or any other person in respect of the Guaranteed Money. 32.2 The Lender may retain the amounts in the suspense account and may, but is not obliged to, apply them in or towards satisfaction of the Guaranteed Money. 32.3 In the event that the Lender is satisfied that it has received all of the Guaranteed Money in full and that it will not be required to repay any such moneys under any laws relating to insolvency it will refund the moneys in the suspense account and any interest accrued thereon (less any financial institution duty or debits tax payable in respect of any deposits or debits in respect of the suspense account) to the Borrower or the Guarantor or any such other person as the case may be. SECTION E 33. APPOINTMENT OF ADMINISTRATIVE AGENT 33.1 The Lender irrevocably appoints the Administrative Agent as its agent, with the rights and duties expressed in this Agreement. 33.2 In acting as agent, the Administrative Agent: 33.2.1 does not assume any fiduciary duties to the Lender; 33.2.2 is an independent contractor. 33.3 The Lender waives any claim which may arise against the Administrative Agent under the law of agency or for breach of fiduciary duty. 33.4 The Administrative Agent agrees to act as Administrative Agent of the Lender on these terms. 34. POWERS AND DUTIES OF ADMINISTRATIVE AGENT 34.1 The Administrative Agent may exercise any powers which this Agreement expressly delegates to Administrative Agent, and any powers reasonably incidental thereto. 34.2 The Administrative Agent must take any action which this Agreement specifically requires the Administrative Agent to take. The Administrative Agent need not take any other action and does not have any implied duties to the Lender. 34.3 The Administrative Agent must forward to the Lender a copy of each Drawdown Notice and each Interest Period Notice under the Term Loan Facility it receives it from the Borrower. 35. GENERAL IMMUNITY Neither the Administrative Agent nor any of its directors, officers, agents or employees are liable to the Borrower, the Guarantor, or the Lender for any act or omission by any of them in respect of this Agreement, except to the extent that the act or omission arises from gross negligence or willful misconduct. 36. NO RESPONSIBILITY FOR LOANS ETC 36.1 Neither the Administrative Agent nor any of its directors, officers, agents or employees need ascertain, enquire into or verify: 36.1.1 any statement, warranty or representation made in connection with this Agreement or any borrowing under this Agreement; 36.1.2 the performance of any term of this Agreement including any obligation to pay proof or any term requiring the provision of information directly to the Lender; 36.1.3 the enforceability, sufficiency or genuineness of this Agreement or any other writing in connection therewith; 36.1.4 the existence or possible existence of any Event of Default; 36.1.5 the financial condition of any Borrower or the Guarantor. 36.2 The Administrative Agent need not disclose to the Lender information volunteered by the Borrower or the Guarantor to the Administrative Agent (either in its capacity as agent or in its individual capacity). 37. ACTING ON INSTRUCTIONS OF LENDER 37.1 The Administrative Agent need not take any action under this Agreement unless: 37.1.1 the Lender instructs it to do so in writing; and 37.1.2 the Lender indemnifies the Administrative Agent to the Administrative Agent's satisfaction against all liability, costs and expenses it incurs in taking or continuing any action. 38. ADMINISTRATIVE AGENT AND LEGAL ADVISERS 38.1 The Administrative Agent may perform any of its duties under this Agreement by its employees, agents and legal advisers. 38.2 If the Administrative Agent selects those agents and legal advisers with reasonable care, the Administrative Agent is not liable to the Lender for any default or misconduct by those agents or legal advisers, except as to money or securities received by the Administrative Agent or its agents or legal advisers. 38.3 The Administrative Agent may obtain legal advice about this Agreement or any matter relating to or arising out of this Agreement. 39. RELIANCE ON DOCUMENTS AND LEGAL ADVICE The Administrative Agent may rely on: 39.1 any notice, consent, certificate, affidavit, letter, facsimile, statement, paper or document if the Administrative Agent believes it to be genuine and correct and to have been signed or sent by the proper person; and 39.2 in respect of legal matters, the opinion of its legal advisers (who may be employees of the Administrative Agent). 40. AGENT'S INDEMNIFICATION 40.1 The Lender indemnifies the Administrative Agent for all losses, and all costs, liability and expenses incurred by the Administrative Agent in respect of or in any way related to or arising out of this Agreement and other related documents or any actions taken or omitted by the Administrative Agent. This may include costs which the Borrower or the Guarantor fails to pay, administration costs, agency fees, enforcement costs, and costs of a dispute between the Administrative Agent and the Lender. However, it does not include losses, costs, liability and expenses resulting from the gross negligence or willful misconduct of the Administrative Agent (as found by a court of competent jurisdiction in a final non-appealable judgment). 40.2 This obligation survives payment of all moneys payment pursuant to this Agreement and termination of this Agreement. 40.3 This section E of this Agreement does not limit the obligations of the Borrower or the Guarantor under this Agreement. 41. LENDER CREDIT DECISIONS The Lender has made its own credit analysis and decision to enter into the Agreement independently and without relying on First Chicago. 42. RESIGNATION OF ADMINISTRATIVE AGENT 42.1 The Administrative Agent may resign at any time by giving a written notice thereof to the Lender. Upon resignation, the Lender shall have the right to appoint a successor Administrative Agent with the written approval of the Borrower (that approval not to be unreasonably withheld). If no successor Administrative Agent has been appointed by the Lender and accepted that appointment within thirty days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lender and with the written approval of the Borrower (that approval not to be unreasonably withheld), appoint a successor agent. 42.2 If no successor Administrative Agent has been appointed pursuant to the clause 42.1 within the thirty days following the giving of notice of resignation by the retiring Administrative Agent, the resignation shall nonetheless then become effective and the Lender shall perform the duties and be entitled to the rights of the Administrative Agent hereunder until it appoints a successor agent (which it shall not be under any obligation to so do). 42.3 Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, the successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent. 42.4 Whether or not a successor Administrative Agent has been appointed, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement upon its resignation becoming effective. After any person's resignation under this Agreement as the agent, the provisions of this Agreement shall continue in effect for its benefit and for the benefit of the Lender in respect of any actions taken or omitted to be taken by the person while it was acting as the Administrative Agent. 42.5 During any period in which a successor agent is not appointed the agency fee referred to in clause 7.3 shall be payable by the Borrower to the Lender. SECTION F 43. CERTIFICATIONS 43.1 Any document or thing required to be certified by the Borrower or the Guarantor shall be certified an Authorized Officer of the Borrower or the Guarantor or in such other manner as the Lender may approve. 43.2 A certificate signed by an Authorized Officer of the Lender or the Administrative Agent stating any amount or rate for the purpose of this Agreement shall in the absence of manifest error be conclusive and binding on the Borrower. 44. UNLAWFULNESS If: 44.1 any law, regulation or regulatory requirement or judgment, order or direction of any court, tribunal or authority binding upon the Lender or its ultimate parent company in the jurisdiction in which the Lender or its ultimate parent company is formed or has its principal or lending office or in which any action is required to be performed by it for the purposes of this Agreement, or 44.2 any change in the interpretation of any such law, regulation or regulatory requirement or judgment, order or direction of any court, tribunal or authority by any government or governmental agency charged with the administration thereof or by a court of competent jurisdiction or compliance by the Lender with any request or direction (whether or not having the force of law) of the Reserve Bank of Australia or any government or other governmental agency in accordance with whose requests or directions the Lender is accustomed to act; renders it unlawful for the Lender to meet any of its obligations under the Facility, the Lender shall promptly notify the Borrower and the following provisions shall apply: 44.3 the Borrower and the Lender shall negotiate in good faith for a period not exceeding thirty (30) days (or such longer period as is required) with a view to the Lender making arrangements to be able to meet the relevant obligations under the Facility in whole or in part in a manner which is not unlawful; and 44.4 if no such arrangements have been made by the end of such period, thereupon the Lender shall be released from its obligations under this Agreement, the Facility shall be cancelled and the Borrower shall pay to the Lender the Loans under this Agreement prior to the date on which it becomes unlawful for the Lender to meets its obligations under the Facility. 45. AUTHORITY TO DEBIT ACCOUNTS The Borrower and the Guarantor irrevocably authorize and direct the Lender and the Administrative Agent to debit any account or accounts of the Borrower or the Guarantor with the Lender or the Administrative Agent in respect of any amounts that are from time to time due and payable under this Agreement by the Borrower or the Guarantor respectively. The Lender will notify the Borrower and the Guarantor (as the case may be) of such amounts so debited other than fees charged in accordance with this Agreement and other than debits in accordance with prior arrangements between the Lender and the Borrower or the Guarantor. 46. NO WAIVER No failure to exercise and no delay in exercising on the part of the Lender any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall, any single or partial exercise of any right power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies of the Lender provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law or equity or legislation or regulation. 47. MERGER 47.1 The representations and warranties of the Borrower and the Guarantor in this Agreement shall survive the execution of this Agreement and the making of any Advance under this Agreement and shall enure for the benefit of the Lender and the Administrative Agent until the Loans have been paid in full by the Borrower to the Lender. 47.2 If the liability of the Borrower or the Guarantor to pay to the Lender or the Administrative Agent any moneys payable under this Agreement becomes merged in any deed, judgment, order or other thing the Borrower or the Guarantor (as the case may be) shall pay interest on the amount owing from time to time under that deed, judgment, order or other thing at the higher of the rate payable under this Agreement and that fixed by or payable under that deed, judgment, order or other thing. 48. TIME OF THE ESSENCE Time shall be of the essence as regards any date or period determined under this Agreement save only to the extent that any such date or period may be altered by mutual agreement between the parties whereupon time shall be of the essence as regards such altered date or period. 49. SET OFF 49.1 The Borrower and the Lender do expressly acknowledge and agree that: 49.1.1 Where the Lender now or at any time in the future is indebted on any account to the Borrower pursuant to arrangements made between them such arrangements are hereinafter referred to as the "Arrangements". 49.1.2 Notwithstanding the Arrangements and any other provision of this Agreement (and without prejudice to the Lender's other rights and remedies) any monies (whether by way of principal interest or otherwise and whether present future actual or contingent) which the Lender may now or may hereafter owe to the Borrower under the Arrangements may be applied to and set off by the Lender as and when the same may become due and payable pro rata against the Loans as and when they become due and payable to the intent and effect: (i) first that the Lender may at any time and from time to time deduct from and retain out of the monies otherwise payable by the Lender to the Borrower pursuant to the Arrangements such amounts as the Lender may think fit and apply or set off such amounts in or toward or against satisfaction of the Loans; and (ii) secondly that upon default by the Borrower hereunder the Lender shall not be obliged to pay any monies to the Borrower under the Arrangements until the obligations of the Borrower to the Lender to pay any monies to the Lender hereunder are paid and satisfied in full. 49.2 The contractual rights of set off conferred on the Lender under sub-clause .1 of this clause are in addition to, and not in substitution for, any rights of set off otherwise conferred on or available to the Lender at law or in equity including (without limitation) any banker's rights of set off or right of combination of accounts or banker's lien. 49.3 For the avoidance of doubt the Lender and the Borrower further declare and acknowledge that the debts and liabilities arising or created hereunder and pursuant hereto and under and pursuant to the Arrangements are mutual debts within the meaning of Section 86(l) of the Bankruptcy Act 1966 (Cwth) (as incorporated in the Corporations Law) and that upon the liquidation or bankruptcy of the Borrower the provisions of Section 86 of the said Bankruptcy Act shall apply so that any sum due from the Borrower to the Lender hereunder shall be set off against any sum due from the Lender to the Borrower under the Arrangements. 49.4 The Borrower acknowledges and agrees that it will not and will not attempt to prevent the Lender from exercising its rights of set off as aforesaid in the circumstances contemplated in respect thereof. 50. APPROPRIATION The Lender or the Administrative Agent may appropriate any payment towards the satisfaction of any moneys due by the Borrower in any way that the Lender or the Administrative Agent thinks fit and notwithstanding any purported appropriation by the Borrower. 51. SUCCESSORS This Agreement shall bind the parties and their respective heirs executors administrators successors and assigns. 52. ASSIGNMENT 52.1 The Lender may not at any time assign the benefits and obligations on its part to be enjoyed or performed under this Agreement without the consent in writing of the Borrower which shall not be unreasonably delayed or withheld. Neither the Borrower nor the Guarantor shall assign or purport to assign any of the benefits or obligations on its part to be enjoyed or performed under this Agreement without the consent in writing of the Lender. 52.2 The Lender may (subject to prior notification to the Borrower) disclose to any prospective assignee, on a confidential basis, such information concerning the Borrower as it considers appropriate without incurring any liability for any breach of the duty of banker- customer confidentiality. 53. NOTICES Any notice demand consent or other communication to be given under or in connection with this Agreement shall be in writing or if it is to be given by the Lender or the Administrative Agent may be signed by any Authorized Officer of the Lender or the Administrative Agent or any solicitor for the time being acting for the Lender or the Administrative Agent and if it is to be given by the Borrower shall be under the common seal of the Borrower or the hand of an Authorized Officer of the Borrower and may be served either: 53.1 personally; or 53.2 by posting the same by registered or certified mail to the party to whom the notice is directed at its address appearing in this Agreement or at any other address of which prior notification shall have been given by the addressee prior to the dispatch of the said notice and any notice given by post shall be deemed to have been received by the party to whom it is addressed at the expiration of forty eight (48) hours (ten Business Days where the addressee is the Guarantor) after the same has been properly posted; or 53.3 by facsimile transmission: To the Lender: (02) 9223 1096 Attention: Credit Administrator To the Administrative Agent: (08) 8223 2948 Attention: Loan Administrator To the Borrower: (08) 8248 8250 Attention: Treasurer To the Guarantor: 1 (847) 205 4894 Attention: Treasurer or any other facsimile number of which prior notification shall have been given to the sender prior to the transmission of the facsimile and any facsimile transmission shall be deemed to have been served on the date of transmission by the sender if the sender shall receive confirmation of receipt of the notice in its entirety from the recipient. The original of any facsimile transmission shall be posted in accordance with sub-clause .2 of this clause on the date of transmission or if transmitted after usual posting hours the next Business Day. If the date of dispatch is not a Business Day in the place to which such notice, request demand or other communication is sent it shall be deemed to have been received at the commencement of business on the next following Business Day in such place. Notice given to any one or more of the persons (if more than one) comprised in the expressions "the Borrower" shall be deemed notice to all such persons. Signatures may be manuscript or may be printed or reproduced by other mechanical means. 54. OTHER DOCUMENTS The Borrower and the Guarantor shall either before or after the making of any Advance under this Agreement do all such acts matters and things and shall sign or execute and deliver all such documents or writing or assurances as may in the reasonable opinion of the Lender or the Administrative Agent be necessary or expedient to further and more effectually carry into full effect the provisions of this Agreement and for conferring the full benefit thereof upon the Lender and the Administrative Agent. 55. AMENDMENT No amendment of this Agreement shall bind the parties unless made in writing expressed to be supplemental to or in substitution for the whole or part of this Agreement. 56. GOVERNING LAW AND JURISDICTION This Agreement and the rights and obligations of the parties shall be governed by and construed in accordance with the laws in force in the State of South Australia and the parties agree by the execution of this Agreement to irrevocably submit to the non-exclusive jurisdiction of the Courts in the State of South Australia in respect of all matters arising under or in connection with this Agreement provided always that the Lender may proceed in the Courts of any Territory State or country having or claiming jurisdiction in respect of the matter which is the subject of the proceedings. 57. SEVERANCE An provision of this Agreement which is or becomes prohibited invalid unlawful void or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective and capable of severance without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 58. COUNTERPARTS This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 59. ENTIRE AGREEMENT This Agreement contains all of the terms and conditions upon which the Lender will provide financial accommodation to the Borrower and supersedes any previous or extant arrangements with respect to the same. EXECUTED AS AN AGREEMENT SIGNED for and on behalf of )RABO AUSTRALIA LIMITED RABO AUSTRALIA LIMITED )by its Attorneys who state that at the time by )of executing this instrument they have )no notice of the revocation of the Power and )of Attorney dated 4 July 1997 )under the authority of which they have its Attorneys )executed this instrument ) /s/ Philip Streten --------------------------------- Attorney Philip Streten State Manager Corporate Banking, Victoria --------------------------------- Name/Position /s/ R.B. Agg --------------------------------- Attorney R.B. Agg Manager Corporate Banking, Victoria --------------------------------- Name/Position SIGNED for and on behalf of ) /s/ Timothy Blackmore THE FIRST NATIONAL BANK )-------------------------------- OF CHICAGO by its Authorized ) Authorized Officer Officers ) Timothy Blackmore/Vice President -------------------------------- Name/Position /s/ S.K. Milne -------------------------------- Authorized Officer S.K. Milne/Associate Underwriter -------------------------------- Name/Position THE COMMON SEAL of ) PENRICE SODA PRODUCTS PTY LTD ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - --------------------------- Director David Reid - - --------------------------- Print name of Director /s/ Henrik Michael Alhsnis - - --------------------------- Director or Secretary Henrik Michael Alhsnis - - --------------------------- Print name of Director or Secretary THE COMMON SEAL of ) PENRICE HOLDINGS PTY ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - --------------------------- Director David Reid - - --------------------------- Print name of Director Henrik Michael Alhsnis - - --------------------------- Director or Secretary Henrik Michael Alhsnis - - --------------------------- Print name of Director or Secretary THE COMMON SEAL of ) IMC GLOBAL AUSTRALIA PTY LTD ) was hereunto affixed ) in the presence of: ) - - ------------------------------ Director - - ------------------------------ Print name of Director - - ------------------------------ Secretary - - ------------------------------ Print name of Director or Secretary SIGNED for and on behalf of ) IMC GLOBAL INC ) By: /s/ E. Paul Dunn, Jr. ---------------------------- Name: E. Paul Dunn, Jr. ------------------------- Title: Vice President & Treasurer ---------------------------- THE COMMON SEAL of ) IMC GLOBAL AUSTRALIA PTY LTD ) was hereunto affixed ) in the presence of: ) /s/ D.A. Reid - - --------------------------------- Director David Reid - - --------------------------------- Print name of Director /s/ Henrik Michael Alhsnis - - --------------------------------- Director or Secretary Henrik Michael Alhsnis - - --------------------------------- Print name of Director or Secretary SIGNED for and on behalf of ) IMC GLOBAL INC ) By -------------------------------- Name ------------------------------ Title ----------------------------- SCHEDULE I FORM OF DRAWDOWN NOTICE NOTICE TO: THE FIRST NATIONAL BANK OF CHICAGO 70 Hindmarsh Square ADELAIDE SA 5000 Facility Agreement dated 1998 ("the Agreement"). The undersigned refers to the above Agreement and irrevocably gives you notice of drawdown under the Facility as follows: CASH ADVANCE/TERM LOAN 1. Drawdown Date: 19 ------------------- -- 2. Amount to be drawn: $ (Australian Dollars) ------------------- 3. Period of the borrowing: days ---------- 4. Payment Account: ------------------- 5. Interest Period: days The Borrower by its execution of this Notice reaffirms and reconstitutes all representations and warranties or agreements of the Borrower in the Agreement as if made at the date of this Notice (except to the extent disclosed in writing to the Lender prior to the date of this Drawdown Notice) and certifies that no Event of Default (as defined in the Agreement) has occurred or is continuing or is likely to result from this transaction. DATED this day of 19 SIGNED by ) an Authorized Officer of ) ------------------------------ ) - - -------------------------------- SCHEDULE 2 INTEREST PERIOD NOTICE TO: THE FIRST NATIONAL BANK OF CHICAGO Facility Agreement dated 1998 ("the Agreement") [insert name of relevant borrower] refers to the above Agreement and irrevocably gives you notice of the required Interest Period under the Term Loan Facility as follows: Interest Period: commencing on -------------------- SIGNED by ) an Authorized Officer of ) [insert name of relevant ) borrower] )-------------------------------- Authorized Officer SCHEDULE 3 VERIFICATION CERTIFICATE TO: RABO AUSTRALIA LIMITED ("the Lender") I, of am a director/company secretary of PENRICE SODA PRODUCTS PTY LIMITED (ACN 008 206 942), PENRICE HOLDINGS PTY (ACN 008 125 835) and IMC GLOBAL AUSTRALIA PTY LIMITED (ACN 072 6-39 902) (each separately hereafter referred to as "the Company") CERTIFY as follows:- I certify that: 1. The company is not the trustee of any trust fund or settlement and all its assets are legally and beneficially owned by it. 2. The Company is not a subsidiary of, or controlled by, an Australian public company. 3. The assets of the Company are or will at the time of first drawdown under the Agreement be free of any Security Interest other than as consented to by the Lender in writing. 4. No meeting has been called to consider a resolution, no resolution has been passed, no application is pending and no order has been made for the winding up or administration of the Company. 5. The Company is not insolvent and it is not aware of any circumstances, and has not received any demand which remains unsatisfied, which is likely to lead to the winding up of the Company under the Corporations Law. 6. No receiver, receiver and manager or administrator has been appointed to the Company or any of its assets and the Company is not a party to any current legal proceedings which is likely to adversely affect the ability of the Borrower to carry out its obligations under the Agreement. 7. A resolution of the directors of the Company: (a) authorizing the acceptance and execution of the facility agreement ("Agreement") governing the terms and conditions of a 2 year revolving credit facility and a 5 year term loan facility ("Facility") agreed to be provided by the Lender to the Company; and (b) appointing each of the persons set out in Annexure "A" as an authorized officer of the Company to prepare, complete and sign letters and notices on behalf of the Company for the purposes of the Agreement and to do everything else that may be necessary for the purposes of the Agreement or the Facility including agreeing any amendments to the provisions of the Agreement including the amount and term, was passed in accordance with the Articles of Association of the Company and an extract thereof is set out in Annexures "B, C and D". 8. Set out in Annexure "A" are the normal signatures of each of the authorized officers referred to above. 9. Neither the execution of the Agreement nor the passing of the resolution referred to above has infringed or will infringe the constitution of the Company or contravene any obligation to which it is a party. 10. I am aware the Lender will rely on this certificate in providing the Facility to the Company. 11. A word or phrase defined in the Agreement has the same meaning in this certificate. 12. A current and up to date copy of the Constitution of the company is attached hereto as Annexures E, F and G. DATED the day of 1998 - - ---------------------------------- Signature - - ---------------------------------- Position "A" This is Annexure "A" referred to in the attached Verification Certificate AUTHORISED OFFICERS OF PENRICE SODA PRODUCTS PTY LIMITED (ACN 008 206 942), PENRICE HOLDINGS PTY (ACN 008 125 835) AND IMC GLOBAL AUSTRALIA PTY LIMITED (ACN 072 639 902) ("the Company") The following are the names and signatures of the authorized officers of the Company. NAME SIGNATURE (Please print) "B" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF PENRICE SODA PRODUCTS PTY LTD (ACN 008 206 942) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents" ) were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 13. the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 14. the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document, ancillary document or other document considered necessary or desirable by that Director; and 15. [*] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorised to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - ----------------------------------- Chairman - - ----------------------------------- Print Name "C" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF PENRICE HOLDINGS PTY (ACN 008 125 835) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents") were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 1. the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 2. the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document. ancillary document or other document considered necessary or desirable by that Director; and 3. [*] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorized to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - ---------------------------- Chairman - - ---------------------------- Print Name "D" EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS OF IMC GLOBAL AUSTRALIA PTY LTD (ACN 072 6-39 902) ("the Company") The Chairman noted that a quorum was present at the meeting comprising Directors entitled to vote on the proposed resolutions and noted that each Director disclosed that director's interest, if any, in the subject matter of the proposed resolutions, without limitation, each directorship, if any, in every company concerned in or by the subject matter of the proposed resolutions. Drafts of the following documents (the "Documents") were tabled at the meeting: Facility Agreement between Penrice Soda Products Pty Ltd, Penrice Holdings Pty and IMC Global Australia Pty Ltd (together, "Borrowers") as borrowers, The First National Bank of Chicago ("Bank") as administrative agent Banque Nationale de Paris as lender and IMC Global Inc ("IMC") as guarantor; Facility Agreement between the Borrowers as borrowers, the Bank as lender and IMC as guarantor; and Facility Agreement between the Borrowers as borrowers, the Bank as administrative agent, Rabo Australia Limited as lender and IMC as guarantor. The Chairman reported in detail on the nature of the transactions evidenced by the Documents and on the rights conferred on and obligations assumed by the Company. RESOLVED THAT: 1. the Company unconditionally execute and delivery the Documents in the form of the drafts tabled together with all ancillary documents and perform each of its obligations under each Document and each ancillary document; 2. the common seal of the Company be affixed to such of the Documents and ancillary documents requiring execution under the Company's common seal and that each director be authorized to execute any Document, ancillary document or other document considered necessary or desirable by that Director; and 3. [*] be appointed as Authorized Officers of the Company for the purposes of the Documents and that they each be authorised to execute any notices and communications under or in connection with the Documents. CERTIFIED to be a true copy of the extract of the Minutes of Meeting of the Board of Directors of the Company (the "Meeting") duly convened and held and that all procedural and formal requirements under the Articles of Association of the Company and the Corporations Law in respect of the Meeting, the resolutions and appointment of directors of the Company have been complied with in full and that such resolutions have not been amended, modified or revoked and are in full force and effect. - - ------------------------------- Chairman - - ------------------------------- Print Name SCHEDULE 4 FACSIMILE INDEMNITY TO: RABO AUSTRALIA LIMITED (the Financier) FROM: PENRICE SODA PRODUCTS PTY LTD ACN 008 206 942 PENRICE HOLDINGS PTY ACN 008 125 835 IMC GLOBAL AUSTRALIA PTY LTD ACN 072 639 902 (each separately referred to as "the Customer") IN CONSIDERATION of the Financier (which expression includes its successors and assigns) agreeing to act on the basis of instructions given by the Customer by Electronic Means, the Customer agrees as follows: 1. In this indemnity "Electronic Means" means telephone, telex, facsimile or any other electronic means. 2. The Customer agrees: (a) that the Customer, and not the Financier, will bear all risks in relation to any unauthorized or fraudulent notice or communication given to the Financier by Electronic Means; (b) that the Financier may, without further enquiry or reference to the Customer, act on that notice or communication if it includes a reference to the Customer and on its face purports to be signed or given by an authorized signatory of the Customer being a person notified as such in writing by the Customer to the Financier from time to time; (c) that the Financier, despite any other term of this indemnity, may, in its absolute discretion, defer acting in accordance with the whole or any part of a notice or communication received by it pending further enquiry to and/or confirmation by the Customer, but the Customer expressly agrees that the Financier will not be under any responsibility to so defer in any case. 3. The Customer: (a) release the Financier from all actions and claims in connection with the Financier in good faith acting on instructions given by Electronic Means or deferring to act under paragraph 2(c) above; and (b) indemnifies the Financier against all losses, costs and expenses suffered as a result of any actions or claims in connection with the Financier in good faith acting on instructions given by Electronic Means, except where it is conclusively proven that the Financier or its employees acted negligently or fraudulently. Date 1998 THE COMMON SEAL of ) PENRICE SODA ) PRODUCTS PTY LTD ) is affixed in the presence of: ) - - -------------------------- ------------------------------------ Signature of Director Signature of Director/Company Secretary - - -------------------------- ------------------------------------ Print Name Print Name THE COMMON SEAL of ) PENRICE HOLDINGS ) PTY is affixed in the presence ) of: ) - - -------------------------- ------------------------------------ Signature of Director Signature of Director/Company Secretary - - -------------------------- ------------------------------------ Print Name Print Name THE COMMON SEAL of ) IMC GLOBAL AUSTRALIA ) PTY LTD is affixed in the ) presence of: ) - - -------------------------- ------------------------------------ Signature of Director Signature of Director/Company Secretary - - -------------------------- ------------------------------------ Print Name Print Name EX-10.80 18 NON-COMPETITION AGREEMENT EXHIBIT 10.80 NON-COMPETITION AGREEMENT This Non-Competition Agreement (the "Agreement) is entered into by and between Robert M. Van Patten (the "Executive") and IMC Global Inc., a Delaware corporation, as of this 1st day of August 1998. WHEREAS, IMC Global Inc. has announced its intention and desire to sell all of its ownership interest in IMC Agribusiness Inc., Hutson's Ag Services, Inc. and IMC Nitrogen, Inc. (collectively, "AgriBusiness"); WHEREAS, the Executive signed a Non-Competition Agreement with The Vigoro Corporation, a wholly owned subsidiary of IMC Global Inc., on or about March 1, 1996 which the parties would like to terminate and replace with this Agreement; WHEREAS, IMC Global Inc. and the Executive have entered into a Severance Agreement (the "Severance Agreement") contemporaneously with this Agreement under which IMC Global Inc. agrees to pay Severance Benefits (as defined in the Severance Agreement) to the Executive upon his termination of employment under certain circumstances as defined therein; NOW, THEREFORE, in consideration of the substantial benefits available to the executive under the Severance Agreement and the agreements and covenants contained herein, the sufficiency of which is acknowledged, the Executive and IMC Global Inc. hereby agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement unless the context requires otherwise. (a) "Affiliate" means any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as IMC Global Inc. or any unincorporated trade or business which is under common control with IMC Global Inc. (as determined under Section 414(c) of the Internal Revenue Code). (b) "Company" means IMC Global Inc. and its subsidiaries, as they may exist from time to time. (c) "Successor Company" means an entity to which the Company transfers its ownership interest in and operation of AgriBusiness. 2. Confidential Information/ Proprietary Rights. Except as required by law, for the longest period of time permitted by applicable law, the Executive shall preserve the confidentiality of and shall not use or divulge or take action reasonably likely to result in the use or disclosure of any trade secret, proprietary or confidential information of the Company or an Affiliate; provided, however, that the Executive may use or disclose such information if it is or becomes public or available to the general public otherwise than through any act or default of a party that has an obligation of confidentiality or non-use with respect to such information. Such information includes but is not limited to (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, suppliers; (iii) inventory selection and management techniques; (iv) product development and marketing plans; and (v) finances. 3. Non-Competition. The Executive agrees to the following obligations that he acknowledges to be reasonably designed to protect the Company's legitimate business interests without unnecessarily or unreasonably restricting his post-employment opportunities. (a) The following restrictions apply during the period the Executive is employed by the Company and for a period of three years following the termination of his employment with the Company. These restrictions apply regardless of the reason for the Executive's termination or by whom initiated. The parties expressly agree and intend that, for purposes of this Agreement only, the Company's transfer of its ownership interest in and operation of AgriBusiness to a Successor Company, whether through a stock transaction or otherwise, shall constitute a termination of the Executive's employment with the Company. (i) The Executive will not engage or assist others in engaging in competition with the Company, directly or indirectly, whether as an employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of a corporation the securities of which are traded on a national securities exchange or in the over-the- counter market), director, officer, employee, consultant, contractor, agent, or otherwise, in the business of producing, brokering and/or distributing in a wholesale capacity crop nutrients, animal feed ingredients, salt, soda ash, sodium bicarbonate, sodium sulfate or boron chemicals. (ii) The Executive will not solicit, in competition with the Company, directly or indirectly, any person who is a client, customer or prospect (as such terms are defined below) for the purpose of performing services and/or providing goods and services of the kind performed and/or provided by the Company in the business of producing, brokering and/or distributing in a wholesale capacity crop nutrients, animal feed ingredients, salt, soda ash, sodium bicarbonate, sodium sulfate or boron chemicals. (iii) The Executive will not induce or persuade or attempt to induce or persuade any employee, contractor or agent of the Company to terminate his or her employment, agency, or other relationship with the Company in order to enter into any employment agency or other relationship in competition with the Company. Notwithstanding anything in the foregoing to the contrary, it shall not be a violation of this Section 3(a) for the Executive to: (i) be employed by the Successor Company; (ii) perform services covered by this Section 3(a) on behalf of and as an employee of the Successor Company; or (iii) solicit the Company's clients, customers or prospects (as defined below) on behalf of and as an employee of the Successor Company. The covenants contained in this Section 3(a) shall apply within any jurisdiction of North America, it being understood that the geographic scope of the business and strategic plans of the Company extend throughout North America and are not limited to any particular region thereof and that such business may be engaged in effectively from any location in such area. As used herein, the terms "client," "customer" and "prospect" shall be defined as any client, customer or prospect of any business in which the Company is or has been substantially engaged within the one year period prior to the Executive's termination of employment with the Company (a) to which or to whom the Executive submitted or assisted in the submission of a presentation or proposal of any kind on behalf of the Company; (b) with which or with whom the Executive had substantial contact relating to the business of the Company; or (c) about which or about whom the Executive acquired substantial confidential or other information as a result of or in connection with the Executive's employment. (b) The Executive agrees that upon termination of his employment he will immediately surrender and return to the Company all Company records and other documents obtained by him, entrusted to him, or otherwise in his possession or control during the course of his employment by the Company, together with all copies thereof. (c) The Executive acknowledges that the provisions contained in this Section 3 are reasonable and necessary because of the substantial harm that would be caused to the Company by the Executive engaging in any of the activities prohibited or restricted herein. Nevertheless, it is the intent and understanding of each party hereto that if, in any action before any court, agency or other tribunal legally empowered to enforce the covenants contained in this Section 3, any term, restriction, covenant or promise contained therein is found to be unenforceable due to unreasonableness or due to any other reason, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency. (d) The Executive acknowledges that his breach of this Section 3 will result in immediate and irreparable harm to the Company's business interests, for which damages cannot be calculated easily and for which damages are an inadequate full remedy. Accordingly, and without limiting the right of the Company to pursue all other legal or equitable remedies available for the violation by the Executive of the covenants contained in this Section 3, it is expressly agreed that remedies other than injunctive relief cannot fully compensate the Company for the irreparable injury that the Company could suffer due to any such violation, threatened violation or continuing violation and that the Company shall be entitled to injunctive relief, without the necessity of proving actual monetary loss, to prevent any such violation, threatened violation or continuing violation thereof. 4. Entire Agreement, Amendment, Waiver. This Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject matter hereof. This Agreement terminates and supersedes any prior agreements made between the parties with respect to the subject matter hereof, including but not limited to the Executive's Non-Competition Agreement entered into by the parties on or about March 1, 1996. The parties may not amend this Agreement except by written instrument signed by both parties. No waiver by either party at any time of any breach by the other of any provision of this Agreement shall be deemed a waiver of similar or dissimilar provision at the same time or any prior or subsequent time. 5. Severability. The provisions of this Agreement shall be regarded as durable, and if any provision or portion thereof is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder and applicability thereof shall not be affected. 6. Assumption. This Agreement shall inure to the benefit of the Company and to the successors and assigns of the Company; provided, however, that it is understood that this Agreement shall not inure to the benefit of or be assumed by a Successor Company. 7. Applicable Law. This Agreement shall at all times be governed by and construed, interpreted and enforced in accordance with the internal laws ( as opposed to the conflict of laws provisions) of the State of Illinois. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and the Executive has signed this Agreement as of the day and year first above written. IMC GLOBAL INC. Robert M. Van Patten By: /s/ B.R. Lockridge /s/ Robert M. Van Patten ------------------------------ ----------------------------- Title: Senior Vice President --------------------------- EX-10.81 19 SEVERANCE AGREEMENT EXHIBIT 10.81 SEVERANCE AGREEMENT This Severance Agreement (the "Agreement) is entered into by and between Robert M. Van Patten (the "Executive") and IMC Global Inc., a Delaware corporation, as of this 19 day of March 1998 (the "Effective Date"). WHEREAS, IMC Global Inc. has announced its intention and desire to sell all of its ownership interest in IMC Agribusiness Inc., Hutson's Ag Services, Inc. and IMC Nitrogen, Inc. (collectively, "AgriBusiness"); WHEREAS, IMC Global Inc. desires to retain the Executive in its employ pending completion of the sale and to provide incentives to the Executive to stay in its employ; WHEREAS, it is IMC Global Inc. and the Executive's intent and assumption that the purchaser of AgriBusiness will assume IMC Global Inc.'s obligations hereunder and act fully in its stead as if it had been the original contracting party; NOW, THEREFORE, in consideration of the agreements and covenants contained herein and in the Non-Competition Agreement entered into contemporaneously with this Agreement by the parties hereto, the sufficiency of which is acknowledged, the Executive and IMC Global Inc. hereby agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement unless the context requires otherwise. (a) "Affiliate" means any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Company or any unincorporated trade or business which is under common control with the Company (as determined under Section 414(c) of the Internal Revenue Code). (b) "Cause" means the Executive (i) grossly neglects his duties; (ii) engages in misconduct; (iii) breaches a material provision of this Agreement; (iv) fails to cooperate fully with the Company in effecting the sale of AgriBusiness. "Gross neglect" means the failure to perform the essential functions of the Executive's job or the failure to carry out the Company's reasonable directions with respect to material duties after the Executive is notified by the Company that the Executive is failing to perform these essential functions or failing to carry out the reasonable directions of the Company. "Misconduct" means embezzlement or misappropriation of corporate funds, or other acts of fraud, dishonesty, or self- dealing; willful refusal to perform, or substantial disregard of material duties; any significant violation of any statutory or common law duty of loyalty to the Company or indictment for a felony. (c) "Company" means IMC Global Inc. and its subsidiaries, as they may exist from time to time. (d) "Good Reason" for termination of employment by the Executive shall mean any of the following: 1. the continued failure by the Company, after notice and a reasonable opportunity to cure, to (i) maintain the Executive's base salary at a rate equal to or higher than the rate in effect on the Effective Date; provided, however, that 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 executives at a similar level as the Executive on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Executive in an annual bonus plan, including any long-term incentive plan, maintained by the Company in which executives at a similar level as the Executive participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company from time to time in which executives at a similar level as the Executive participate; (iv) provide for participation in all Company sponsored group or executive medical, dental, life, disability, retirement, profit-sharing, thrift, non- qualified, deferred compensation, and other plans maintained by the Company to the same extent as executives at a similar level as the Executive participate; (v) provide vacation and perquisites substantially equivalent to those provided by the Company to executives at a similar level as the Executive; or 2. a significant adverse change, without the Executive's written consent (which consent shall not be withheld unreasonably) that continues after notice and 60 days to cure, in working conditions or status, including but not limited to a significant adverse change in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities. A significant adverse change does not include a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it becomes a subsidiary of another entity which directly results in changes in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder. 3. a change, without the Executive's consent, in the Executive's primary employment location to a location that is more than 50 miles from the primary location of the Executive's employment as in effect immediately prior to the Effective Date. (e) "Successor Company" means an entity to which the Company transfers its ownership interest in and operation of AgriBusiness. 2. Term. This Agreement shall commence on the Effective Date and shall terminate on the third anniversary of the Effective Date. 3. Severance Eligibility. If, during the Term of this Agreement, the Executive's employment is terminated by the Company or Successor Company or the Executive terminates his employment within 60 days after the Executive has or should have knowledge that Good Reason exists, the Executive shall be entitled to receive the Severance Benefits described in paragraph 4 herein if he timely executes and does not revoke a Waiver and Release of Claims substantially in the form attached hereto as Exhibit A, unless his employment is terminated during the Term of this Agreement due to any of the following: (i) the Executive's death; (ii) the Executive's inability to perform the essential functions of his position with or without reasonable accommodation; (iii) the Executive is terminated for Cause; or (iv) the Executive voluntarily resigns or retires. Notwithstanding the foregoing, if, in connection with the sale of AgriBusiness, the Executive's employment with the Company or Successor Company is terminated and (i) the Executive is offered alternative employment with the Company, an Affiliate or Successor Company that is at a location that is no more than 50 miles from the Executive's primary employment location immediately prior to termination and that is at a reasonably comparable base salary and the position offered has, in the Company's reasonable determination, reasonably comparable duties and responsibilities to the position the Executive held with the Company or Successor Company at termination or (ii) the Executive accepts an offer of employment with the Company, an Affiliate or Successor Company, such termination shall not render the Executive eligible for Severance Benefits under this Agreement. 4. Severance Benefits. If the Executive is eligible for Severance Benefits as provided in paragraph 3 above, the Executive shall receive the following "Severance Benefits": (a) An amount equal to $1,356,627, paid in thirty-six (36) monthly installments; (b) If the Executive timely and appropriately exercises his right to continue his coverage under the Company's medical and dental plans as provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), then the Company will pay the employer portion (the Executive will pay the employee portion) of such premiums for the Executive until the earlier of: (i) the expiration of the one year period following the date of termination and (ii) the date on which the Executive is no longer eligible to continue such coverage under COBRA. Except as provided in this paragraph, the Executive's continued participation and coverage under the group health insurance plans shall be governed by COBRA. (c) The Company shall continue the Executive's coverage under its life insurance policy until the earlier of (i) the expiration of the one year period following the date of termination and (ii) the date on which the Executive becomes eligible to participate in and receive similar benefits under a plan or arrangement sponsored by another employer or under any Company sponsored retirement plan. Participation shall be on the same terms and conditions as are applicable to active employees. Severance Benefits shall be subject to all applicable federal, state and local deductions and withholdings. At the option of the Company, the present value of the Severance Benefits may be paid in a lump sum at any point during the Severance Benefits period. The Company's obligation to continue Severance Benefits shall cease immediately if (i) the Company has or would have had grounds to terminate the Executive's employment immediately for Cause; (ii) the Executive violates the terms of the Non-Competition Agreement entered into contemporaneously with this Agreement by the parties hereto; or (iii) the Executive would otherwise not be entitled to Severance Benefits under paragraph 3 above. 5. Confidential Information/ Proprietary Rights. Except as required by law, during the term of this Agreement and thereafter for the longest period of time permitted by applicable law, the Executive shall preserve the confidentiality of and shall not use or divulge or take action reasonably likely to result in the use or disclosure of any trade secret, proprietary or confidential information of the Company or an Affiliate; provided, however, that the Executive may use or disclose such information if it is or becomes public or available to the general public otherwise than through any act or default of a party that has an obligation of confidentiality or non-use with respect to such information. Such information includes but is not limited to (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, suppliers; (iii) inventory selection and management techniques; (iv) product development and marketing plans; and (v) finances except to the extent publicly disclosed. 6. Return of Company Property. The Executive agrees that upon termination of his employment he will immediately surrender and return to the Company all records and other documents obtained by him, entrusted to him, or otherwise in his possession or control during the course of his employment by the Company, together with all copies thereof; provided, however, that subject to Company review and authorization, the Executive may retain copies of such documents as necessary for the Executive's personal records for federal income tax purposes. 7. Dispute Resolution. 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. The arbitration proceeding shall be conducted in Chicago, Illinois or such other location to which the parties may agree. If either party pursues a claim and such claim results in an arbitrator's decision or award, both parties agree to accept such decision or award as final and binding, and judgment upon the decision or award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The parties shall share the cost of the arbitrator's services. 8. Entire Agreement, Amendment, Waiver. The parties agree and intend that if the Executive is eligible for Severance Benefits hereunder, then he shall not be eligible for severance benefits under any other Company severance plan, policy or practice. If the Executive's employment is terminated and he is not eligible for Severance Benefits under this Agreement, the Executive's rights under any employee benefit plans maintained by the Company shall be determined in accordance with the provisions of such plans. This Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject matter hereof. This Agreement supersedes any prior agreements made between the parties with respect to the subject matter hereof, including but not limited to the Executive's Non-Competition Agreement entered into by the parties on or about March 1, 1996. The Executive's participation in and right to collect payments or benefits under the Vigoro Corporation Severance Plan, dated November 13, 1995, also shall terminate on the Effective Date of this Agreement. The parties may not amend this Agreement except by written instrument signed by both parties. No waiver by either party at any time of any breach by the other of any provision of this Agreement shall be deemed a waiver of similar or dissimilar provision at the same time or any prior or subsequent time. 9. Assumption. This Agreement shall inure to benefit of, and be binding upon, the successors and assignees of the Company and AgriBusiness. The Company and AgriBusiness shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Company or AgriBusiness, expressly and unconditionally to assume and agree to perform the Company's obligations under this Agreement. 10. Notice. Any notice, request, or other communication required or permitted to be given hereunder shall be made to the addresses hereinafter set forth or to any other address designated by either of the parties hereto by notice similarly given: If to the Company: If to the Executive: Senior Vice President, Human Resources Robert M. Van Patten IMC Global Inc. 3003 Sunset Boulevard S. 2100 Sanders Road Edwardsville, IL 62025 Northbrook, IL 60062 All such notices, requests or other communications shall be sufficient if made in writing either (i) by personal delivery to the party entitled thereto, (ii) by facsimile with confirmation of receipt, (iii) by registered or certified mail, return receipt requested or (iv) by express courier service. The notice, request or other communication shall be deemed effective upon personal delivery, upon confirmation of receipt of facsimile transmission, or upon actual or constructive receipt by the party entitled thereto if by registered or certified mail or express courier service; provided, however, that a notice, request or other communication received after regular business hours shall be deemed to be received on the next succeeding business day of the Company. 11. Employment At-Will. Nothing herein shall be construed as altering the employment at-will status of the Executive. The Executive and the Company can terminate the Executive's employment at any time for any reason. 12. Severability. The provisions of this Agreement shall be regarded as durable, and if any provision or portion thereof is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder and applicability thereof shall not be affected. 13. Applicable Law. This Agreement shall at all times be governed by and construed, interpreted and enforced in accordance with the internal laws ( as opposed to the conflict of laws provisions) of the State of Illinois. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and the Executive has signed this Agreement as of the day and year first above written. IMC GLOBAL INC. Robert M. Van Patten By: /s/ B.R. Lockridge /s/ Robert M. Van Patten -------------------------- ---------------------------- Title: Senior Vice President ----------------------- EXHIBIT A WAIVER AND RELEASE OF CLAIMS In exchange for the Severance Benefits described in the attached Severance Agreement (the "Agreement"), which I acknowledge I would not otherwise be entitled to receive, I freely and voluntarily agree to this WAIVER AND RELEASE OF CLAIMS ("WAIVER"): 1. My employment with IMC Global Inc. will terminate effective - - -------------------------. 2. I acknowledge that the Severance Benefits described in the attached Agreement are the sole payments to which I am entitled and that I am not entitled to any additional severance payments. 3. I, and anyone claiming through me, hereby waive and release any and all claims that I may have ever had or that I may now have against IMC Global Inc., its parents, divisions, partnerships, affiliates, subsidiaries, and other related entities and their successors and assigns, and past, present and future officers, directors, employees, agents and attorneys of each of them in their individual or official capacity (hereinafter collectively referred to as "Released Parties"). Among the claims that I am waiving are claims relating to my employment or termination of employment, including, but not limited to, claims of discrimination in employment brought under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act or other federal, state or local employment discrimination, employment, wage laws, ordinances or regulations or any common law or statutory claims of wrongful discharge or breach of contract or any other common law or statutory claims; whether for damages, lost wages or for any other relief or remedy. 4. I understand and agree that this WAIVER will be binding on me and my heirs, administrators and assigns. I acknowledge that I have not assigned any claims or filed or initiated any legal proceedings against any of the Released Parties. 5. Except as may be required by law, I agree that I will not disclose the existence or terms of this WAIVER to anyone except my accountant, attorney or spouse, each of whom shall also be bound by this confidentiality provision. 6. I understand that I have [twenty-one (21)] [forty-five (45)] days to consider whether to sign this WAIVER and return it to B. Russell Lockridge, Senior Vice President, Human Resources of IMC Global Inc. IMC Global Inc. hereby advises me of my right to consult with an attorney before signing the WAIVER and I acknowledge that I have had an opportunity to consult with an attorney and have either held such consultation or have determined not to consult with an attorney. 7. I understand that I may revoke my acceptance of this WAIVER by delivering notice of my revocation to B. Russell Lockridge within seven (7) days of the day I sign the WAIVER. If I do not revoke my acceptance of this WAIVER within seven days of the day I sign it, it will be legally binding and enforceable. IMC GLOBAL INC. AGREED AND ACCEPTED: By: ----------------------------- ------------------------------ Title: -------------------------- ------------------------------ Print Name Date: Date: --------------------------- ------------------------- EX-10.82 20 EXECUTIVE SEVERANCE AGREEMENT EXHIBIT 10.82 EXECUTIVE SEVERANCE AGREEMENT This Executive Severance Agreement (the "Agreement") is dated as of the 19th day of March 1999 between J. Bradford James (the "Executive") and IMC Global Inc., a Delaware corporation (the "Company"). WHEREAS, the Company desires to retain the Executive as its Senior Vice President and Chief Financial Officer and the Executive desires to continue in such position; and WHEREAS, the Company and the Executive desire to provide appropriate assurances for the Executive to continue to perform the Executive's duties and responsibilities thereby promoting the stability of the Company. NOW, THEREFORE, in consideration of the agreements and covenants contained herein, the sufficiency of which is acknowledged, the Executive and the Company hereby agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement unless the context requires otherwise. (a) "Base Salary" means the Executive's annualized base salary as adjusted from time to time. (b) "Cause" means the Executive (i) grossly neglects his duties, (ii) engages in misconduct; (iii) breaches a material provision of this Agreement, including, but not limited to, Section 4; (iv) willfully fails to cooperate fully with the Company in effecting a smooth transition of the Executive's duties and responsibilities to such person(s) as may be designated by the Company. "Gross neglect" means the willful failure to perform the essential functions of the Executive's job or the willful failure to carry out the Company's reasonable directions with respect to material duties after the Executive is notified in writing by the Company that the Executive is failing to perform these essential functions or failing to carry out the reasonable directions of the Company. Such notice shall specify the functions or directions that the Executive is failing to perform and what steps need to be taken to cure and shall set forth the reasonable time frame, which shall be at a minimum 45 days, within which to cure. "Misconduct" means embezzlement or misappropriation of corporate funds, or other acts of fraud, dishonesty, or self-dealing; provided, however, that the Executive shall be given notice and an opportunity within the next 45 days to explain his position and actions to the Company, which shall then make a final decision; any significant violation of any statutory or common law duty of loyalty to the Company; conviction for a felony; or any significant violation of Company policy or any inappropriate workplace conduct that seriously disrupts or interferes with Company operations; provided, however, that if the policy violation or inappropriate conduct can be cured, then the Executive shall be given written notice of the policy violation or inappropriate conduct and a reasonable opportunity to cure, which shall be at a minimum 45 days. (c) "Company" means IMC Global Inc. and its subsidiaries, as they may exist from time to time. (d) "Effective Date" means the date first set forth above. (e) "Good Reason" for termination of employment by the Executive shall mean any of the following reasons explained below in paragraphs 1, 2 and 3. In each case, to constitute a termination for Good Reason entitling the Executive to Severance Benefits as described in Section 3 of this Agreement, the following must occur: (i) Within 90 days after the Executive has or reasonably should have knowledge that Good Reason exists, the Executive must give the Company written notice specifying the grounds for his belief that Good Reason exists; (ii) The Company shall then have a reasonable opportunity, which shall be at least 45 days, to cure; and (iii) If the Company cures the Good Reason within the cure period, then the Executive shall have no right to terminate employment for Good Reason. If the Company does not cure the Good Reason within the cure period, then within 14 days of the completion of the cure period, the Executive may give written notice of his intent to terminate his employment for Good Reason. The effective date of such termination for Good Reason shall be two calendar months after the date of the notice to terminate. At its sole discretion, the Company shall have the right to accelerate the termination date by paying the Executive his base pay for the balance of the two month notice period. 1. the continued failure by the Company, after notice and a reasonable opportunity to cure, to (i) maintain for the initial term of this Agreement the Executive's Base Salary at a rate equal to or higher than the rate in effect on the Effective Date and for any subsequent term of the Agreement maintain the Executive's Base Salary at a rate equal to or higher than the rate in effect on the Effective Date; provided, however, that during any such subsequent term, Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to corporate officers at a similar level as the Executive on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Executive in an annual bonus plan maintained by the Company in which corporate officers at a similar level as the Executive participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company from time to time in which corporate officers at a similar level as the Executive participate; (iv) provide for participation in all Company sponsored group or executive medical, dental, life, disability, retirement, profit-sharing, thrift, non-qualified, deferred compensation, and other plans maintained by the Company to the same extent as corporate officers at a similar level as the Executive participate; (v) provide vacation, and perquisites substantially equivalent to those provided by the Company to corporate officers at a similar level as the Executive; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 8, it being understood that nothing contained in this clause alters the Company's obligations under Section 8 of this Agreement; or 2. a significant adverse change, without the Executive's written consent that continues after notice and a reasonable opportunity to cure, in working conditions or status, including but not limited to a significant adverse change in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it becomes a subsidiary of another entity which directly results in changes in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder; or 3. a change, without the Executive's consent, in the Executive's primary employment location to a location that is more than 50 miles from the primary location of the Executive's employment as in effect immediately prior to the Effective Date. f. " Severance Event" shall be deemed to have occurred if, and only if, during the Term of this Agreement, which includes the initial term and any extensions or renewals as provided in Section 2, (i) the Executive's employment is terminated by the Company other than for Cause or upon the Executive's death or inability to perform the essential functions of his position with or without reasonable accommodation or (ii) the Executive terminates his employment for Good Reason. If, however, the Executive's employment is terminated whether by the Executive with or without Good Reason or by the Company with or without Cause in connection with a "change in control" of the Company, as such phrase is defined in Section 5 of this Agreement, such termination shall not constitute a Severance Event; provided, however, the Executive's employment shall not be considered to have terminated in connection with a change in control of the Company as so defined unless such change in control has occurred in such manner and such time as to have made Section 5 of this Agreement effective prior to the Executive's termination. 2. Term. The term of this Agreement shall commence on the Effective Date and shall terminate on the second anniversary of the Effective Date; provided, however, that unless the Company gives written notice of its intent to terminate the Agreement at least one calendar month prior to the second anniversary of the Effective Date, this Agreement shall renew automatically for an additional one year term and shall continue to renew automatically for additional one year terms unless written notice of the Company's intent to terminate the Agreement is given to the Executive at least one calendar month prior to the expiration of the then current term. 3. Severance Benefits. Upon the occurrence of a Severance Event and the execution of a general release (substantially in the form attached hereto as Exhibit A) of all claims against the Company and other related entities or persons without additional consideration, and upon the expiration of any applicable revocation period, the Executive shall be entitled to receive the following "Severance Benefits": (a) An amount equal to the target award for the Executive under the Company's Management Incentive Compensation Program ("MICP"), or successor annual bonus plan in effect from time to time, for the fiscal year in which the Severance Event Occurs reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which the Severance Event occurs; (b) An amount equal to the target award for the Executive under the Company's 1996 Long-Term Incentive Plan, or successor long-term incentive plan in effect from time to time, for the fiscal year in which the Severance Event occurs reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which the Severance Event occurs; (c) An amount equal to two times the Executive's then current Base Salary, payable in accordance with regular payroll procedures of the Company; (d) An amount equal to two times the highest annual bonus earned under the Company's Management Incentive Compensation Program, or successor annual bonus plan in effect from time to time, during the three consecutive complete bonus years immediately preceding the date on which the Severance Event occurs; provided, however, that in the event that the Executive's employment is terminated prior to the completion of three complete bonus years, any prorated annual bonus received by the Executive shall be annualized and the bonus years in which the Executive's employment commences or terminates shall be deemed to be "complete bonus years" for purposes of determining the highest annual bonus earned by the Executive during the three complete bonus years immediately preceding the date on which the Severance Event occurs; (e) If the Executive timely and appropriately exercises his right to continue his coverage under the Company's medical and dental plans as provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), then the Company will pay the employer portion (and the Executive will pay the employee portion) of such premiums for the Executive until the earlier of: (i) the expiration of the two year period following the date of the Severance Event and (ii) the date on which the Executive is no longer eligible to continue such coverage under clause 4980B(f)(2)(B)(ii), (iii), (iv) or (v) of COBRA. Except as provided in this paragraph, the Executive's continued participation and coverage under the group health insurance plans shall be governed by COBRA; and (f) The Company shall continue the Executive's coverage under its life and disability insurance policies until the earlier of (i) the expiration of the two year period following the date of termination and (ii) the date on which the Executive becomes eligible to participate in and receive similar benefits under a plan or arrangement sponsored by another employer or under any Company sponsored retirement plan. Participation shall be on the same terms and conditions as are applicable to active employees. Severance Benefits shall be subject to all applicable federal, state and local deductions and withholdings. Those Severance Benefits described in paragraphs (a) and (b) shall be paid in a lump sum within 30 days of the Severance Event. At the option of the Company, the present value of the Severance Benefits, described in paragraphs 3 (c) and (d) above may be paid in a lump sum at any point during the Severance Benefits period. The Company's obligation to continue Severance Benefits shall cease immediately if the Company has or would have had grounds to terminate the Executive's employment immediately for Cause. In the event the Executive dies or becomes disabled before all Severance Benefits are paid to him, the remaining amounts due to him under Sections 3(c) and 3(d) shall be reduced by the proceeds the Executive's estate receives under any life insurance policy with respect to which the premiums are paid by the Company or any benefits the Executive receives under any Company disability policy; but subject to such reductions, those remaining amounts, if any, shall be paid to the Executive or his estate. If any family member of the Executive is receiving medical and/or dental coverage under Section 3(e) at the time of the Executive's death or disability and such family member constitutes a "qualified beneficiary" under COBRA, such medical and/or dental coverage shall continue in accordance with the requirements of COBRA, provided that such family member pays the full cost of the premium for such coverage. The Executive understands and acknowledges that the Severance Benefits constitute his sole benefits upon termination. 4. Exclusivity of Services and Confidential/ Proprietary Information. (a) Executive acknowledges that during his employment with the Company he has developed, acquired, and had access to and will develop, acquire and have access to trade secrets or other proprietary or confidential information belonging to the Company and that such information gives the Company a substantial business advantage over others who do not have such information. Accordingly, the Executive agrees to the following obligations that he acknowledges to be reasonably designed to protect the Company's legitimate business interests without unnecessarily or unreasonably restricting his post-employment opportunities: (i) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, he will not engage or assist others in engaging in competition with the Company, directly or indirectly, whether as an employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of a corporation the securities of which are traded on a national securities exchange or in the over-the-counter market), director, officer, employee, consultant, agent, or otherwise, in the business of producing and distributing potash, phosphate, animal feed ingredients or salt or any other significant business in which the Company is engaged or is preparing to engage in at the time of termination; (ii) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, he will not solicit, in competition with the Company, directly or indirectly, any person who is a client, customer or prospect (as such terms are defined below) (including, without limitation, purchasers of the Company's products) for the purpose of performing services and/or providing goods and services of the kind performed and/or provided by the Company in the business of producing and distributing potash, phosphate, animal feed ingredients or salt or any other significant business in which the Company is engaged or is preparing to engage in at the time of termination; (iii) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, he will not induce or persuade or attempt to induce or persuade any employee or agent of the Company to terminate his or her employment, agency, or other relationship with the Company in order to enter into any employment agency or other relationship in competition with the Company; (iv) the covenants contained in this Section 4(a) shall apply within any jurisdiction of North America, it being understood that the geographic scope of the business and strategic plans of the Company extend throughout North America and are not limited to any particular region thereof and that such business may be engaged in effectively from any location in such area; and (v) as used herein, the terms "client," "customer" and "prospect" shall be defined as any client, customer or prospect of any business in which the Company is or has been substantially engaged within the one year period prior to the Executive's termination of employment (a) to which or to whom the Executive submitted or assisted in the submission of a presentation or proposal of any kind on behalf of the Company; (b) with which or with whom the Executive had substantial contact relating to the business of the Company; or (c) about which or about whom the Executive acquired substantial confidential or other information as a result of or in connection with the Executive's employment, at any time during the one year period preceding the Executive's termination of employment for any reason. Notwithstanding the foregoing, if the Company consents in writing, it shall not be a violation of this Section 4(a) for the Executive to engage in conduct otherwise prohibited by this Section. (b) The Executive agrees that he will not at any time during employment or thereafter for the longest time permitted by applicable law, use, disclose, or take any action which may result in the use or disclosure of any trade secrets or other proprietary or confidential information of the Company, except to the extent that the Company may specifically authorize in writing. This obligation shall not apply when and to the extent that any trade secret, proprietary or confidential information of the Company becomes publicly available other than due to the Executive's act or omission. In connection with this Section 4, the Executive has executed and shall abide by the terms of the separate agreement attached hereto as Exhibit B. (c) The Executive agrees that upon termination of his employment he will immediately surrender and return to the Company all records and other documents obtained by him, entrusted to him, or otherwise in his possession or control during the course of his employment by the Company, together with all copies thereof; provided, however, that subject to Company review and authorization, the Executive may retain copies of such documents as necessary for the Executive's personal records for federal income tax purposes. (d) The Executive acknowledges that the provisions contained in this Section 4 are reasonable and necessary because of the substantial harm that would be caused to the Company by the Executive engaging in any of the activities prohibited or restricted herein. Nevertheless, it is the intent and understanding of each party hereto that if, in any action before any court, agency or other tribunal legally empowered to enforce the covenants contained in this Section 4, any term, restriction, covenant or promise contained therein is found to be unenforceable due to unreasonableness or due to any other reason, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency. (e) The Executive acknowledges that his breach of this Section 4 will result in immediate and irreparable harm to the Company's business interests, for which damages cannot be calculated easily and for which damages are an inadequate full remedy. Accordingly, and without limiting the right of the Company to pursue all other legal or equitable remedies available for the violation by the Executive of the covenants contained in this Section 4, it is expressly agreed that remedies other than injunctive relief cannot fully compensate the Company for the irreparable injury that the Company could suffer due to any such violation, threatened violation or continuing violation and that the Company shall be entitled to injunctive relief, without the necessity of proving actual monetary loss, to prevent any such violation, threatened violation or continuing violation thereof. 5. Change in Control. (a) Effective Date. For purposes of this Section 5, the term "Effective Date" shall mean the date on which a Change in Control of the Company (as defined in Section 5(i)) occurs. This Section 5 shall not become effective, and the Company shall have no obligation hereunder, if the employment of the Executive with the Company shall terminate prior to a Change in Control of the Company. If there is a Change in Control and this Section becomes effective, then this Section shall govern the terms and conditions of the Executive's employment and termination thereof and the provisions of Sections 1, 2, 3, and 4 of this Agreement shall no longer be effective. (b) Right to Change in Control Severance Benefits. The Executive shall be entitled to receive from the Company Change in Control Severance Benefits as described in Section 5(g) herein, if during the term of this Agreement there has been a Change in Control of the Company and there is a Termination (as defined in Section 5(f)) prior to the expiration of the Employment Term (as defined in Section 5(c)). (c) Employment Term. For purposes of this Section 5, the term "Employment Term" shall mean the period commencing on the Effective Date of this Section 5 and ending on the earlier to occur of (1) the last day of the month in which occurs the third anniversary of the Effective Date of this Section 5 or (2) the last day of the month in which the Executive attains mandatory retirement age pursuant to the terms of a mandatory retirement plan of the Company as such were in effect and applicable to the Executive immediately prior to the Effective Date of this Section 5. (d) Employment. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, until the expiration of the Employment Term. During the Employment Term, the Executive shall exercise such position and authority and perform such responsibilities as are commensurate with the position and authority being exercised and duties being performed by the Executive immediately prior to the Effective Date of this Section 5, which services shall be performed at the location where the Executive was employed immediately prior to the Effective Date of this Section 5 or at such other location as the Company may reasonably require; provided, that the Executive shall not be required to accept another location that he deems unreasonable in the light of his personal circumstances. (e) Compensation and Benefits. During the Employment Term, the Executive shall receive the following compensation and benefits: 1. He shall receive an annual base salary which is not less than his Base Salary immediately prior to the Effective Date of this Section 5, with the opportunity for increases, from time to time thereafter, which are in accordance with the Company's regular executive compensation practices. 2. He shall be eligible to participate on a reasonable basis, and to continue his existing participation, in annual incentive, stock option, restricted stock, long-term incentive performance and any other compensation plan which provides opportunities to receive compensation in addition to his Base Salary which is the greater of (i) the opportunities provided by the Company for executives with comparable duties or (ii) the opportunities under any such plans in which he was participating immediately prior to the Effective Date of this Section 5. 3. He shall be entitled to receive and participate in salaried employee benefits (including, but not limited to, medical, life and accident insurance, investment, stock ownership and disability benefits) and perquisites which are the greater of (i) the employee benefits and perquisites provided by the Company to executives with comparable duties or (ii) the employee benefits and perquisites to which he was entitled or in which he participated immediately prior to the Effective Date of this Section 5. 4. He shall be entitled to continue to accrue credited service for retirement benefits and to be entitled to receive retirement benefits under and pursuant to the terms of the Company's qualified retirement plan for salaried employees, the Company's supplemental executive retirement plan, and any successor or other retirement plan or agreement in effect on the Effective Date of this Section 5 in respect of his retirement, whether or not a qualified plan or agreement, so that his aggregate monthly retirement benefit from all such plans and agreements (regardless when he begins to receive such benefit) will be not less than it would be had all such plans and agreements in effect immediately prior to the Effective Date of this Section 5 continued to be in effect without change until and after he begins to receive such benefit. (f) Termination. The term "Termination" shall mean termination, prior to the expiration of the Employment Term, of the employment of the Executive with the Company for any reason other than death, disability (as described below), cause (as described below), or voluntary resignation (as described below). 1. The term "disability" means physical or mental incapacity qualifying the Executive for long- term disability under the Company's long-term disability plan. 2. The term "cause" means (i) the willful and continued failure of the Executive substantially to perform his duties with the Company (other than any failure due to physical or mental incapacity) after a demand for substantial performance is delivered to him by the Board of Directors which specifically identifies the manner in which the Board believes he has not substantially performed his duties or (ii) willful misconduct materially and demonstrably injurious to the Company. No act or failure to act by the Executive shall be considered "willful" unless done or omitted to be done by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. The unwillingness of the Executive to accept any or all of a change in the nature or scope of his position, authorities or duties, a reduction in his total compensation or benefits, a relocation that he deems unreasonable in light of his personal circumstances, or other action by or request of the Company in respect of his position, authority or responsibility that he reasonably deems to be contrary to this Agreement, may not be considered by the Board of Directors to be a failure to perform or misconduct by the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for cause for purposes of this Section 5 unless and until there shall have been delivered to him a copy of a resolution, duly adopted by a vote of three-quarters of the entire Board of Directors of the Company at a meeting of the Board called and held (after reasonable notice to the Executive and an opportunity for the Executive and his counsel to be heard before the Board) for the purpose of considering whether the Executive has been guilty of such a willful failure to perform or such willful misconduct as justifies termination for cause hereunder, finding that in the good faith opinion of the Board the Executive has been guilty thereof and specifying the particulars thereof. 3. The resignation of the Executive shall be deemed "voluntary" if it is for any reason other than one or more of the following: (a) The Executive's resignation or retirement (other than mandatory retirement, as aforesaid) is requested by the Company other than for cause; (b) Any significant change in the nature or scope of the Executive's position, authorities or duties from those described in Section 5(d) of this Agreement; (c) Any reduction in his total compensation or benefits from that provided in Section 5(e); (d) The breach by the Company of any other provision of this Section 5; or (e) The reasonable determination by the Executive that, as a result of a Change in Control of the Company and a change in circumstances in his position, he is unable to exercise the authorities and responsibility attached to his position and contemplated by Section 5(d) of this Agreement. 4. Termination that entitles the Executive to the payments and benefits provided in Section 5(g) shall not be deemed or treated by the Company as the termination of the Executive's employment or the forfeiture of his participation, award or eligibility for the purpose of any plan, practice or agreement of the Company referred to in Section 5(e). (g) Change in Control Severance Payments. In the event of and within 30 days following Termination, the Company shall pay to the Executive the following benefits (collectively, "Change in Control Severance Payments"): 1. His Base Salary and all other benefits due him as if he had remained an employee pursuant to this Section 5 through the remainder of the month in which Termination occurs, less applicable withholding taxes and other authorized payroll deductions; 2. An amount equal to the target award for the Executive under the Company's annual bonus plan for the fiscal year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs; provided, however, that if the Executive has deferred his award for such year under the plan, the payment due the Executive under this Paragraph (2) shall be paid in accordance with the terms of the deferral; 3. An amount equal to the target award for the Executive under the Company's long-term incentive plan for the fiscal year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs; 4. A lump sum severance allowance in an amount which is equal to the sum of the amounts determined in accordance with the following subparagraphs (a) and (b): (a) an amount equal to three times the Executive's Base Salary at the rate in effect immediately prior to Termination; and (b) an amount equal to three times the highest annual bonus earned under the Company's Management Incentive Compensation Program, or successor annual bonus plan in effect from time to time, during the three consecutive complete bonus years immediately prior to Termination; provided, however, that in the event that the Executive's employment is terminated prior to the completion of three complete bonus years, any prorated annual bonus received by the Executive shall be annualized and the bonus years in which the Executive's employment commences or terminates shall be deemed to be "complete bonus years" for purposes of determining the highest annual bonus earned by the Executive during the three complete bonus years immediately prior to Termination. (h) Non-Competition and Confidentiality. The Executive agrees that: 1. There shall be no obligation on the part of the Company to provide any further Change in Control Severance Benefits (other than payments or benefits already earned or accrued) described in Section 5(g) if, when and so long as the Executive shall be employed by or otherwise engage in any business which is competitive with any business of the Company or of any of its subsidiaries, as such business existed as of the Effective Date of this Section 5, in which the Executive was engaged during his employment, and if such employment or activity is likely to cause serious damage to the Company or any of its subsidiaries; and 2. during and after the Employment Term, he will not divulge or appropriate to his own use or the use of others any secret or confidential information pertaining to the businesses of the Company or any of its subsidiaries obtained during his employment by the Company, it being understood that this obligation shall not apply when and to the extent any of such information becomes publicly known or available other than because of his act or omission. (i) Definition of "Change in Control". "Change in Control" of the Company means, and shall be deemed to have occurred upon, the first to occur of any of the following events: 1. the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (c) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 5(i); 2. Individuals who, as of the effective date of this Section 5, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided, that any individual who becomes a director of the Company subsequent to the effective date of this Section 5, whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; 3. approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or 4. the consummation of a plan of complete liquidation or dissolution of the Company. (j) Excise Tax Payments. If any of the payments to be made under Section 5 or any payments which are construed as being made under Section 5, will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any similar tax that may hereafter be imposed), the Company shall pay to the Executive at the time specified in Paragraph 1 below an additional amount (the "Gross-up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the Gross-up Payment provided for by this paragraph, but before deduction for any federal, state or local income tax on the Change in Control Severance Payments, shall be equal to the Total Payments. 1. For purposes of determining whether any of the Change in Control Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by the Executive in connection with a Change in Control (as that term is defined in Section 5(i)) of the Company or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change of Control of the Company or any person affiliated with the Company or such person) (which, together with the Change in Control Severance Payments, shall constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i) above), and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 2. For purposes of determining the amount of the Gross-up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made and the applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, the Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-up Payment attributable to such reduction (plus the portion of the Gross-up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the portion of the Gross-up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment, the existence or amount of which cannot be determined at the time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of such excess (plus any interest payable with respect of such excess) at the time that the amount of such excess is finally determined. 3. The Gross-up Payment or portion thereof provided for in Paragraphs 1 and 2 above shall be paid not later than the thirtieth day following payment of any amounts under this Section 5; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the forty-fifth day after payment of any amounts under this Section 5. 4. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). 5. All Gross-up Payments will be paid to the Executive from the Trust established under the Trust Agreement between IMC Global Inc. and Wachovia Bank Trust Company, N.A., which has been established to protect payment obligations of the Company under this Agreement. Any repayment due the Company from the Executive as a result of the circumstances described in the last sentence of the preceding paragraph shall be made by the Executive after the Executive has received such excess amounts from the Trust. 6. If there are any changes in the Code which otherwise would or might affect the workings of this Section 5(j), then Section 5(j) shall be deemed to be revised in such a way as to provide to the Executive the maximum benefits he would be entitled to receive under the current language of Section 5(j) and the Code. (k) Enforcement Costs. The Company is aware that upon the occurrence of a Change in Control, the Board of Directors or a stockholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Section 5, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Section 5 declared unenforceable, or may take, or attempt to take, other action to deny the Executive the benefits intended under this Section 5. In these circumstances, the purpose of this Section 5 could be frustrated. It is the intent of the parties that the Executive not be required to incur the legal fees and expenses associated with the protection or enforcement of his rights under this Section 5 by litigation or other legal action because such costs would substantially detract from the benefits intended to be extended to the Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such costs. Accordingly, if at any time after the Effective Date of this Section 5, it should appear to the Executive that the Company is or has acted contrary to or is failing or has failed to comply with any of its obligations under this Section 5 for the reason that it regards this Section 5 to be void or unenforceable or for any other reason, or that the Company has purported to terminate his employment for cause or is in the course of doing so in either case contrary to this Section 5, or in the event that the Company or any other person takes any action to declare this Section 5 void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from the Executive the benefits provided or intended to be provided to him hereunder, and the Executive has acted in good faith to perform his obligations under this Section 5, the Company irrevocably authorizes the Executive from time to time to retain counsel of his choice at the expense of the Company to represent him in connection with the protection and enforcement of his rights hereunder, including without limitation representation in connection with termination of his employment contrary to this Section 5 or with the initiation or defense of any litigation or other legal action, whether by or against the Executive or the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. The reasonable fees and expenses of counsel selected from time to time by the Executive as hereinabove provided shall be paid or reimbursed to the Executive by the Company on a regular, periodic basis upon presentation by the Executive of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $200,000. Counsel so retained by the Executive may be counsel representing other officers or key executives of the Company in connection with the protection and enforcement of their rights under similar agreements between them and the Company, and, unless in his sole judgment use of common counsel could be prejudicial to him or would not be likely to reduce the fees and expenses chargeable hereunder to the Company, the Executive agrees to use his best efforts to agree with such other officers or executives to retain common counsel. (l) Successors and Assigns. Except as otherwise provided herein, this Section 5 shall be binding upon and inure to the benefit of the Executive and his legal representatives, heirs, and assigns; provided, however, that in the event of the Executive's death prior to payment or distribution of all amounts, distributions, and benefits due him under this Section 5, each such unpaid amount and distribution shall be paid in accordance with this Section 5 to the person or persons designated by the Executive to the Company to receive such payment or distribution and in the event the Executive has made no applicable designation, to the person or persons designated by the Executive as the beneficiary or beneficiaries of proceeds of life insurance payable in the event of the Executive's death under the Company's group life insurance plan. 6. Dispute Resolution. The Executive and the Company shall not initiate arbitration or other legal proceeding (except for any claim under Section 4) against the other party or against any directors, officers, employees, agents or representatives of the Company or its affiliates, relating in any way to this Agreement, to the Executive's retention by the Company, to the termination of this Agreement or of such retention, or to any or all other claims for employment or other discrimination under any federal, state or local law, regulation, ordinance or executive order until 30 days after the party against whom the claim(s) is made ("respondent") receives written notice from the claiming party of the specific nature of any purported claim(s) and, to the extent known or reasonably anticipated, the amount of any purported damages attributable to each such claim(s). The Executive and the Company further agree that if respondent submits the claiming party's claim(s) to the CPR Institute for Dispute Resolution or JAMS/Endispute for nonbinding mediation prior to the expiration of such 30 day period, the claiming party may not institute arbitration or other legal proceedings against respondent until the earlier of: (a) the completion of good-faith mediation efforts or (b) 90 days after the date on which the respondent received written notice of the claimant's claim(s). The mediation shall be conducted in Chicago, Illinois or such other location to which the parties may agree. The Company agrees to pay the cost of the mediator's services. Subject to the foregoing, the Executive and the Company agree that any and all claims or disputes relating to this Agreement, to the termination of this Agreement or to such retention, to the Executive's termination of employment or to his retention, that one party or that the Executive may have against any directors, officers, employees, agents, or representatives of the Company or its affiliates, including without limitation, claims for employment or other discrimination under any federal, state, or local law, regulation, ordinance, or executive order, shall be submitted for arbitration and resolved by an arbitrator selected in accordance with the rules and procedures of the CPR Institute for Dispute Resolution or JAMS/Endispute, it being understood and agreed that no more than one arbitrator shall be retained for any arbitration conducted hereunder. The arbitration proceeding shall be conducted in Chicago, Illinois or such other location to which the parties may agree. If either party pursues a claim and such claim results in an arbitrator's decision or award, both parties agree to accept such decision or award as final and binding, and judgment upon the decision or award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The parties shall share the cost of the arbitrator's services. Notwithstanding any of the foregoing provisions of this Section, the Company may in its discretion immediately pursue any and all available legal and equitable remedies for the Executive's breach, threatened breach or continuing breach of any provision of Section 4 in any court, agency, or other tribunal of competent jurisdiction. 7. Entire Agreement, Amendment, Waiver. This Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject matter hereof. This Agreement supersedes any prior agreements made between the parties with respect to the subject matter hereof. The parties may not amend this Agreement except by written instrument signed by both parties. No waiver by either party at any time of any breach by the other of any provision of this Agreement shall be deemed a waiver of similar or dissimilar provision at the same time or any prior or subsequent time. 8. Assumption. This Agreement shall inure to benefit of, and be binding upon, the successors and assignees of the Company. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company's obligations under this Agreement. 9. Notice. Any notice, request, or other communication required or permitted to be given hereunder shall be made to the addresses hereinafter set forth or to any other address designated by either of the parties hereto by notice similarly given: If to the Company: If to the Executive: Senior Vice President, Human Resources J. Bradford James IMC Global Inc. 55 W. Goethe St., 2100 Sanders Road #1216 Northbrook, IL 60062 Chicago, IL 60610 All such notices, requests or other communications shall be sufficient if made in writing either (i) by personal delivery to the party entitled thereto, (ii) by registered or certified mail, return receipt requested or (iii) by express courier service. The notice, request or other communication shall be deemed effective upon personal delivery or upon actual or constructive receipt by the party entitled thereto if by registered or certified mail or express courier service; provided, however, that a notice, request or other communication received after regular business hours shall be deemed to be received on the next succeeding business day of the Company. 10. Severability. The provisions of this Agreement shall be regarded as durable, and if any provision or portion thereof is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder and applicability thereof shall not be affected. 11. Applicable Law. This Agreement shall at all times be governed by and construed, interpreted and enforced in accordance with the internal laws ( as opposed to the conflict of laws provisions) of the State of Illinois. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and the Executive has signed this Agreement as of the day and year first above written. IMC GLOBAL INC. J. BRADFORD JAMES By: ----------------------------- --------------------------- Title: Chairman of the Board of Directors and Chief Executive Officer EXHIBIT A WAIVER AND RELEASE OF CLAIMS In exchange for the Severance Benefits described in the attached Executive Severance Agreement (the "Agreement"), which I acknowledge I would not otherwise be entitled to receive, I freely and voluntarily agree to this WAIVER AND RELEASE OF CLAIMS ("WAIVER"): 1. My employment with IMC Global Inc. will terminate effective . - - --------------------- 2. I acknowledge that the Severance Benefits described in the attached Agreement are the sole payments to which I am entitled and that I am not entitled to any additional severance payments. 3. I, and anyone claiming through me, hereby waive and release any and all claims that I may have ever had or that I may now have against IMC Global Inc., its parents, divisions, partnerships, affiliates, subsidiaries, and other related entities and their successors and assigns, and past, present and future officers, directors, employees, agents and attorneys of each of them in their individual or official capacity (hereinafter collectively referred to as "Released Parties"). Among the claims that I am waiving are claims relating to my employment or termination of employment, including, but not limited to, claims of discrimination in employment brought under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act or other federal, state or local employment discrimination, employment, wage laws, ordinances or regulations or any common law or statutory claims of wrongful discharge or breach of contract or any other common law or statutory claims; whether for damages, lost wages or for any other relief or remedy. 4. I understand and agree that this WAIVER will be binding on me and my heirs, administrators and assigns. I acknowledge that I have not assigned any claims or filed or initiated any legal proceedings against any of the Released Parties. 5. Except as may be required by law, I agree that I will not disclose the existence or terms of this WAIVER to anyone except my accountant, attorney or spouse, each of whom shall also be bound by this confidentiality provision. 6. I understand that I have twenty-one (21) days to consider whether to sign this WAIVER and return it to B. Russell Lockridge, Senior Vice President, Human Resources of IMC Global Inc. IMC Global Inc. hereby advises me of my right to consult with an attorney before signing the WAIVER and I acknowledge that I have had an opportunity to consult with an attorney and have either held such consultation or have determined not to consult with an attorney. 7. I understand that I may revoke my acceptance of this WAIVER by delivering notice of my revocation to B. Russell Lockridge within seven (7) days of the day I sign the WAIVER. If I do not revoke my acceptance of this WAIVER within seven days of the day I sign it, it will be legally binding and enforceable. IMC GLOBAL INC. AGREED AND ACCEPTED: By: --------------------------- ----------------------------- Title: ------------------------ ----------------------------- Print Name Date: Date: ------------------------- ----------------------------- EX-12 21 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 IMC Global Inc. Computation of Ratio of Earnings to Fixed Charges
Years Ended December 31, ----------------------------------------------- 1998 1997 1996 1995 1994 ------ ------ ------ ------ ------ Fixed charges: Interest charges $ 176.0 $ 40.2 $ 43.6 $ 57.8 $ 69.4 Rent expense 10.4 6.0 5.8 5.0 4.7 ------- ------- ------- ------- ------- Total fixed charges $ 186.4 $ 46.2 $ 49.4 $ 62.8 $ 74.1 ======= ======= ======= ======= ======= Earnings: Net earnings (loss) $ (9.0) $ 62.9 $ 127.1 $ 215.5 $ 113.9 Extraordinary item (3.0) 24.9 8.1 3.5 4.4 (Earnings) loss from discontinued operations 69.1 (18.0) (13.5) (23.8) (24.4) Cumulative effect of accounting change - - - - 5.9 Provision for income taxes 84.5 30.4 81.3 112.7 81.1 Minority interest 14.1 124.4 185.7 163.6 106.8 Interest charges 176.0 40.2 43.6 57.8 69.4 Rent expense 10.4 6.0 5.8 5.0 4.7 ------- ------- ------- ------- ------- Total earnings $ 342.1 $ 270.8 $ 438.1 $ 534.3 $ 361.8 ======= ======= ======= ======= ======= Ratio of earnings to fixed charges 1.84 5.86 8.87 8.51 4.88 Adjusted ratio of earnings to fixed charges 3.19(a) 9.84(b) 10.59(c) 8.51 4.88 ======= ======= ======= ======= ======= (a) The adjusted ratio of earnings to fixed charges for the year ended December 31, 1998 excludes charges of $195.1 million resulting from the Company-wide profit improvement program, $44.1 million due to the estimated loss on disposal of Chemicals and $14.0 million as a result of the loss on the sale of IMC Vigoro. (b) The adjusted ratio of earnings to fixed charges for the year ended December 31, 1997 excludes a charge of $183.7 million related to the write down of the historical carrying value of the Company's 25 percent interest in Main Pass. (c) The adjusted ratio of earnings to fixed charges for the year ended December 31, 1996 excludes a charge of $84.9 million related to the merger of The Vigoro Corporation into a wholly-owned subsidiary of the Company.
EX-13 22 PORTION OF IMC GLOBAL INC.'S 1998 ANNUAL REPORT EXHIBIT 13 FINANCIAL TABLE OF CONTENTS - - --------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS REPORT OF MANAGEMENT REPORT OF INDEPENDENT AUDITORS CONSOLIDATED STATEMENT OF OPERATIONS CONSOLIDATED BALANCE SHEET CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS QUARTERLY RESULTS (UNAUDITED) FIVE YEAR COMPARISON MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - - ----------------------------------------------------------------------- INTRODUCTION Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and the accompanying notes. Through the restructuring of operations, acquisitions and divestitures, IMC Global Inc. (Company or IMC) has demonstrated its commitment to maintaining its position as one of the world's leading producers of crop nutrients and salt products, as well as maintaining its position as one of the largest producers and sellers of animal feed ingredients. Sales for 1998 increased 27 percent while earnings from continuing operations, before non-recurring charges, increased 26 percent over the prior year and generated $825.6 million of EBITDA(a), a 78 percent increase over 1997. These cash earnings will allow the Company to make the investments necessary to continue to strengthen its prominent position in the highly competitive crop nutrient, salt and animal feed marketplaces. Management places significant emphasis on EBITDA as one of the key standards for measuring consolidated performance. Although EBITDA is a leading indicator used by management, it is not a replacement of measurement standards defined by and required by generally accepted accounting principles, such as operating earnings and cash flow from operating activities. The Company's current operational structure consists of six business units corresponding to its major product lines as follows: IMC-Agrico Phosphates (phosphates), IMC Kalium (potash), IMC Salt (salt), IMC- Agrico Feed Ingredients (animal feed), IMC AgriBusiness (wholesale and retail distribution), and IMC Chemicals (soda ash and other inorganic chemicals). As a result of the pending divestitures of IMC AgriBusiness (AgriBusiness) and IMC Chemicals (Chemicals), the future operational structure of the Company will be comprised of the following four business units: IMC-Agrico Phosphates (Phosphates), IMC Kalium (Kalium), IMC Salt (Salt) and IMC-Agrico Feed Ingredients (Feed Ingredients). All financial information for AgriBusiness has been stated as discontinued operations. See Note 4, "Discontinued Operations," of Notes to Consolidated Financial Statements. [Chart] Net Sales - - --------- (In millions) 1998 1997 1996 ---- ---- ---- $2,696.2 $2,116.0 $2,143.3 [Chart] Gross Margins - - ------------- (In millions) 1998(a) 1997 1996(a) - - ------- ---- ------- $761.5 $574.9 $617.1 (a) Before non-recurring charges. [Chart] Earnings from Continuing Operations - - ----------------------------------- (In millions) 1998(a) 1997(a) 1996(a) - - ------- ------- ------- $229.1 $182.0 $181.6 (a) Before non-recurring charges. RESULTS OF OPERATIONS OVERVIEW 1998 Compared to 1997 Net sales of $2,696.2 million in 1998 increased 27 percent from $2,116.0 million one year ago. Gross margins for 1998 were $761.5 million, an increase of 32 percent from comparable 1997 margins of $574.9 million, excluding 1998 non-recurring charges of $23.1 million, related to the sale of IMC Vigoro and a Company-wide profit improvement program, discussed in more detail below. Earnings from continuing operations in 1998, before non-recurring charges of $172.0 million, or $1.50 per share, related to a Company- wide profit improvement program and the divestitures of the Chemicals and IMC Vigoro businesses, were $229.1 million, or $2.00 per share. The Company incurred a net loss in 1998 of $9.0 million, or $0.08 per share, including non-recurring charges of: (i) $114.2 million, or $1.00 per share, related to a Company-wide profit improvement program, discussed in more detail in "Merger and Restructuring Charges;" (ii) $69.1 million, or $0.61 per share, of losses from discontinued operations, including an estimated loss of $74.2 million, or $0.65 per share, on the divestiture of AgriBusiness; (iii) $48.7 million, or $0.42 per share, related to an estimated loss on the divestiture of the Chemicals business; (iv) $9.1 million, or $0.08 per share, related to the divestiture of the IMC Vigoro business, the Company's consumer lawn and garden and professional products businesses; and (v) $3.0 million, or $0.03 per share, of a net extraordinary gain related to early extinguishments of high-cost debt. In 1997, earnings from continuing operations, excluding a write-down of the historical carrying value of the Company's interest in Main Pass 299 (Main Pass) of $112.2 million, or $1.19 per share, were $182.0 million, or $1.92 per share. Net earnings, including: (i) the Main Pass write-down; (ii) earnings from discontinued operations of $18.0 million, or $0.19 per share; and (iii) an extraordinary charge of $24.9 million, or $0.26 per share, related to the early extinguishment of high-cost debt, were $62.9 million, or $0.67 per share. Sales and earnings for 1998 were driven by increased sales by Kalium and Phosphates which improved 13 percent and six percent, respectively. In addition, sales and earnings for 1998 included the operations of Salt and Chemicals which were established in conjunction with the acquisition of privately held Harris Chemical Group, Inc. and its Australian affiliate, Harris Chemical Australia Pty Ltd. & Its Controlled Entities (collectively, Harris) in April 1998 (Harris Acquisition). Sales for Salt and Chemicals in 1998 were $175.0 million and $311.8 million, respectively. In December 1998, a definitive agreement was signed to sell the Chemicals business unit. See Note 2, "Acquisitions" and Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 Net sales of $2,116.0 million in 1997 decreased one percent from $2,143.3 million in 1996. Gross margins in 1997 were $574.9 million, a decrease of seven percent from comparable 1996 margins of $617.1 million, excluding 1996 non-recurring charges of $20.8 million, related to the Company's merger (Vigoro Merger) with The Vigoro Corporation (Vigoro),discussed in more detail below. Earnings from continuing operations in 1997, excluding the Main Pass write-down of $112.2 million, or $1.19 per share, were $182.0 million, or $1.92 per share. Net earnings, which included: (i) the Main Pass write-down; (ii) earnings from discontinued operations of $18.0 million, or $0.19 per share; and (iii) an extraordinary charge of $24.9 million, or $0.26 per share, related to the early extinguishment of high-cost debt, were $62.9 million, or $0.67 per share. In 1996, earnings from continuing operations, excluding non-recurring charges related to the Vigoro Merger, as well as costs associated with, among other things, a corporate restructuring, other asset valuations and environmental issues of $59.9 million, or $0.62 per share, were $181.6 million, or $1.87 per share. Net earnings, which included: (i) the non-recurring charges referred to above; (ii) earnings from discontinued operations of $13.5 million, or $0.14 per share; and (iii) an extraordinary charge of $8.1 million, or $0.08 per share, were $127.1 million, or $1.31 per share. Sales and earnings for 1997 were driven by record-level sales by Kalium offset by a decline in sales at Phosphates. Kalium's net sales increased 33 percent while Phosphates' net sales decreased 11 percent. For more detail on all the charges discussed above, see Note 2, "Acquisitions," Note 3, "Non-Recurring Charges," Note 4, "Discontinued Operations," Note 5, "Other Divestitures" and Note 13, "Financing Arrangements," of Notes to Consolidated Financial Statements. IMC-AGRICO PHOSPHATES - - --------------------- (Dollars in millions)
% Increase Years ended December 31, (Decrease) ------------------------------------------------ 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Net sales $1,572.8 $1,484.8 $1,661.3 6 (11) Gross margins $ 375.6(c) $ 298.7 $ 411.4(d) 26 (27) As a percentage of net sales 24% 20% 25% Sales volumes (000 tons)(a) 7,313 7,105 7,382 3 (4) Average DAP price per short ton(b) $ 178 $ 176 $ 186 1 (5) (a) Sales volumes include tons sold captively and represent dry product tons, primarily DAP. (b) FOB plant. (c) Before non-recurring charges of $17.2 million. (d) Before non-recurring charges of $6.9 million.
1998 Compared to 1997 Phosphates' net sales of $1,572.8 million in 1998 increased six percent from $1,484.8 million in 1997. Increased shipments of concentrated phosphates contributed an additional $57.7 million to net sales. The majority of the volume growth came from increased domestic shipments of diammonium phosphate (DAP) and granular monoammonium phosphate (GMAP), which each increased 17 percent, partially offset by decreased granular triple superphosphate (GTSP) volumes of 13 percent. The increase in DAP and GMAP was primarily a result of a strong spring season, an increase in the number of supply contracts and spot sales to certain larger co-ops. The decrease in GTSP was primarily the result of the availability in the marketplace of aggressively priced imports. International sales volumes rose slightly compared to the prior year as increased shipments of GMAP and merchant acid were partially offset by decreased shipments of DAP. In addition, average sales realizations of concentrated phosphates, particularly DAP, favorably impacted net sales by $20.5 million. Net sales were also favorably impacted by $6.6 million due to higher domestic phosphate rock sales volumes. Gross margins in 1998 of $375.6 million, excluding non-recurring charges of $17.2 million, climbed 26 percent from $298.7 million in 1997, primarily as a result of the increased volumes and prices discussed above as well as favorable raw material costs. 1997 Compared to 1996 Phosphates' net sales of $1,484.8 million in 1997 decreased 11 percent from $1,661.3 million in 1996. Decreased sales volumes of concentrated phosphates caused a decline in net sales of $45.0 million. The majority of the decline came from reduced domestic shipments of DAP and GTSP, which declined 17 and 11 percent, respectively, offset by increased GMAP volumes of 18 percent. The decline in DAP and GTSP volumes was primarily due to overall weakened demand and a focus on higher margin GMAP opportunities. International sales volumes were relatively flat in 1997 compared to 1996, as decreased shipments of DAP and GTSP were offset by increased shipments of GMAP. In addition, average sales realizations of concentrated phosphates, particularly DAP, unfavorably impacted net sales by $49.2 million. Net sales were also unfavorably impacted by $56.7 million due to lower phosphate rock sales volumes as a result of the Company's strategic decision to phase out third-party sales of phosphate rock. This action was taken to maximize relative values of rock and concentrated phosphates by utilizing high-quality reserves for internal upgrading. Gross margins declined 27 percent in 1997 to $298.7 million from $411.4 million, excluding non-recurring charges of $6.9 million in 1996, primarily due to the lower volumes and prices discussed above. In addition, gross margins reflected the benefit of a change to market-based acid pricing to Feed Ingredients. IMC KALIUM - - ---------- (Dollars in millions)
%Increase Years ended December 31, (Decrease) ------------------------------------------ 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Net sales $ 700.1 $ 617.4 $ 464.8 13 33 Gross margins $ 283.1 $ 237.7 $ 159.8(c) 19 49 As a percentage of net sales 40% 39% 34% Sales volumes (000 tons)(a) 8,485 8,941 7,290 (5) 23 Average potash price per short ton(b) $ 81 $ 70 $ 64 16 9 (a) Sales volumes include tons sold captively. (b) FOB plant/mine. (c) Before non-recurring charges of $7.9 million.
1998 Compared to 1997 Kalium's net sales increased 13 percent to $700.1 million in 1998 from $617.4 million in 1997. This increase resulted from acquisitions made by the Company as well as price increases during the year, partially offset by decreased volumes. Sales for 1998 included a full year of operating results for Western Ag-Minerals (Western Ag), which was acquired in September 1997. The Company also acquired a salt evaporation facility located in Ogden, Utah as part of the Harris Acquisition in April 1998. The incremental sales in 1998 from these two acquisitions contributed $80.0 million. Average sales realizations increased 16 percent as a result of price increases effective in March and September 1998. Sales volumes decreased by five percent as a result of a decrease in domestic sales volumes of nine percent partially offset by an increase in international volumes of five percent. Domestic sales volumes declined as a result of low demand for agricultural products due to an excellent harvest coupled with low commodity prices, while the increase in international sales volumes was attributable to greater potash exports to Brazil and China. The increase in average sales realizations, partially offset by decreased volumes, favorably impacted net sales by $3.0 million. Gross margins of $283.1 million in 1998 increased 19 percent compared with $237.7 million in 1997, primarily as a result of the acquisitions and price increases discussed above. 1997 Compared to 1996 Kalium's net sales increased 33 percent to $617.4 million in 1997 from $464.8 million in 1996 as a result of higher volumes and prices. Domestic volumes grew 22 percent, or $67.4 million, primarily due to additional corn acreage planted in 1997, favorable weather conditions and anticipated corn price increases. Internationally, increased volumes favorably impacted net sales by $38.2 million primarily as the result of higher demand from China. Average sales realizations increased nine percent, or $41.6 million, as a result of a series of price increases during the year. In addition, the inclusion of salt sales in 1997 favorably impacted net sales by $5.4 million. Gross margins of $237.7 million in 1997 increased 49 percent compared to 1996 margins of $159.8 million, excluding 1996 non-recurring charges of $7.9 million, primarily as a result of the volume and price increases discussed above. IMC SALT The Salt business unit was established in April 1998 concurrent with the Harris Acquisition; consequently, operating results for the year ended December 31, 1998 included only partial year activity. The Harris Acquisition established the Company as one of the leaders in the salt industry. See Note 2, "Acquisitions," of Notes to Consolidated Financial Statements. Salt's net sales for 1998 were $175.0 million with gross margins of $57.0 million. These results were lower than comparable pre- acquisition amounts in 1997 of $182.8 million and $66.6 million, respectively, primarily due to mild weather conditions. OTHER 1998 Compared to 1997 The Company's net sales and gross margins in 1998 included results from the Chemicals, Feed Ingredients and IMC Vigoro business units. Chemicals, with 1998 sales and margins of $311.8 million and $40.8 million, respectively, was established concurrent with the Harris Acquisition in April 1998; consequently, operating results for the year ended December 31, 1998 included only partial year activity. In December 1998, a definitive agreement was signed to sell the Chemicals business unit with the Company retaining an ongoing minority economic interest. Additionally, sales for Feed Ingredients remained relatively flat and margins decreased slightly as a result of a change in the price of purchased acid from Phosphates in mid-1997. The divestiture of IMC Vigoro in June 1998 partially offset the increases in net sales and gross margins discussed above. See Note 2, "Acquisitions" and Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 Net sales for 1997 included the Feed Ingredients and IMC Vigoro businesses and remained relatively unchanged from 1996 levels. Gross margins in 1997 were negatively impacted by increased costs at Feed Ingredients as a result of a change in the price in mid-1997 of acid purchased from Phosphates coupled with inventory write-offs at IMC Vigoro. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - - -------------------------------------------- (In millions)
% Increase Years ended December 31, (Decrease) ----------------------------------------- 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Selling, general and administrative expenses $ 159.6(a)$ 131.8 $ 132.4(b) 21 - (a) Before non-recurring charges of $9.9 million. (b) Before non-recurring charges of $0.2 million.
1998 Compared to 1997 The increase in selling, general and administrative expenses for 1998 as compared to 1997 primarily resulted from the Harris Acquisition in April 1998, partially offset by an overall reduction in general corporate spending and the divestiture of IMC Vigoro in June 1998. See Note 2, "Acquisitions" and Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 Selling, general and administrative expenses for 1997 remained consistent with 1996. MERGER AND RESTRUCTURING CHARGES During the fourth quarter of 1998, the Company developed and began execution of a plan to improve profitability (Restructuring Plan or Project Profit). The Restructuring Plan was comprised of four major initiatives: (i) the combination of the potash and phosphates business units in an effort to realize certain operating and staff function synergies; (ii) restructuring of the phosphate rock mining, concentrated phosphate and salt production/distribution operations and processes in an effort to reduce costs; (iii) simplification of the current business activities by eliminating businesses not deemed part of the Company's core competencies; and (iv) reduction of operational and corporate headcount. In conjunction with the Restructuring Plan, the Company recorded pre-tax charges totaling $193.3 million ($162.0 million net of minority interest) in the fourth quarter of 1998. As a result of the specific plans described below, the Company expects to increase operating earnings in excess of an estimated $100.0 million over the next two years, with approximately half of that amount expected to be realized in 1999. The increase in earnings is anticipated to result from simplification of the business, shut-down of high-cost operations, exit from low-margin businesses and headcount reductions. The Restructuring Plan (shown below in tabular format) primarily relates to the following: Asset impairments Project Profit included the removal of property, plant and equipment, as well as the write-down to fair value of those assets made obsolete due to the decision to close certain facilities and forego or abandon certain mineral properties. In order to determine the write-down of assets affected by the Restructuring Plan, and in accordance with Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company performed an assessment of future cash flows and, accordingly, adjusted the assets to their appropriate fair values. The majority of the impairment occurred at Phosphates' Florida production facilities where property, plant and equipment was written down by approximately $64.4 million to fair value. Phosphates developed a new strategic mine plan (Mine Plan) which identified asset reductions, lower operating costs and optimal phosphate rock management as key drivers in the restructuring of operations. The write-down of impaired assets in connection with the Mine Plan primarily consisted of facilities, production equipment, operating supplies, land and mineral reserves. Salt recorded an $11.2 million write-down of property, plant and equipment at its Kansas and Canadian locations, as a result of the decision to consolidate certain facilities and achieve operating efficiencies. The majority of the write-down related to production equipment. The remaining $0.4 million of asset impairments was recorded at Feed Ingredients for the permanent closure of a limestone rock production facility. The $76.0 million in asset impairment charges included $31.8 million pertaining to assets which will continue to be utilized until their respective disposal dates, primarily within the first nine months of 1999. The estimated fair value of these assets, which will be depreciated over their respective remaining periods of service, reflected estimated operating net cash flows until disposition. Non-employee exit costs In accordance with the objective of the Mine Plan, to optimize phosphate rock management, Phosphates decided to permanently close a high-cost phosphate rock mine. As a result of this decision, the Company recorded a charge of $18.4 million for the demolition and other incremental costs of closure of the mine. The closure costs included approximately $15.5 million for incremental environmental land reclamation of the surrounding mined-out areas. The Company expects the demolition and closure activities to be essentially completed by the end of the third quarter of 1999. The Company also decided to close certain production operations in connection with the Restructuring Plan, principally the uranium and urea operations of Phosphates. This decision was based on an analysis of the future outlook for these products, taking into consideration whether the operations were part of the Company's core businesses. These operations were determined to be non-core businesses and the Company recorded charges of approximately $12.8 million for demolition and closure, including environmental costs, of the uranium and urea production facilities. Additionally, environmental and closure costs of $2.4 million have been recognized for the planned closure of one of the Company's evaporated salt production facilities. The Company expects the demolition and closure activities to be completed by late-1999. Other various exit costs totaled $7.3 million. In connection with the Restructuring Plan, the Company decided to discontinue its transportation of ammonia from Louisiana to its phosphate operations in Florida. This decision was based on current market conditions which secured the availability of ammonia to the Company and which made the high-cost transportation of ammonia from Louisiana to Florida unnecessary. As a result, the Company recorded a charge of $13.2 million for the net present value of costs associated with permanently idling leased equipment used in the transportation of ammonia from Louisiana. Employee headcount reductions As part of the Restructuring Plan, headcount reductions were implemented at the Phosphates, Feed Ingredients, Salt and Kalium operations, as well as at the Company's corporate headquarters. Certain of these reductions were a result of the closing and/or exiting of production operations, as discussed above. To facilitate headcount reductions, the Company offered a voluntary retirement program for eligible employees. In addition, certain involuntary eliminations of positions, which were communicated prior to December 31, 1998, were necessary in order to achieve desired staffing levels. A total of 185 employees accepted the voluntary retirement plan by December 31, 1998, with 112 of those employees having left the Company as of that date. The remaining voluntarily terminated employees will leave the Company by June 1999. Additionally, a total of 454 employees were involuntarily terminated and had left the Company by the end of February 1999. Virtually all severance payments were disbursed subsequent to December 31, 1998. As a result of the employee terminations necessitated by the Restructuring Plan, settlement, curtailment and special termination charges of $19.7 million were recorded in accordance with SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits." The related liabilities have been classified in Other noncurrent liabilities in the Company's Consolidated Balance Sheet. See Note 15, "Pension Plans and Other Benefits," of Notes to Consolidated Financial Statements. Inventories and spare parts of exited businesses Phosphates recorded charges of approximately $17.2 million to reduce the carrying value of finished goods inventories on-hand to net realizable value at December 31, 1998, as a result of the decision to exit certain businesses. The Restructuring Plan included a major reduction in production assets primarily used in the Phosphates business. The reduction was accomplished through the permanent shut-down of select mining facilities as well as a cut-back in concentrate facilities. Given the reduction in facilities and the resulting decrease in production, historical levels of spare parts inventory that had been maintained by the Company were no longer necessary or warranted. Therefore, the Company recorded a charge of $8.7 million for the write-off of spare parts inventory. Details of the restructuring charges were as follows: (In millions)
Activity -------------------- Restructuring Remaining Charges Cash Paid Non-cash Accrual ------- --------- -------- ------- Asset impairments: Facilities closed prior to December 31, 1998 $ 44.2 $ - $ 44.2 $ - Facilities to be closed in 1999 31.8 - 31.8 - Non-employee exit costs: Demolition and closure costs 33.6 - - 33.6 Idled leased transportation equipment 13.2 - - 13.2 Other 7.3 0.5 1.5 5.3 Employee headcount reductions: Severance benefits 17.6 0.2 - 17.4 Settlement, curtailment and special termination benefits 19.7 - 19.7 - Inventories and spare parts of exited businesses: Finished goods inventories 17.2 - 17.2 - Spare parts inventories 8.7 - 8.7 - ------ ------ ------ ------ Total $193.3 $ 0.7 $123.1 $ 69.5 ====== ====== ====== ======
All restructuring charges have been recorded as a separate line item on the Consolidated Statement of Operations, except for the finished goods inventory write-down which was recorded in Cost of goods sold. OTHER (INCOME) EXPENSE, NET - - ------------------------------- (In millions)
% Increase Years ended December 31, (Decrease) ------------------------------------------------- 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Other (income) expense, net $ (3.9)(a) $ (5.4) $(22.5)(b) (28) (76) (a) Before a non-recurring loss on sale of Chemicals of $44.1 million. (b) Before non-recurring charges of $16.6 million.
1998 Compared to 1997 The decrease in other income in 1998 as compared to 1997 resulted from increased debt fee amortization as a result of the issuance and refinancing of certain debt in conjunction with the Harris Acquisition. See Note 13, "Financing Arrangements," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 Results for 1996 included gains on the sale of properties of $11.6 million and higher interest income realized from short-term investments as compared to 1997. INTEREST EXPENSE - - ---------------- (In millions)
% Increase Years ended December 31, (Decrease) ------------------------------------------------- 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Interest expense $ 176.0 $ 40.2 $ 43.6 n/m (8) n/m not meaningful.
1998 Compared to 1997 The increase in interest expense in 1998 compared with 1997 was attributable to debt assumed as part of the Harris Acquisition and the issuance of additional debt necessary to fund the purchase. For additional detail, see "Capital Resources and Liquidity" as well as Note 2, "Acquisitions" and Note 13, "Financing Arrangements," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 Interest expense for 1997 remained consistent with 1996. MINORITY INTEREST - - ----------------- (In millions)
% Increase Years ended December 31, (Decrease) ------------------------------------------------- 1998 1997 1996 1998 1997 ---- ---- ---- ---- ---- Minority interest $ 14.1 $ 124.4 $ 185.7 (89) (33)
1998 Compared to 1997 The decrease in minority interest compared with 1997 was primarily the result of the merger between Freeport-McMoRan Inc. (FTX) and the Company (FTX Merger). See Note 2, "Acquisitions" and Note 6, "Minority Interest," of Notes to Consolidated Financial Statements. 1997 Compared to 1996 The decrease in minority interest compared with 1996 was primarily attributable to a reduction in IMC-Agrico Company (IMC-Agrico) earnings in 1997. [CHART] EBITDA(a) - - ------ (In millions) 1998 1997 ---- ---- $825.6 $464.5 (a) Earnings from continuing operations before non-recurring charges, minority interest, interest charges, taxes, depreciation and amortization, and after PLP distributions. [Chart] Capital Expenditures - - -------------------- (In millions) 1998 1997 ---- ---- $367.6 $244.0 [CHART] Debt-to-Total Capitalization - - ---------------------------- 1998 1997 - - ---- ---- 62.1% 42.4% CAPITAL RESOURCES AND LIQUIDITY The Company generates significant cash from operations and has sufficient borrowing capacity to meet its operating and discretionary spending requirements. Operating activities generated $269.1 million of cash in 1998 compared with $563.4 million in 1997. The decrease of $294.3 million was primarily due to an increase in working capital. The Company's working capital ratio, excluding short-term debt and current maturities and assets of discontinued operations held for sale, was 2.4:1 as of December 31, 1998 compared with 2.2:1 as of December 31, 1997. The change in working capital was the result of a build-up of inventories and the payment of previously settled litigation matters. Net cash used in investing activities increased $383.1 million over 1997 primarily due to acquisitions and increased capital expenditures, partially offset by $44.8 million of proceeds from the sale of IMC Vigoro. The Company invested $393.3 million of cash to fund the Harris Acquisition in April 1998, which established the Company as a leading salt producer. See Note 2, "Acquisitions" and Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements. In 1998, the Company expended $367.6 million on mine expansion and development; oil and gas exploration and development; and system development and production equipment upgrades while in 1997 expenditures of $244.0 million related to mine expansion and development as well as production equipment upgrades. The increase of $123.6 million over 1997 was primarily due to the following: (i) PLP's share of McMoRan Exploration Co. (MMR), formerly McMoRan Oil & Gas Co. (MOXY), exploration and development costs of $44.4 million (see discussion below); (ii) enterprise-wide systems development expenditures of $28.2 million; and (iii) expenditures for Salt and Chemicals of $28.1 million and $17.6 million, respectively. The Company estimates that its capital expenditures for 1999 will approximate $230.0 million and will be financed primarily from operations. In conjunction with the FTX Merger, the Company, through its interest in PLP, participates in an aggregate $210.0 million, multi-year oil and natural gas exploration program with MMR (Exploration Program). In accordance with the Exploration Program, PLP, MMR and an individual investor (Investor) fund 56.4 percent, 37.6 percent and 6.0 percent, respectively, of the exploration costs. As of December 31, 1998, PLP's total exploration spending-to-date was approximately $70.0 million. All revenue and other costs are allocated 47.0 percent to PLP, 48.0 percent to MMR and 5.0 percent to the Investor. Cash generated from financing activities increased $631.9 million in 1998 from a use of funds of $190.4 million in 1997 to a source of funds of $441.5 million in 1998. This increase in financing funds was primarily due to higher net debt proceeds in 1998 of $315.6 million, decreased stock repurchases of $184.4 million and decreased cash distributions to PLP of $135.4 million as a result of the Company's increased ownership in IMC-Agrico due to the FTX Merger. During 1998, total borrowings increased to approximately $3.0 billion primarily due to the assumption and issuance of approximately $1.5 billion in debt related to the Harris Acquisition. As part of a general debt restructuring subsequent to the Harris Acquisition, the Company issued approximately $1.1 billion in long-term notes and debentures with effective interest rates ranging from 6.50 percent to 7.625 percent with maturities from 2001 through 2018. The debt restructuring reduced the Company's short-term borrowings, primarily commercial paper, and retired the higher rate debt assumed as part of the Harris Acquisition. Additionally, the Company will use anticipated proceeds from the pending divestitures of AgriBusiness and Chemicals to pay down existing debt. As of December 31, 1998, the Company had the ability to borrow under a shelf registration statement which permitted the issuance of approximately $750.0 million of securities. As of December 31, 1998, the Company also had $977.6 million of commercial paper outstanding supported by $1.5 billion of bank facilities. See Note 13, "Financing Arrangements," of Notes to Consolidated Financial Statements. The Company may acquire shares of its stock on an ongoing basis and is authorized as of December 31, 1998 to purchase up to an additional 4.5 million shares. Management considers market conditions, alternate uses of cash and shareholder returns, among other factors, when evaluating the timing of share repurchases. The Company's financial condition remains strong. The Company believes that its cash, other liquid assets, operating cash flows and access to capital markets, taken together, provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of and investment in existing businesses and development of new projects. MARKET RISK The Company is exposed to the impact of interest rate changes, fluctuations in the functional currency of foreign operations, and the impact of fluctuations in the purchase price of natural gas consumed in operations, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize these risks, but not for trading purposes. The functional currency of all operations outside the United States is the respective local currency. Foreign currency translation effects are included in Accumulated other comprehensive income in stockholders' equity. The Company uses foreign currency forward exchange contracts, which typically expire within one year, to hedge transaction exposure related to United States dollar-denominated assets and liabilities. Realized gains and losses on these contracts are recognized in the same period as the hedged transaction. The Company had foreign currency forward exchange contracts outstanding as of December 31, 1998 and 1997 with notional amounts of $106.2 million and $183.8 million, respectively, which approximated fair value. The Company conducted sensitivity analyses of its derivatives and other financial instruments assuming the following: (i) a one percentage point adverse change in interest rates; (ii) a ten percent adverse change in foreign currency exchange rates; and (iii) a ten percent adverse change in the purchase price of natural gas, all from their levels at December 31, 1998. Holding all other variables constant, the hypothetical adverse changes would not materially affect the Company's financial position. These analyses did not consider the effects of the reduced level of economic activity that could exist in such an environment and certain other factors. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate its exposure to possible changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analyses assume no changes in the Company's financial structure. CONTINGENCIES Reference is made to Note 20, "Contingencies," of Notes to Consolidated Financial Statements. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS The Company's Program The Company has adopted the following Environmental, Health and Safety (EHS) Policy (Policy): As a key to the Company's success, the Company is committed to the pursuit of excellence in health and safety, and environmental stewardship. Every employee will strive to continuously improve the Company's performance and to minimize adverse environmental, health and safety impacts. The Company will proactively comply with all environmental, health and safety laws and regulations. This Policy is the cornerstone of the Company's comprehensive EHS plan (EHS Plan) to achieve sustainable, predictable, measurable and verifiable EHS performance. Integral elements of the EHS Plan include: (i) improving the Company's EHS procedures and protocols; (ii) upgrading its related facilities and staff; (iii) performing baseline and verification audits; (iv) formulating improvement plans; and (v) assuring management accountability. The Company has adopted a three- year phased approach to initial implementation of this EHS Plan. Each of the Company's business units is in a different stage of EHS integration, with the recently acquired operations just beginning the process. In the fourth year of the EHS Plan and beyond, the Company will conduct verification audits to confirm that the business units have implemented the program and have achieved regulatory compliance, continuous improvement and integration of EHS management into day-to- day business functions. The Company's goal is to implement a harmonized EHS system that supports the Company's position as a proactive, effective and efficient corporate citizen. Through the EHS Plan, the Company endeavors to ensure that it satisfies its obligations. As a producer and distributor of crop nutrients and salt, the Company is subject to a myriad of international, federal, state, provincial and local EHS laws in the United States, Canada and Europe. These ever-evolving standards regulate, or propose to regulate: (i) the content and use of products; (ii) the conduct of mining and production operations including employee safety procedures; (iii) the management and handling of raw materials; (iv) air and water quality; (v) disposal of hazardous and solid wastes; and (vi) post-mining land reclamation. For new regulatory programs, it is difficult to ascertain future compliance obligations or estimate future costs until implementing regulations have been finalized and definitive regulatory interpretations have been adopted. The Company believes that the EHS Plan will respond to these regulatory requirements while minimizing EHS risk and associated costs. Nevertheless, there can be no assurance that unexpected or additional costs, penalties, or liabilities will not be incurred. The Company has expended, and anticipates that it will continue to expend, substantial resources, both financial and managerial, to comply with EHS standards. In 1999, environmental capital expenditures will total approximately $55.0 million, primarily related to: (i) installation of a new mine shaft at Cote Blanche, Louisiana; (ii) construction of wastewater treatment areas in Florida; (iii) modification and construction projects associated with phosphogypsum stacks at the concentrates plants in Florida and in Louisiana; and (iv) remediation of contamination at current or former operations. Additional expenditures for land reclamation activities will total approximately $19.0 million. In 2000, the Company expects environmental capital expenditures will be approximately $49.0 million and expenditures for land reclamation activities to be approximately $20.0 million. Based on current information, it is the opinion of management that the Company's contingent liability arising from EHS matters, taking into account established reserves, will not have a material adverse effect on the Company's financial position or results of operations. However, no assurance can be given that greater-than- anticipated EHS expenditures will not be required in 1999 or in the future. Product Requirements and Impacts The Company's primary businesses include the production and sale of crop nutrients and salt. International, federal, state and provincial standards: (i) require registration of all crop nutrient products and certain salt products before those products can be sold; (ii) impose labeling requirements on those products; and (iii) require producers to manufacture the products to formulations set forth on the labels. Various environmental, natural resource and public health agencies at all regulatory levels have begun evaluating alleged environmental impacts that might arise from the handling and use of products such as those manufactured by the Company. Most of these evaluations are in the initial stages. Some agencies have implemented or are considering standards that may restrict customers' use of the Company's products because of the alleged impacts; however, it is unclear whether the evaluations will result in additional regulatory requirements for the industry, including the Company. At this preliminary stage, the Company cannot estimate the potential impact of these standards on the market for the Company's products or on the expenditures that may be necessary to meet new requirements. Operating Requirements and Impacts Permitting The Company holds numerous environmental 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 or other permits. The United States Environmental Protection Agency has recently proposed guidance that would allow organizations or communities to challenge federally authorized permits on the basis that those permits would have a disproportionate impact on minority or low-income communities. This guidance could impact the ability of the Company's operations to obtain timely permits, particularly in Louisiana. In addition, over the next two to six years, Phosphates will be continuing its efforts to obtain permits in support of its anticipated Florida mining operations at the Ona and Pine Level properties. These properties contain in excess of 100 million tons of phosphate rock reserves. For years, the Company has successfully permitted mining properties in Florida and anticipates that it will be able to permit these properties. Nevertheless, a denial of these permits or the issuance of permits with cost-prohibitive conditions would adversely impact the Company by preventing it from mining at Ona or Pine Level. Mining Operations A significant number of EHS standards govern the Company's phosphate, potash and salt mining activities and the Company is in substantial compliance with these standards. In October 1997, however, Phosphates received three notices from the United States Army Corps of Engineers (Corps) alleging that the Company had violated the permits authorizing phosphate mining in certain wetland areas. After an internal audit of its Corps permits, the Company notified the Corps that the Company had inadvertently disturbed, without permits, additional wetlands over which the Corps had asserted jurisdiction. The Company has had discussions with the Corps to resolve these issues. A settlement agreement is pending and the Company does not expect that the settlement will have a material adverse effect on the Company's financial condition or operations. Several regulatory agencies have begun to review potential health impacts of diesel emissions in mining operations. The Province of Ontario has adopted and the Mine Safety and Health Administration has proposed limits of exposure to diesel emissions for all underground mining operations including salt and potash. Moreover, in 1998, the National Institute for Occupational Safety and Health (NIOSH) conducted a study to determine whether exposure to exhaust generated by diesel equipment used in underground mining operations results in health effects. This study involved a review of Kalium's two potash mines in Carlsbad, New Mexico. The Company cannot estimate the extent of expenditures that may be necessary to address conclusions of the NIOSH study or additional regulatory standards that may arise. Management of Residual Materials Potash, salt and phosphate mining and processing generate residual materials that must be managed. Potash tailings, which contain primarily salt, iron and clay, are stored in surface disposal sites. Salt residuals are managed in piles. Phosphate mining residuals such as overburden and sand tailings are used in reclamation, while clay residuals are deposited in clay ponds. Phosphate processing produces phosphogypsum which is stored in phosphogypsum stack systems. The Company has incurred and will continue to incur significant costs to manage its potash, salt and phosphate residual materials in accordance with environmental laws, regulations and permit requirements. For potash and salt residuals in Saskatchewan, the Department of Environmental and Resource Management (Department) published regulations in 1994 requiring all mine operators to obtain approval of facility decommissioning and reclamation plans that would cover all mine facilities, including salt piles and potash tailings management areas. As part of these plans, the Department will require operators to provide financial assurance that the plans will be carried out, although the financial assurance mechanism has not been specified. Along with other members of the potash industry, the Company filed decommissioning plans for its three Saskatchewan potash mines in 1997. The Department rejected all industry plans that did not provide for the underground disposal of surface tailings. The potash industry is cooperating with the Department to evaluate technically feasible disposal alternatives besides underground disposal. Although costs for decommissioning are likely to be significant, the Company does not anticipate expending such funds in the foreseeable future because implementation of the decommissioning plans is deferred until an agreement is reached with the Department over the appropriate technical approach. Like all members of the potash industry, the Company is unable to predict with certainty the financial impact of these regulations on the Company due to the anticipated life of each mine, potential advances in tailings management technology and changes from time to time in rules and regulations. The Company's Saskatchewan salt mine also submitted its decommissioning plan in 1997. The plan was conditionally approved because it provided for dissolution and reinjection of the facility's residual salt pile. The dissolution process has begun; however, the Department still has not specified the type of financial assurance that it will require from the salt mine facility. With regard to phosphate processing, Florida law may require Phosphates to close one or more of its unlined phosphogypsum stacks and/or associated cooling ponds after March 25, 2001 if the stack system or pond is demonstrated to cause an exceedance of Florida's groundwater quality standards. Phosphates has already begun closure activities at its unlined gypsum stack at its New Wales facility in central Florida. Phosphates cannot predict at this time whether Florida law will require closure of any of its other stack systems. The costs of such closure could be significant. In addition, Phosphates currently operates an unlined cooling pond at New Wales. Monitoring indicates that discharges from the unlined cooling pond are within Florida goundwater standards. As a result, Phosphates is seeking a permit to continue operating this pond. The Company anticipates that the permit will be granted during the second quarter of 1999. However, if Phosphates does not receive the permit, it will need to line or relocate the cooling pond, which is estimated to cost approximately $50.0 million. On-Site Remedial Activities Many of the Company's currently, and formerly, owned facilities have been in operation for a number of years. The historical use and handling of regulated chemical substances, crop nutrient products and salt at these facilities by the Company and predecesssor operators has resulted in soil and groundwater contamination. In addition, through the FTX Merger, the Company has assumed responsibility for contamination at some crop nutrient or oil and gas facilities that were operated by FTX, PLP or their predecessors. Spills or other unintended releases of regulated substances have occurred previously at these facilities, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations, which currently are in progress, to determine whether remedial action may be required to address contamination. Material expenditures could be required by the Company in the future to remediate the contamination at these current or former sites. It is the Company's policy to accrue environmental investigatory and non-capital remediation costs for identified sites when litigation has commenced or a claim or assessment has been asserted or is probable and the likelihood of an unfavorable outcome is probable. The Company cannot determine the cost of any remedial action that ultimately may be required at unknown sites, sites currently under investigation, sites for which investigations have not been performed, or sites at which unanticipated conditions are discovered. The Company believes that, pursuant to several indemnification agreements, it is entitled to at least partial, and in many instances complete, indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities or businesses from parties including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies, Inc.; Estech, Inc.; ARCO; Conoco; the Williams Companies; Kerr-McGee Inc.; and certain other private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date as well as future anticipated expenditures. Off-Site Remedial Activities In addition to impacting the sites at which the Company has operated, several parties have alleged that the Company's historic operations have resulted in contamination to neighboring off-site areas. In Louisiana, three lawsuits filed in 1998 contend that former oil and gas operations of FTX, its subsidiaries and other defendants resulted in damage to marshland: Terrebone Parish School Board v. Texaco Inc.; Estate of Simoneaux v. Southern Natural Gas Co.; and Michael X. St. Martin v. Quintana Petroleum Corp. These suits seek unspecified damages for restoration of the marshes to their "pre-leased," "pre- operational," or "natural" conditions. Because the suits are in the early stages, it is difficult to determine the magnitude of exposure to the Company; however, the Company intends to vigorously contest these actions. Superfund The Comprehensive Environmental Response Compensation and Liability Act (Superfund)imposes liability, without regard to fault or to the legality of a party's conduct, on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved or concluding involvement at less than 20 Superfund sites. The Company's liability at these sites, either alone or in the aggregate, is not currently expected to be material. As more information is obtained regarding these sites and the potentially responsible parties involved, this expectation could change. YEAR 2000 READINESS DISCLOSURE Like other businesses dependent on modern technology, the Company must address potential Year 2000-related issues. The Company is progressing through a comprehensive program (Year 2000 Program) to evaluate and address the impact of Year 2000-related issues on its operational systems, business application software, computer hardware, facilities infrastructure and equipment with embedded technology, and Year 2000- related risks associated with its vendors and customers. The Company's Year 2000-related effort is a cooperative venture coordinated among business units and appropriate members of the Company's senior management. Progress reviews are held regularly with senior management and the Board of Directors. As an additional step, the Company has created the position of Year 2000 Risk Manager to provide Company-wide leadership, oversight and coordination of its Year 2000 project. State of Readiness The Company is using both internal and external resources to implement its Year 2000 Program, which includes the following overlapping phases: (i) system inventory and analysis; (ii) remediation, testing and implementation; and (iii) vendor and customer review. The Company expects that its Year 2000 Program will be substantially complete by the end of the third quarter of 1999. System Inventory and Analysis Phase The system inventory and analysis phase consists of compiling a detailed inventory of all of the Company's systems and platforms to determine which items are date sensitive, affected by the Year 2000, and therefore require remediation. Each of the Company's business units has focused specifically on the following seven target areas: (i) business application software; (ii) mainframe hardware and software; (iii) network servers; (iv) desktop environment; (v) network and telephone systems; (vi) non-information technology assets and facilities; and (vii) major suppliers and service providers. This analysis has involved both an internal assessment conducted by Company engineers, technicians and business unit managers, as well as contact with the manufacturers of computer systems and equipment used by the Company in its operations. Each of the Company's business units has substantially completed its system inventory and analysis phase. The principal business application systems requiring remediation that were identified by the Company during this stage include the following systems: (i) equipment maintenance; (ii) spare parts inventory; (iii) distribution; (iv) customer order entry; and (v) financial/accounting. In addition, some Company plants have identified certain production control systems that will require Year 2000-related remediation in order to remain operative. Remediation, Testing and Implementation Phase The remediation, testing and implementation phase involves determining and implementing a remediation method (upgrade, replace or discontinue) that is most appropriate for each specific date-sensitive item. The remediated item is then tested and returned to normal operations when Year 2000-related issues have been addressed. Testing includes functional testing of remedial measures and regression testing to validate that changes have not altered existing functionality. Several system manufacturers have provided testing procedures for their equipment and have been available for consultations about Year 2000- related testing. In certain cases, the Company has also retained special consultants to assist with its remediation efforts. As a separate initiative, the Company is implementing its Global Vision Project, an enterprise-wide resource planning (ERP) software package. Its scope includes accounts payable, inventory, purchasing, general ledger, payroll, human resources and plant maintenance. This new ERP software and the improvements to the infrastructure hardware required to support the Global Vision Project should further remediate issues associated with the Year 2000. The Company expects all of its business units to have substantially completed the remediation, testing and implementation phase in the third quarter of 1999. Vendor and Customer Review Phase Vendor reviews consist of assessing vendor readiness, and if necessary, identifying alternate channels to receive critical materials and/or supplies. Each business unit has developed a questionnaire that has been submitted to its primary suppliers and vendors to determine their Year 2000-related status. The business units are currently analyzing the information provided in these responses, and will determine the best way to address any specific issues. As an additional precaution, each business unit's purchase orders now contain a Year 2000-related clause to help ensure that any newly purchased equipment adequately addresses Year 2000-related issues. Although the Company is attempting to monitor and validate the efforts of other parties, it may not have control over the success of these efforts. In the event that satisfactory commitments from key suppliers are not received, the Company is forming plans for the continuing availability of critical materials and supplies through alternate channels. In general, however, the Company is satisfied with the progress made by key vendors to date and no critical issues have been identified. In addition to investigating the Company's key suppliers, the Company's business units are also contacting key customers to explain the Company's Year 2000-related efforts and to solicit certain information about each customer's Year 2000-related efforts to assess potential Year 2000-related problems that could affect future orders from such customers. Costs The Company does not currently expect that the costs of addressing its Year 2000-related issues will have a material effect on its financial position, results of operations or liquidity. Modification costs for Year 2000-related issues are expensed as incurred and are funded through operating cash flows. In a few limited instances, some business units have deferred certain non-Year 2000-related information technology projects due to their respective Year 2000-related efforts. The Company believes, however, that these deferred projects are not critical to its present or future financial performance or business operations. The Company estimates its total Year 2000-related technology and non-information technology systems remediation costs to be approximately $6.0 million, of which approximately $2.0 million was expended in 1998. The remaining costs will be incurred during 1999. A sizable portion of these costs represent the redeployment of existing employee resources rather than incremental expenses. Risks Progress reports on the Year 2000 Program are presented regularly to the Company's Board of Directors and senior management. As the program continues, the Company may discover additional Year 2000-related challenges, including that remediation plans are not feasible or that the cost of such plans exceeds current expectations. In many cases, the Company is relying on written assurances from vendors that the current systems are, or that new or upgraded systems acquired by the Company will adequately address Year 2000-related issues. The Company believes that one of its principal Year 2000-related risks is the effect Year 2000-related issues will have on its vendors, especially its utilities vendors. A substantial part of the Company's day-to-day operations is dependent on power, transportation systems, and telecommunication services, as to which alternative sources of service may not be available. The Company will continue to investigate the readiness of its suppliers, including utilities, and pursue the availability of alternatives to further diminish the extent of any impact Year 2000-related issues may have on the Company. Although there can be no assurance that the Company will be able to complete all of the modifications in the required time frame or that no unanticipated events will occur, it is management's belief that the Company is taking adequate action to address Year 2000-related issues. However, because of the range of possible issues and the large number of variables involved, it is impossible to quantify the potential cost of problems should the Company's remediation efforts or the efforts of those it does business with not be successful. If either the Company, or the Company's vendors, fail to adequately address Year 2000-related issues, the Company may suffer business interruptions. If such interruptions cause the Company to be unable to fulfill its obligations to third parties, the Company may potentially be exposed to third-party liability. Contingency Planning The Company is developing contingency measures to address the possibility that it will not have fully addressed Year 2000-related issues by December 31, 1999. Each of the Company's business units is developing a contingency plan based upon templates and suggested procedures that have been provided by the Year 2000 Risk Manager. Each business unit contingency plan will identify the risk and document the steps that need to be taken to allow the Company to continue to meet the needs of its customers in the event of a Year 2000-related failure. The Company expects each business unit to complete its contingency plan by the end of the second quarter of 1999. The above section, even if incorporated by reference into other documents or disclosures, is a Year 2000 Readiness Disclosure as defined under the Year 2000 Information and Readiness Disclosure Act of 1998. RECENTLY ISSUED ACCOUNTING GUIDANCE In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which the Company is required to adopt effective January 1, 2000. SFAS No. 133 will require the Company to recognize all derivatives on the Consolidated Balance Sheet at fair value. Additionally, changes in derivative fair values will either: (i) be recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments; or (ii) for forecasted transactions, deferred and recorded as a component of accumulated other comprehensive income in stockholders' equity until the hedged transactions occur and then are recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The Company does not believe the effect of adopting SFAS No. 133 will be material to its results of operations or financial position. FORWARD-LOOKING STATEMENTS All statements, other than statements of historical fact, contained within "Management's Discussion and Analysis of Financial Condition and Results of Operations" constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions in the agricultural industry or in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company's products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and change in trade, monetary and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal proceedings, including environmental, and administrative proceedings involving the Company; the completion of the Company's Year 2000 Program; and the other risk factors reported from time to time in the Company's Securities and Exchange Commission reports. REPORT OF MANAGEMENT - - ----------------------------------------------------------------------- Management of IMC Global Inc. is responsible for the preparation, integrity and fair presentation of the financial information included in this report. The financial statements have been prepared in accordance with generally accepted accounting principles and necessarily include certain amounts that are based on management's estimates and judgment. Management is responsible for maintaining a system of internal accounting controls to provide reasonable assurance as to the integrity and reliability of the financial statements, the proper safeguarding and use of assets, and the accurate execution and recording of transactions. Such controls are based on established policies and procedures and are implemented by trained personnel. The system of internal accounting controls is monitored by the Company's internal auditors to confirm that the system is proper and operating effectively. The Company's policies and procedures prescribe that the Company and its subsidiaries are to maintain ethical standards and that its business practices are to be consistent with those standards. The Company's financial statements have been audited by Ernst & Young LLP, independent auditors. Their audit was conducted in accordance with generally accepted auditing standards and included consideration of the Company's internal control system. Management has made available to Ernst & Young LLP all of the Company's financial records and related data, as well as minutes of the meetings of the Board of Directors. Management believes that all representations made to Ernst & Young LLP were valid and appropriate. The Board of Directors, operating through its Audit Committee composed entirely of non-employee directors, provides oversight to the financial reporting process. The Audit Committee meets periodically with management, the internal auditors and Ernst & Young LLP, jointly and separately, to review financial reporting matters, internal accounting controls and audit results to assure that all parties are properly fulfilling their responsibilities. Both Ernst & Young LLP and the internal auditors have unrestricted access to the Audit Committee. J. Bradford James Anne M. Scavone Senior Vice President and Vice President and Chief Financial Officer Controller REPORT OF INDEPENDENT AUDITORS - - ----------------------------------------------------------------------- To the Board of Directors and Stockholders of IMC Global Inc. We have audited the accompanying consolidated balance sheet of IMC Global Inc. as of December 31, 1998 and 1997 and the related consolidated statements of operations, cash flows and stockholders' equity for each of the three years in the period ended December 31, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of IMC Global Inc. at December 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. Ernst & Young LLP Chicago, Illinois January 28, 1999 CONSOLIDATED STATEMENT OF OPERATIONS - - ----------------------------------------------------------------------- (In millions, except per share amounts)
Years ended December 31, -------------------------------- 1998 1997 1996 ---- ---- ---- Net sales $2,696.2 $2,116.0 $2,143.3 Cost of goods sold 1,957.8 1,541.1 1,547.0 -------- -------- -------- Gross margins 738.4 574.9 596.3 Selling, general and administrative expenses 169.5 131.8 132.6 Main Pass write-down - 183.7 - Merger and restructuring charges 176.1 - 37.3 Exploration expenses 20.9 - - -------- -------- -------- Operating earnings 371.9 259.4 426.4 Interest expense 176.0 40.2 43.6 Other (income) expense, net 40.2 (5.4) (5.9) -------- -------- -------- Earnings from continuing operations before minority interest 155.7 224.6 388.7 Minority interest 14.1 124.4 185.7 -------- -------- -------- Earnings from continuing operations before income taxes 141.6 100.2 203.0 Provision for income taxes 84.5 30.4 81.3 -------- -------- -------- Earnings from continuing operations 57.1 69.8 121.7 Discontinued operations: Earnings from discontinued operations 5.1 18.0 13.5 Estimated loss on disposal (74.2) - - -------- -------- -------- Total earnings (loss) from discontinued operations (69.1) 18.0 13.5 Earnings (loss) before extraordinary item (12.0) 87.8 135.2 Extraordinary item - debt retirement 3.0 (24.9) (8.1) -------- -------- -------- Net earnings (loss) $ (9.0) $ 62.9 $ 127.1 ======== ======== ======== Basic earnings (loss) per share: Earnings from continuing operations $ 0.50 $ 0.74 $ 1.31 Total earnings (loss) from discontinued operations (0.61) 0.19 0.15 Extraordinary item - debt retirement 0.03 (0.26) (0.09) -------- -------- -------- Net earnings (loss) per share $ (0.08) $ 0.67 $ 1.37 ======== ======== ======== Basic weighted average number of shares outstanding 114.2 94.0 92.7 Diluted earnings (loss) per share: Earnings from continuing operations $ 0.50 $ 0.74 $ 1.25 Total earnings (loss) from discontinued operations (0.61) 0.19 0.14 Extraordinary item - debt retirement 0.03 (0.26) (0.08) ------- -------- -------- Net earnings (loss) per share $ (0.08) $ 0.67 $ 1.31 ======== ======== ======== Diluted weighted average number of shares outstanding 114.8 94.7 97.0 See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEET - - --------------------------------------------------------------------- (In millions, except per share amounts)
As of December 31, ASSETS 1998 1997 - - --------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 110.6 $ 109.7 Receivables, net 421.5 288.1 Inventories, net 580.6 592.8 Assets of discontinued operations held for sale 273.3 - Deferred income taxes 91.1 54.2 Other current assets 5.5 17.4 -------- -------- Total current assets 1,482.6 1,062.2 Property, plant and equipment, net 3,697.4 2,506.0 Other assets 1,276.9 1,105.7 -------- -------- Total assets $6,456.9 $4,673.9 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - - --------------------------------------------------------------------- Current liabilities: Accounts payable $ 255.9 $ 253.3 Accrued liabilities 240.9 230.9 Short-term debt and current maturities of long-term debt 408.3 188.9 -------- -------- Total current liabilities 905.1 673.1 Long-term debt, less current maturities 2,638.7 1,235.2 Deferred income taxes 566.6 389.7 Other noncurrent liabilities 486.1 440.2 Stockholders' equity: Common stock, $1 par value, authorized 300,000,000 shares; issued 125,072,811 and 124,668,286 shares in 1998 and 1997, respectively 125.0 124.6 Capital in excess of par value 1,697.3 1,690.3 Retained earnings 400.6 446.2 Accumulated other comprehensive income (66.3) (30.8) Treasury stock, at cost, 10,738,520 and 10,691,520 shares in 1998 and 1997, respectively (296.2) (294.6) -------- -------- Total stockholders' equity 1,860.4 1,935.7 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,456.9 $4,673.9 ======== ======== See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS - - --------------------------------------------------------------------- (In millions)
Years ended December 31, 1998 1997 1996 - - --------------------------------------------------------------------- Cash Flows from Operating Activities: Net earnings (loss) $ (9.0) $ 62.9 $ 127.1 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 251.7 183.2 171.0 Merger and restructuring charges 144.0 - 67.3 Estimated loss on disposal of discontinued operations 74.2 - - Estimated loss on sale of business 48.7 - - Minority interest 14.1 124.4 175.7 Main Pass write-down - 112.2 - Deferred income taxes 2.9 58.4 27.9 Other charges and credits, net (38.4) 2.4 (26.3) Changes in: Receivables (18.2) (12.3) 69.1 Inventories (81.4) 3.9 (66.9) Other current assets (9.4) 2.1 18.9 Accounts payable (64.9) (2.8) (21.8) Accrued liabilities (79.8) 29.0 (55.3) Net current assets of discontinued operations 34.6 - - -------- -------- -------- Net cash provided by operating activities 269.1 563.4 486.7 -------- -------- -------- Cash Flows from Investing Activities: Capital expenditures (367.6) (244.0) (209.0) Acquisitions, net of cash acquired (393.3) (91.4) (7.1) Proceeds from sale of business 44.8 - - Proceeds from sale of property, plant and equipment 6.4 8.8 12.4 -------- -------- -------- Net cash used in investing activities (709.7) (326.6) (203.7) -------- -------- -------- Net cash provided (used) before financing activities (440.6) 236.8 283.0 -------- -------- -------- Cash Flows from Financing Activities: Cash distributions to the unitholders of PLP (11.0) - - Cash distributions from IMC-Agrico to PLP - (146.4) (265.8) Payments of long-term debt (1,303.1) (515.9) (232.7) Proceeds from issuance of long-term debt, net 2,370.2 805.3 244.6 Changes in short-term debt, net (522.3) (127.7) (75.4) Increase (decrease) in securitization of accounts receivable, net (61.5) 6.0 (9.5) Stock options exercised and restricted stock awards 8.9 5.5 18.0 Cash dividends paid (36.6) (29.7) (34.5) Purchase of treasury stock (3.1) (187.5) - -------- -------- -------- Net cash provided by (used in) financing activities 441.5 (190.4) (355.3) -------- -------- -------- Net change in cash and cash equivalents 0.9 46.4 (72.3) Cash and cash equivalents - beginning of year 109.7 63.3 135.6 -------- -------- -------- Cash and cash equivalents - end of year $ 110.6 $ 109.7 $ 63.3 ======== ======== ======== See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - - --------------------------------------------------------------------- (In millions, except per share amounts)
Capital in Accumulated Excess Other Total Common of Retained Comprehensive Treasury Stockholders' Stock Par Value Earnings Income Stock Equity - - ---------------------------------------------------------------------- Balance at December 31,1995 $ 96.9 $ 793.6 $315.8 $ (8.5) $(107.4) $1,090.4 Net earnings - - 127.1 - - 127.1 Foreign currency translation adjustment - - - (8.7) - (8.7) -------- Comprehensive income - - - - - 118.4 Dividends ($0.32 per share) - - (29.9) - - (29.9) Stock options exercised 0.7 17.2 - - 0.1 18.0 Issuance of common stock pursuant to acquisitions 0.4 14.5 - - - 14.9 Conversion of convertible notes 3.6 110.8 - - - 114.4 ------ ------- ------ ------ ------- -------- Balance at December 31,1996 $101.6 $ 936.1 $413.0 $(17.2) $(107.3) $1,326.2 Net earnings - - 62.9 - - 62.9 Foreign currency translation adjustment - - - (13.6) - (13.6) -------- Comprehensive income - - - - - 49.3 Dividends ($0.32 per share) - - (29.7) - - (29.7) Stock options exercised 0.3 5.2 - - - 5.5 Issuance of common stock pursuant to acquisitions 22.7 749.0 - - 0.2 771.9 Purchase of treasury shares - - - - (187.5) (187.5) ------ ------- ------ ------ ------- -------- Balance at December 31,1997 $124.6 $1,690.3 $446.2 $(30.8) $(294.6) $1,935.7 Net loss - - (9.0) - - (9.0) Foreign currency translation adjustment - - - (35.5) - (35.5) -------- Comprehensive loss - - - - - (44.5) Dividends ($0.32 per share) - - (36.6) - - (36.6) Stock options exercised and restricted stock awards 0.4 7.0 - - 1.5 8.9 Purchase of treasury shares - - - - (3.1) (3.1) ------ ------- ------ ------ ------- -------- Balance at December 31,1998 $125.0 $1,697.3 $400.6 $(66.3) $(296.2) $1,860.4 ====== ======== ====== ====== ======= ======== See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except per share amounts) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company and all subsidiaries which are more than 50.0 percent owned and controlled. Additionally, its interest in the Exploration Program is proportionately consolidated by PLP at a rate of 56.4 percent of the exploration costs and 47.0 percent of the profits derived from oil and gas producing properties. Prior to its disposal in 1997, the Company proportionately consolidated its 25.0 percent interest in the sulphur operations of Main Pass. All significant intercompany accounts and transactions are eliminated in consolidation. Certain amounts in the consolidated financial statements for periods prior to December 31, 1998 have been reclassified to conform to the current presentation. As discussed in more detail in Note 4, the IMC AgriBusiness business unit has been presented as discontinued operations. Use of Estimates Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized by the Company upon the transfer of title to the customer, which is generally at the time product is shipped. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents which are reflected at their approximate fair value. Concentration of Credit Risk Domestically, the Company sells its products to manufacturers, distributors and retailers primarily in the midwestern and southeastern United States and to governmental bodies such as states, provinces, counties and municipalities located in the Great Lakes region of the United States and Canada. Internationally, the Company's products are sold primarily through two North American export associations and various distributors. In 1998, sales to China accounted for approximately 15.0 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. 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. Property, Plant and Equipment/Other Assets Property (including mineral deposits), plant and equipment, including assets under capital leases, are carried at cost. Cost of significant assets includes capitalized interest incurred during the construction and development period. Expenditures for replacements and improvements are capitalized; maintenance and repair expenditures, except for repair and maintenance overhauls (Turnarounds), are charged to operations when incurred. Expenditures for Turnarounds are deferred when incurred and amortized into cost of goods sold on a straight-line basis, generally over an 18-month period. Turnarounds are large-scale maintenance projects that are performed regularly, usually every 18 to 24 months, 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 deposits, 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, ten to 45 years; machinery and equipment, three to 25 years; and leasehold improvements, over the lesser of the remaining useful life of the asset or the remaining term of the lease. Goodwill, representing the excess of purchase cost over the fair value of net assets of acquired companies, is generally amortized using the straight-line method over 40 years. At December 31, 1998 and 1997, goodwill, included in Other assets in the Consolidated Balance Sheet, totaled $1,064.2 million and $839.7 million, respectively. See Note 2, "Acquisitions," for detail regarding goodwill. Using the methodology prescribed in SFAS No. 121, the Company reviews long-lived assets and the related intangible assets for impairment whenever events or changes in circumstances indicate the carrying amounts of such assets may not be recoverable. Once evidence of a potential impairment exists, recoverability of the respective assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate, to the carrying amount, including associated intangible assets, of such operation. If the operation is determined to be unable to recover the carrying amount of its assets, then intangible assets are written down first, followed by the other long-lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets. Accrued Environmental Costs As a producer and distributor of crop nutrients and salt, the Company is subject to a myriad of international, federal, state, provincial and local EHS laws in the United States, Canada, and Europe. These standards regulate: (i) the content and use of products; (ii) the conduct of mining and production operations including employee safety procedures; (iii) the management and handling of raw materials; (iv) air and water quality; (v) disposal of hazardous and solid wastes; and (v) post-mining land reclamation. Compliance with these laws often requires the Company to incur costs. The Company also has incurred contingent environmental liability arising from three sources: facilities currently or formerly owned by the Company or its predecessors; facilities adjacent to currently or formerly owned facilities; and third-party Superfund sites. At facilities currently or formerly owned by the Company or its corporate predecessors, including FTX, PLP and their corporate predecessors, the historical use and handling of regulated chemical substances, crop nutrient products, and salt has resulted in soil and groundwater contamination, sometimes requiring the Company to undertake or fund cleanup efforts. Similarly, disposal of the Company's waste at third-party sites may result in liability for remedial costs. Of the environmental costs discussed above, the following environmental costs are charged to the Company's operating expense: fines, penalties, and certain remedial action to address violations of the law; remediation of properties that are currently or were formerly owned or operated by the Company, when those properties do not contribute to current or future revenue generation; and liability for remediation of facilities adjacent to currently or formerly owned facilities or for third-party Superfund sites. Contingent environmental liabilities are recorded for environmental investigatory and non-capital remediation costs at identified sites when litigation has commenced or a claim or assessment has been asserted or is probable and the likelihood of an unfavorable outcome is probable. Derivatives The Company is exposed to the impact of interest rate changes, fluctuations in the functional currency of foreign operations, and the impact of fluctuations in the purchase price of natural gas consumed in operations, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize these risks, but not for trading purposes. The functional currency of all operations outside the United States is the respective local currency. Foreign currency translation effects are included in Accumulated other comprehensive income in stockholders' equity. The Company uses foreign currency forward exchange contracts, which typically expire within one year, to hedge transaction exposure related to United States dollar-denominated assets and liabilities. Realized gains and losses on these contracts are recognized in the same period as the hedged transaction. The Company had foreign currency forward exchange contracts outstanding as of December 31, 1998 and 1997 with notional amounts of $106.2 million and $183.8 million, respectively, which approximated fair value. Comprehensive Income In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." This Statement establishes rules for the reporting of comprehensive income and its components. Comprehensive income consists of net income and foreign currency translation effects and is presented in the Consolidated Statement of Stockholders' Equity. The adoption of SFAS No. 130 had no impact on total stockholders' equity. Prior year financial statements have been reclassified to conform to the SFAS No. 130 requirements. As of December 31, 1998, the Company's Accumulated other comprehensive income reduced stockholders' equity by $66.3 million. Recently Issued Accounting Guidance In June 1998, the FASB issued SFAS No. 133 which the Company is required to adopt effective January 1, 2000. SFAS No. 133 will require the Company to recognize all derivatives on the Consolidated Balance Sheet at fair value. Additionally, changes in derivative fair values will either: (i) be recognized in earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments; or (ii) for forecasted transactions, deferred and recorded as a component of Accumulated other comprehensive income in stockholders' equity until the hedged transactions occur and are then recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The Company does not believe the effect of adopting SFAS No. 133 will be material to its results of operations or financial position. 2. ACQUISITIONS Harris In April 1998, the Company completed the acquisition of Harris for approximately $1.4 billion. Under the terms of the Harris Acquisition, the Company purchased all Harris equity for approximately $450.0 million in cash and assumed approximately $1.0 billion of debt. Harris, with annual sales of approximately $800.0 million, is a leading producer of salt, soda ash, boron chemicals and other inorganic chemicals, including potash crop nutrients. For financial statement purposes, the Harris Acquisition was accounted for as a purchase and, accordingly, Harris' results are included in the consolidated financial statements since the date of acquisition. The purchase price, which was initially financed through proceeds borrowed under credit facilities and assumed debt, has been preliminarily allocated to acquired assets and liabilities based on estimated fair values at the date of acquisition. This allocation resulted in an excess of purchase price over identifiable net assets acquired, or goodwill, of approximately $326.0 million which is included in Other assets in the Consolidated Balance Sheet. This goodwill is being amortized on a straight-line basis over 40 years. FTX In December 1997, the Company completed a merger with FTX. The combination was accounted for as a purchase and resulted in the dissolution of FTX. In connection with the FTX Merger, each share of common stock of FTX was exchanged for 0.90 share of the Company's common stock plus one-third of a warrant, with each whole warrant entitling the holder to purchase one share of the Company's common stock for $44.50 per share. As a result of the transaction, 22.7 million shares were issued at an average market price of $32.28 per share. The warrants, which are publicly traded on the New York Stock Exchange and expire on the third anniversary of the FTX Merger, were valued at $3.56 per warrant. As a result of the FTX Merger, goodwill of $747.5 million was recorded and is being amortized on a straight-line basis over 40 years. The FTX Merger resulted in the Company relinquishing its 25.0 percent interest in Main Pass to MMR, a newly formed public entity consisting of the former sulphur business of PLP and Main Pass. In connection with the FTX Merger, the Company recorded a charge of pre-tax $183.7 million, included in Operating earnings in the Consolidated Statement of Operations, to write down the assets of Main Pass to their fair value of approximately $14.1 million. Other Business Acquisitions In 1997, the Company completed several smaller acquisitions, including a potash mine and processing facility (Western Ag); several retail distribution operations (Frankfort Supply, Sanderlin, Crop-Maker, So-Green and Hutson Ag Services, Inc.); a storage terminal company (Hutson Company, Inc.); and the purchase of the preferred stock of a subsidiary held by an unrelated third party. Total cash payments for these acquisitions were $91.4 million, and approximately 0.2 million shares of common stock of the Company were issued for $7.9 million. In 1996, the Company acquired several retail distribution operations (Madison Seed and Agri-Supply) and a precision farming operation (Top-Soil). Total cash payments for acquisitions during the year were $7.1 million. Hutson Company, Inc., Top-Soil and the retail distribution operations were acquired by the IMC AgriBusiness business unit which has been classified as discontinued operations as of December 31, 1998. 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 Operations since the respective dates of acquisition. Pro Forma Information (unaudited) The unaudited pro forma information for the periods set forth below gives effect to the Harris Acquisition and the FTX Merger, including the contribution of Main Pass, as if the transactions had occurred as of January 1, 1997. Pro forma information for the Other Business Acquisitions, discussed above, has not been included as it would not be materially different from reported amounts. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.
1998 1997 ---- ---- Net sales $2,923.4 $2,910.2 Earnings from continuing operations before minority interest 160.1 48.7 Earnings from continuing operations before income taxes 146.0 22.9 Earnings (loss) from continuing operations 63.8 (8.0) Net loss (4.8) (14.9) Net loss per diluted share (0.04) (0.13)
There was no common stock issued for acquisitions in 1998 while $771.9 million and $14.9 million of common stock were issued in 1997 and 1996, respectively. Liabilities assumed in acquisitions were $1,628.8 million, $357.5 million and $6.6 million in 1998, 1997 and 1996, respectively. 3. NON-RECURRING CHARGES Restructuring Plan During the fourth quarter of 1998, the Company developed and began execution of a plan to improve profitability. The Restructuring Plan was comprised of four major initiatives: (i) the combination of the potash and phosphates business units in an effort to realize certain operating and staff function synergies; (ii) restructuring of the phosphate rock mining, concentrated phosphate and salt production/distribution operations and processes in an effort to reduce costs; (iii) simplification of the current business activities by eliminating businesses not deemed part of the Company's core competencies; and (iv) reduction of operational and corporate headcount. In conjunction with the Restructuring Plan, the Company recorded pre-tax charges totaling $193.3 million ($162.0 million net of minority interest) in the fourth quarter of 1998. The Restructuring Plan (shown below in tabular format) primarily relates to the following: Asset impairments The Restructuring Plan included the removal of property, plant and equipment, as well as the write-down to fair value of those assets made obsolete due to the decision to close certain facilities and forego or abandon certain mineral properties. In order to determine the write-down of assets affected by the Restructuring Plan, in accordance with SFAS No. 121, the Company performed an assessment of future cash flows and, accordingly, adjusted the assets to their appropriate fair values. The majority of the impairment occurred at Phosphates' Florida production facilities where property, plant and equipment was written down by approximately $64.4 million to fair value. Phosphates developed a Mine Plan which identified asset reductions, lower operating costs and optimal phosphate rock management as key drivers in the restructuring of operations. The write-down of impaired assets in connection with the Mine Plan primarily consisted of facilities, production equipment, operating supplies, land and mineral reserves. Salt recorded an $11.2 million write-down of property, plant and equipment at its Kansas and Canadian locations, as a result of the decision to consolidate certain facilities and achieve operating efficiencies. The majority of the write-down related to production equipment. The remaining $0.4 million of asset impairments was recorded at Feed Ingredients for the permanent closure of a limestone rock production facility. The $76.0 million in asset impairment charges included $31.8 million pertaining to assets which will continue to be utilized until their respective disposal dates, primarily within the first nine months of 1999. The estimated fair value of these assets, which will be depreciated over their respective remaining periods of service, reflected estimated operating net cash flows until disposition. Non-employee exit costs In accordance with the objective of the Mine Plan to optimize phosphate rock management, Phosphates shut-down a high-cost phosphate rock mine. As a result of this shut-down, the Company recorded a charge of $18.4 million for the demolition and other incremental costs of closure of the mine. The closure costs included approximately $15.5 million for incremental environmental land reclamation of the surrounding mined-out areas. The Company expects the demolition and closure activities to be essentially completed by the end of the third quarter of 1999. The Company also decided to close certain production operations in connection with the Restructuring Plan, principally the uranium and urea operations of Phosphates. This decision was based on an analysis of the future outlook for these products, taking into consideration whether the operations were part of the Company's core businesses. These operations were determined to be non-core businesses and the Company recorded charges of approximately $12.8 million for demolition and closure, including environmental costs, of the uranium and urea production facilities. Additionally, environmental and closure costs of $2.4 million have been recognized for the planned closure of one of the Company's evaporated salt production facilities. The Company expects the demolition and closure activities to be completed by late-1999. Other various exit costs totaled $7.3 million. In connection with the Restructuring Plan, the Company decided to discontinue its transportation of ammonia from Louisiana to its phosphate operations in Florida. This decision was based on current market conditions which secured the availability of ammonia to the Company and which made the high-cost transportation of ammonia from Louisiana to Florida unnecessary. As a result, the Company recorded a charge of $13.2 million for the net present value of costs associated with permanently idling leased equipment used in the transportation of ammonia from Louisiana. Employee headcount reductions As part of the Restructuring Plan, headcount reductions were implemented at the Phosphates, Feed Ingredients, Salt and Kalium operations, as well as at the Company's corporate headquarters. Certain of these reductions were a result of the closing and/or exiting of production operations, as discussed above. To facilitate headcount reductions, the Company offered a voluntary retirement program for eligible employees. In addition, certain involuntary eliminations of positions, which were communicated prior to December 31, 1998, were necessary in order to achieve desired staffing levels. A total of 185 employees accepted the voluntary retirement plan by December 31, 1998, with 112 of those employees having left the Company as of that date. The remaining voluntarily terminated employees will leave the Company by June 1999. Additionally, a total of 454 employees were involuntarily terminated and had left the Company by the end of February 1999. Virtually all severance payments were disbursed subsequent to December 31, 1998. As a result of the employee terminations necessitated by the Restructuring Plan, settlement, curtailment and special termination charges of $19.7 million were recorded in accordance with SFAS No. 88. The related liabilities have been classified in Other noncurrent liabilities in the Company's Consolidated Balance Sheet. See Note 15, "Pension Plans and Other Benefits," of Notes to Consolidated Financial Statements. Inventories and spare parts of exited businesses Phosphates recorded charges of approximately $17.2 million to reduce the carrying value of finished goods inventories on-hand to net realizable value at December 31, 1998, as a result of the decision to exit certain businesses. The Restructuring Plan included a major reduction in production assets primarily used in the Phosphates business. The reduction was accomplished through the permanent shut-down of select mining facilities as well as a cut-back in concentrate facilities. Given the reduction in facilities and the resulting decrease in production, historical levels of spare parts inventory that had been maintained by the Company were no longer necessary or warranted. Therefore, the Company recorded a charge of $8.7 million for the write-off of spare parts inventory. Details of the restructuring charges were as follows: (In millions)
Activity ------------------- Restructuring Remaining Charges Cash Paid Non-cash Accrual ------- --------- -------- ------- Asset impairments: Facilities closed prior to December 31, 1998 $ 44.2 $ - $ 44.2 $ - Facilities to be closed in 1999 31.8 - 31.8 - Non-employee exit costs: Demolition and closure costs 33.6 - - 33.6 Idled leased transportation equipment 13.2 - - 13.2 Other 7.3 0.5 1.5 5.3 Employee headcount reductions: Severance benefits 17.6 0.2 - 17.4 Settlement, curtailment and special termination benefits 19.7 - 19.7 - Inventories and spare parts of exited businesses: Finished goods inventories 17.2 - 17.2 - Spare parts inventories 8.7 - 8.7 - ------- ------ ------- ------ Total $ 193.3 $ 0.7 $ 123.1 $ 69.5 ======= ====== ======= ======
All restructuring charges have been recorded as a separate line item on the Consolidated Statement of Operations, except for the finished goods inventory write-down which was recorded in Cost of goods sold. Vigoro Merger In March 1996, the Company completed a merger with Vigoro that resulted in Vigoro becoming a subsidiary of the Company. Upon consummation of the Vigoro Merger, the Company issued approximately 32.4 million shares of its common stock in exchange for all of the outstanding shares of Vigoro. The Vigoro 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 Vigoro Merger. In connection with the Vigoro Merger, the Company recorded charges totaling $20.2 million, primarily for consulting, legal and accounting services. Immediately following the Vigoro 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. Of these amounts, $6.0 million has been included in discontinued operations. The charges consisted of $6.5 million for lease terminations resulting from office consolidations and $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 December 31, 1998, the following amounts were paid: (i) $20.2 million for charges relating to the Vigoro Merger; (ii) $6.4 million for lease terminations resulting from office consolidations; and (iii) $16.6 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 Company Partnership Agreement, from the Company to PLP. Of these amounts $7.7 million has been included in discontinued operations. As of December 31, 1998, $14.7 million has been paid and $31.1 million of non-cash write-offs were recorded. 4. DISCONTINUED OPERATIONS In January 1999, the Company signed a definitive agreement to sell its AgriBusiness retail and wholesale distribution business unit. The Company anticipates the sale to be completed in the first quarter of 1999. The loss on disposal, net of income tax benefits of $21.1 million, is estimated to be $74.2 million and was recorded in the fourth quarter of 1998 in accordance with Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of Operations." The Consolidated Statement of Operations of the Company has been restated to report separately the operating results of AgriBusiness as discontinued operations. Interest expense has been allocated to discontinued operations based on the portion of the Company's short-term borrowing program that is specifically attributable to AgriBusiness and amounted to $13.2 million, $13.3 million and $13.1 million in 1998, 1997 and 1996, respectively. Income taxes associated with the discontinued operations of AgriBusiness were $2.9 million, $13.1 million and $8.4 million for 1998, 1997 and 1996, respectively. For 1998, 1997 and 1996, AgriBusiness' revenues were $787.0 million, $872.6 million and $797.7 million, respectively. For financial reporting purposes, the assets and liabilities of AgriBusiness, to be sold, net of the estimated loss on disposal, have been classified in the Consolidated Balance Sheet as Assets of discontinued operations held for sale as of December 31, 1998, as follows:
Assets: Accounts receivable $ 63.7 Inventories 157.1 Other current assets 0.5 Property, plant and equipment, net 130.4 Other assets 6.0 -------- Total assets 357.7 Liabilities: Accounts payable 69.8 Accrued liabilities 11.1 Other noncurrent liabilities 3.5 -------- Total liabilities 84.4 -------- Assets of discontinued operations held for sale $ 273.3 ========
5. OTHER DIVESTITURES IMC Vigoro In June 1998, the Company completed the sale of its IMC Vigoro business unit which consisted primarily of consumer lawn and garden and professional products for $44.8 million in cash. In connection with this transaction, the Company recorded a non-recurring charge of approximately $14.0 million, $9.1 million after tax benefits, or $0.08 per share. Of the $14.0 million charge, $4.1 million was included in Cost of goods sold and $9.9 million was included in Selling, general and administrative expenses in the Consolidated Statement of Operations. IMC Chemicals In December 1998, the Company signed a definitive agreement to sell its Chemicals business unit with the Company retaining an ongoing minority economic interest. The sale is anticipated to close in the first quarter of 1999. Based on the terms of the sale agreement, the Company recorded a pretax charge of $44.1 million for the estimated loss on sale. This charge is included in Other income and expense, net in the Consolidated Statement of Operations. Chemicals was established concurrent with the Harris Acquisition (see Note 2, "Acquisitions") in April 1998. Net sales and operating earnings for Chemicals since the date of acquisition were $311.8 million and $21.9 million, respectively. 6. MINORITY INTEREST Minority interest as included in the Consolidated Statement of Operations was $14.1 million, $124.4 million, and $185.7 million for 1998, 1997 and 1996, respectively. Prior to the FTX Merger, minority interest primarily consisted of PLP's 43.5 percent interest in IMC-Agrico. Subsequent to the FTX Merger, minority interest was largely comprised of the public unitholder interest in PLP (majority owned and consolidated by the Company since the FTX Merger), including an effective 21.1 percent minority interest in IMC-Agrico. 7. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share:
1998 1997 1996 ---- ---- ---- Basic earnings (loss) per share computation: Earnings from continuing operations $ 57.1 $ 69.8 $121.7 Total earnings (loss) from discontinued operations (69.1) 18.0 13.5 Extraordinary item - debt retirement 3.0 (24.9) (8.1) ------ ------ ------ Net earnings (loss) $ (9.0) $ 62.9 $127.1 ====== ====== ====== Basic weighted average common shares outstanding 114.2 94.0 92. Basic per share amounts: Earnings per share from continuing operations $ 0.50 $ 0.74 $ 1.31 Total earnings (loss) from discontinued operations (0.61) 0.19 0.15 Extraordinary item - debt retirement 0.03 (0.26) (0.09) ------ ------ ------ Net earnings (loss) per share $(0.08) $ 0.67 $ 1.37 ====== ====== ====== Diluted earnings (loss) per share computation: Earnings from continuing operations $ 57.1 $ 69.8 $121.7 Total earnings (loss) from discontinued operations (69.1) 18.0 13.5 Extraordinary item - debt retirement 3.0 (24.9) (8.1) ------ ------ ------ Net earnings (loss) $ (9.0) $ 62.9 $127.1 ====== ====== ====== Basic weighted average common shares outstanding 114.2 94.0 92.7 Unexercised stock options 0.6 0.7 1.1 Convertible debt - - 3.2 ------ ------ ------ Diluted weighted average common shares outstanding 114.8 94.7 97.0 ====== ====== ====== Diluted per share amounts: Earnings per share from continuing operations $ 0.50 $ 0.74 $ 1.25 Total earnings (loss) from discontinued operations (0.61) 0.19 0.14 Extraordinary item - debt retirement 0.03 (0.26) (0.08) ------ ------ ------ Net earnings (loss) per share $(0.08) $ 0.67 $ 1.31 ====== ====== ======
Options to purchase approximately 4.6 million, 3.1 million and 0.8 million shares of common stock were outstanding at December 31, 1998, 1997 and 1996, respectively, but were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares and, therefore, the effect would be antidilutive. Additionally, warrants to purchase approximately 8.4 million shares of common stock were outstanding at December 31, 1998 and 1997 but were not included in the computation of diluted earnings per share for the same reason as the options noted above. See Note 2, "Acquisitions." 8. RECEIVABLES Accounts receivable as of December 31 were as follows:
1998 1997 ---- ---- Trade $ 349.4 $ 270.8 Non-trade 78.5 53.8 ------- ------- 427.9 324.6 Less: Allowances 6.4 7.5 Receivable interests sold - 29.0 ------- ------- Receivables, net $ 421.5 $ 288.1 ======= =======
The carrying value of accounts receivable was equal to the estimated fair value of such assets due to their short maturity. Under an agreement with a financial institution, IMC-Agrico L.L.C., a special-purpose limited liability company of which IMC-Agrico is the sole equity owner, had transferred, on an ongoing basis, an undivided percentage interest in a designated pool of receivables, subject to limited recourse provisions related to the receivables generated from export transactions, in an amount not to exceed $65.0 million. This agreement expired in August 1998. As of December 31, 1997, IMC-Agrico L.L.C. had transferred a total of $61.5 million of such receivable interests, of which $32.5 million did not meet the criteria to be accounted for as a sale under SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." As a result, short- term debt of $32.5 million was recorded in the Consolidated Balance Sheet as of December 31, 1997. Related costs, primarily from discount fees, totaled $2.0 million, $3.3 million and $3.6 million in 1998, 1997 and 1996, respectively. 9. INVENTORIES Inventories as of December 31 were as follows:
1998 1997 ---- ---- Products (principally finished) $ 468.2 $ 499.7 Operating materials and supplies 136.3 109.9 ------- ------- 604.5 609.6 Less: Inventory allowances 23.9 16.8 ------- ------- Inventories, net $ 580.6 $ 592.8 ======= =======
10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of December 31 were as follows:
1998 1997 ---- ---- Land $ 104.6 $ 121.3 Mineral properties and rights 1,431.7 713.4 Buildings and leasehold improvements 615.9 481.2 Machinery and equipment 3,520.8 2,958.0 Construction-in-progress 244.4 188.2 -------- -------- 5,917.4 4,462.1 Accumulated depreciation and depletion (2,220.0) (1,956.1) -------- -------- Property, plant and equipment, net $3,697.4 $2,506.0 ======== ========
The increase in Property, plant and equipment was a result of the Harris Acquisition. See Note 2, "Acquisitions." As of December 31, 1998, idle facilities of the Company included one phosphate rock mine and two concentrated phosphate plants, all of which will remain closed subject to improved market conditions. The net book value of these facilities totaled $72.1 million. In the opinion of management, the net book value of the Company's idle facilities is not in excess of net realizable value. Subsequent to December 31, 1998, the Company idled a second phosphate rock mine and resumed production at a concentrated phosphate plant. 11. OTHER ASSETS Other assets as of December 31 were as follows:
1998 1997 ---- ---- Goodwill $ 1,064.2 $ 839.7 Other 212.7 266.0 --------- --------- Other assets $ 1,276.9 $ 1,105.7 ========= =========
The increase in Other assets was primarily due to the goodwill recorded in conjunction for the Harris Acquisition. See Note 2, "Acquisitions." 12. ACCRUED LIABILITIES Accrued liabilities as of December 31 were as follows:
1998 1997 ---- ---- Salaries, wages and bonuses $ 62.5 $ 35.3 Interest 47.1 14.4 Restructuring 36.7 13.0 Legal reserve - 40.8 Other 94.6 127.4 ------- ------- Accrued liabilities $ 240.9 $ 230.9 ======= =======
The decrease in the legal reserve in 1998 relates to the payment of previously settled litigation matters. See Note 3, "Non-Recurring Charges," for detail relating to the restructuring reserve. 13. FINANCING ARRANGEMENTS Total indebtedness as of December 31, 1998 was approximately $3.0 billion, a $1.6 billion increase from total indebtedness as of December 31, 1997 of $1.4 billion. The primary reason for this increased indebtedness was the Harris Acquisition. See Note 2, "Acquisitions." Short-term borrowings were $397.0 million and $179.7 million as of December 31, 1998 and 1997, respectively, which primarily consisted of commercial paper, revolving credit facilities, vendor financing arrangements and the portion of the sale of receivables classified as short-term debt as of December 31, 1997, as required by SFAS No. 125. The weighted average interest rate on short-term borrowings was 6.1 percent and 6.0 percent for 1998 and 1997, respectively. Long-term debt as of December 31 consisted of the following:
1998 1997 ---- ---- Notes and debentures due 2001-2018, with interest rates ranging from 6.50% to 7.625% $1,700.0 $ 300.0 Corporate commercial paper 596.9 - Industrial revenue bonds, maturing through 2022, with interest rates ranging from 3.50% to 7.525% 92.8 102.1 Revolving credit facilities, variable rates 66.8 655.0 Other debt 193.5 187.3 -------- -------- 2,650.0 1,244.4 Less: current maturities 11.3 9.2 -------- -------- Total long-term debt, less current maturities $2,638.7 $1,235.2 ======== ========
A portion of outstanding commercial paper is classified as long- term since it is supported by a long-term bank facility. As part of a general debt restructuring subsequent to the Harris Acquisition, the Company issued approximately $1.1 billion of long- term notes and debentures with effective interest rates ranging from 6.50 percent to 7.625 percent with maturities from 2001 through 2018. The debt restructuring reduced the Company's short- term borrowings, primarily commercial paper, and retired the higher rate debt assumed as part of the Harris Acquisition. Also in conjunction with the Harris Acquisition, the Company arranged a $1.0 billion bridge credit facility (Bridge Facility). The Bridge Facility is a 364-day, floating rate facility maturing in March 1999. In December 1998, the Bridge Facility was amended to reduce the amount available under the facility from $1.0 billion to $500.0 million. Commitment fees associated with the Bridge Facility are 15.0 basis points. The Company is currently negotiating an extension of this facility at a reduced amount. Also in December 1998, the Company renewed and amended its $350.0 million short-term credit facility maturing in December 1999, and amended its $650.0 million long-term credit facility maturing in December 2002, (collectively with the Bridge Facility, the Credit Facilities). Commitment fees associated with the short-term and long-term facilities are 10.0 basis points and 11.0 basis points, respectively. The amount available for borrowing under the Credit Facilities is reduced by the balance of outstanding commercial paper, letters of credit and guarantees. As of December 31, 1998, the Company had a total of $977.6 million of commercial paper outstanding and $1.5 billion of commercial paper backup facilities. Net available borrowings, under the Credit Facilities, as of December 31, 1998 were $442.0 million. Outstanding letters of credit as of December 31, 1998 totaled $53.1 million. These Credit Facilities contain provisions which: (i) restrict the Company's ability to dispose of a substantial portion of its consolidated assets; (ii) limit the creation of additional liens on the Company's and its subsidiaries' assets; and (iii) limit the Company's subsidiaries' incurrence of debt. These Credit Facilities also contain a leverage ratio test and other covenants. The Company, through various subsidiaries, also maintains the following credit facilities: (i) a $100.0 million, five-year revolving credit facility maturing in December 2002 (Canadian Facility); (ii) a 50.0 million Australian Dollar, two-year revolving credit facility maturing in September 2000 and a 25.0 million Australian Dollar, five-year term loan facility maturing in September 2003 (Australian Facilities); and (iii) a 45.0 million Pound Sterling, five-year revolving credit facility maturing in December 2003 (European Facility). As of December 31, 1998, $66.8 million was outstanding under the European Facility while there were no outstanding obligations under either the Canadian Facility or the Australian Facilities. Commitment fees associated with the Canadian Facility, the Australian Facilities and the European Facility are 11.0 basis points, 30.0 basis points and 30.0 basis points, respectively. The Company currently guarantees the payment of $75.0 million principal amount of industrial revenue bonds due 2015 issued by the Florida Polk County Industrial Development Authority (Polk County Bonds). As a result of the FTX Merger, the Company is not in technical compliance with one covenant in such guarantee. The Company has notified the Bank of New York, trustee for holders of the Polk County Bonds, regarding the issue. The holders of the Polk County Bonds have not sought to accelerate the Polk County Bonds or requested that any other action be taken. Because solicitation of a unanimous waiver of the technical default is impractical, the Company currently intends to take no action. The Company does not believe that any acceleration, redemption or refinancing of the Polk County Bonds would have a material adverse effect on the Company and its subsidiaries, taken as a whole because the Company believes it would be able to repay the Polk County Bonds from available sources of liquidity. As of December 31, 1998, 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. Extraordinary income of $3.0 million in 1998 and extraordinary charges of $24.9 million and $8.1 million in 1997 and 1996, respectively, related to the early extinguishment of debt. Cash interest payments were $145.4 million, $56.8 million and $68.3 million for 1998, 1997 and 1996, respectively. Scheduled maturities, excluding commercial paper borrowings and the revolving credit facilities, are as follows:
1999 $ 27.6 2000 41.8 2001 212.0 2002 314.0 2003 and beyond 1,407.2
14. OTHER NONCURRENT LIABILITIES Other noncurrent liabilities as of December 31 were as follows:
1998 1997 ---- ---- Employee and retiree benefits $ 234.7 $ 231.0 Environmental 114.3 105.8 Restructuring 44.6 13.3 Deferred gain 36.0 36.8 Other 56.5 53.3 ------- ------- Noncurrent liabilities $ 486.1 $ 440.2 ======= =======
See Note 3, "Non-Recurring Charges," for more detail on the restructuring reserve. 15. PENSION PLANS AND OTHER BENEFITS The Company has non-contributory pension plans for a majority of its employees. Benefits are based on a combination of years of service and compensation levels, depending on the plan. Generally, contributions to the United States plans are made to meet minimum funding requirements of the Employee Retirement Income Security Act of 1974, while contributions to Canadian plans are made in accordance with Pension Benefits Acts, instituted by the provinces of Saskatchewan and Ontario. Employees in the United States and Canada whose pension benefits exceed Internal Revenue Code and Revenue Canada limitations, respectively, are covered by supplementary non-qualified, unfunded pension plans. The plans' assets consist mainly of corporate equity, United States government securities, corporate debt securities and units of participation in a collective short-term investment fund. Effective January 1, 1998, the Company transitioned from a defined benefit pension plan to a defined contribution plan for certain employees who elected to do so (Transition). The Company accounted for the Transition in accordance with SFAS No. 88. The impact of the curtailment as a result of the Transition was not material. The Company also provides certain health care benefit plans for certain retired employees. 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 Company has adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," effective December 31, 1998. The new standard does not change the measurement or recognition of costs for pension or other postretirement plans. It standardizes disclosures and eliminates those that are no longer useful. The following tables, prepared in accordance with the new standard, set forth pension and postretirement obligations and plan assets for the Company's defined benefit plans, based on a September 30 measurement date, as of December 31:
Pension Benefits Other Benefits ---------------- -------------- 1998 1997 1998 1997 ---- ---- ---- ---- Change in benefit obligation: Benefit obligation as of January 1 $ 391.8 $ 233.8 $ 175.3 $ 71.8 Service cost 10.6 13.0 2.6 1.9 Interest cost 27.5 18.3 11.0 5.3 Plan amendment 6.1 2.9 4.1 - Effect of settlements (31.0) - - - Actuarial loss 41.3 0.7 17.2 2.0 Benefits paid (48.1) (13.6) (9.1) (2.3) Acquisitions 36.4 136.7 - 96.6 Other (1.2) - (3.3) - Curtailments (7.0) - - - ------- ------- ------- ------- Benefit obligation as of December 31 $ 426.4 $ 391.8 $ 197.8 $ 175.3 ======= ======= ======= ======= Change in plan assets: Fair value as of January 1 $ 380.8 $ 190.2 $ - $ - Actual return 0.5 29.5 - - Company contribution 37.5 11.2 9.1 2.3 Effect of settlements (57.9) - - - Acquisitions 38.1 154.5 - - Asset transfer - 9.0 - - Benefits paid (48.1) (13.6) (9.1) (2.3) ------- ------- ------- ------- Fair value as of December 31 $ 350.9 $ 380.8 $ - $ - ======= ======= ======= ======= Funded status of the plan $ (75.5) $ (11.0) $(197.8) $(175.3) Unrecognized net (gain) loss 74.5 1.5 7.4 (11.2) Unrecognized transition liability (asset) 20.7 (1.3) (1.6) (1.7) Unrecognized prior service cost (0.5) 17.0 (5.3) (10.2) ------- ------- ------- ------- Prepaid (accrued) benefit cost $ 19.2 $ 6.2 $(197.3) $(198.4) Amounts recognized in the consolidated balance sheet: Prepaid benefit cost $ 69.7 $ 63.1 $ 17.1 $ 17.9 Accrued benefit liability (64.8) (64.8) (214.4) (216.3) Intangible asset 14.3 7.9 - - ------- ------- ------- ------- Total recognized $ 19.2 $ 6.2 $(197.3) $(198.4) ======= ======= ======= =======
The acquisition amounts relate to pension and postretirement liabilities and assets assumed in conjunction with the Harris Acquisition in April 1998, and the FTX Merger which occurred in December 1997. See Note 2, "Acquisitions" and Note 3, "Non- Recurring Charges." Amounts applicable to the Company's pension plan with accumulated benefit obligations in excess of plan assets are as follows:
1998 1997 ---- ---- Projected benefit obligation $ 191.4 $ 113.6 Accumulated benefit obligation $ 147.0 $ 81.3 Fair value of plan assets $ 96.3 $ 35.3
Pension Benefits Other Benefits ---------------- -------------- 1998 1997 1998 1997 ---- ---- ---- ---- Actuarial assumptions: Discount rate 7.0% 7.5% 7.0% 7.5% Expected return on plan assets 9.9% 9.6% - - Rate of compensation increase 5.0% 5.1% - -
For measurement purposes, a 7.4 percent annual rate of increase in the per capita cost of covered pre-65 health care benefits was assumed for 1998 decreasing gradually to 4.7 percent in 2004 and thereafter; and a 7.5 percent annual rate of increase in the per capita cost of covered post-65 health care benefits was assumed for 1998 decreasing gradually to 5.0 percent in 2004. The components of net pension and other benefits expense were:
Pension Benefits Other Benefits ------------------ ------------------ 1998 1997 1996 1998 1997 1996 ---- ---- ---- ---- ---- ---- Service cost for benefits earned during the year $ 10.6 $ 13.0 $ 13.5 $ 2.6 $ 1.9 $ 1.7 Interest cost on projected benefit obligation 27.5 18.3 16.8 11.0 5.3 5.2 Return on plan assets (33.5) (18.1) (16.8) - - - Net amortization and deferral 2.8 2.8 2.6 (1.4) (1.8) (1.8) Curtailments and settlements 19.4 2.8 - 0.5 - - ------ ------ ------ ------ ------ ------ Net pension and other benefits expense $ 26.8 $ 18.8 $ 16.1 $ 12.7 $ 5.4 $ 5.1 ====== ====== ====== ====== ====== ======
The curtailment and settlement charges included in the tables above were primarily recorded as part of the Restructuring Charge. See Note 3, "Non-Recurring Charges." The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:
One Percentage One Percentage Point Increase Point Decrease -------------- -------------- Effect on total service and interest cost components $ 0.7 $ (0.6) Effect on postretirement benefit obligation $10.8 $(10.2)
The Company also has defined contribution pension and 401K investment savings plans (Plans) for certain of its employees in the United States and Canada. 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 employee contributions. In 1998, the Company added a profit sharing feature to the Plans for salaried and non-union hourly employees as a replacement for traditional pension plans. The Company contribution is based on the employee's age and pay and the Company's financial performance. The expense attributable to these plans was $18.1 million, $8.5 million and $6.4 million in 1998, 1997 and 1996, respectively. In addition, the Company provides benefits such as workers' compensation and disability to certain former or inactive employees after employment but before retirement. 16. INCOME TAXES Two of the Company's three potash operations that are subject to Canadian taxes, IMC Kalium Canada Ltd. and IMC Central Canada Potash Inc., are included in the consolidated United States federal income tax return filed by the Company. Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for accounting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31 were as follows:
1998 1997 ---- ---- Deferred tax liabilities: Property, plant and equipment $ 824.2 $ 433.4 Other liabilities 132.1 114.8 ------- ------- Total deferred tax liabilities 956.3 548.2 Deferred tax assets: Alternative minimum tax credit carryforwards 137.4 124.4 Net operating loss carryforward 96.7 - Postretirement and postemployment benefits 45.8 43.1 Foreign tax credit carryforward 24.6 30.6 Sterlington litigation settlement - 22.4 Reclamation and decommissioning accruals 22.3 23.8 Sale of AgriBusiness business unit 20.0 - Restructuring charges 58.1 9.5 Purchase accounting adjustments related to Harris Acquisition 28.2 - Other assets 107.8 61.4 ------- ------- Subtotal 540.9 315.2 Valuation allowance 60.1 37.3 ------- ------- Total deferred tax assets 480.8 277.9 ------- ------- Net deferred tax liabilities $ 475.5 $ 270.3 ======= =======
As of December 31, 1998, the Company had alternative minimum tax credit carryforwards of approximately $137.4 million, net operating loss carryforwards in the amount of $229.6 million, foreign tax credit carryforwards in the amount of $24.6 million, investment tax credit and other general business credit carryforwards in the amount of $10.7 million, and a carryover of charitable contributions in the amount of $17.8 million. The alternative minimum tax credit carryforwards can be carried forward indefinitely. The net operating loss carryforwards have expiration dates ranging from 2005 through 2013. The foreign tax credit carryforward will expire in 2001 to the extent it remains unutilized. The investment tax credit and other general business credit carryforwards have expiration dates ranging from 1999 through 2008. The charitable contributions carryover has expiration dates ranging from 1999 through 2001. Due to the uncertainty of the realization of certain tax carryforwards, the Company has established a valuation allowance against these carryforward benefits in the amount of $60.1 million. Some of these carryforward benefits may be subject to limitations imposed by the Internal Revenue Code. Except to the extent that valuation allowances have been established, the Company believes these limitations will not prevent the carryforward benefits from being realized. The provision for income taxes from continuing operations for the years ended December 31 consisted of the following:
1998 1997 1996 ---- ---- ---- Current: Federal $ 27.9 $ 11.9 $ 42.0 State and local 1.9 3.7 2.2 Foreign 43.1 48.3 12.0 ------- ------- ------- 72.9 63.9 56.2 Deferred: Federal (20.7) (37.0) 3.3 State and local (2.9) (8.4) 0.7 Foreign 35.2 11.9 21.1 ------- ------- ------- 11.6 (33.5) 25.1 ------- ------- ------- $ 84.5 $ 30.4 $ 81.3 ======= ======= =======
The components of earnings from continuing operations including non-recurring items and before income taxes and extraordinary items and the effects of significant adjustments to tax computed at the federal statutory rate were as follows:
1998 1997 1996 ---- ---- ---- Domestic earnings $(18.0) $ (5.0) $151.7 Foreign earnings 159.6 105.2 51.3 ------ ------ ------ Earnings from continuing operations before income taxes and extraordinary item $141.6 $100.2 $203.0 ====== ====== ====== Computed tax at the federal statutory rate of 35% $ 49.6 $ 35.1 $ 70.9 Foreign income and withholding taxes 40.9 4.9 11.3 Percentage depletion in excess of basis (26.6) (9.5) (9.0) Vigoro Merger expenses not deductible for tax purposes - - 7.1 State income taxes, net of federal income tax benefit (0.7) (3.0) 1.9 Benefit of foreign sales corporation (4.4) (5.6) (3.9) Amortization of goodwill 9.1 - - Sale of Chemicals 16.8 - - Other items (none in excess of 5% of computed tax) (0.2) 8.5 3.0 ------ ------ ------ Provision for income taxes $ 84.5 $ 30.4 $ 81.3 ====== ====== ====== Effective tax rate 59.6% 30.3% 40.0% ===== ===== =====
The following supplemental information presents earnings from continuing operations before income taxes and non-recurring charges and the related reconciliation of the effective income tax rate before the impact of such non-recurring charges:
1998 1997 1996 ---- ---- ---- Domestic earnings $ 203.6 $ 178.7 $ 236.6 Foreign earnings 159.6 105.2 51.3 ------- ------- ------- Earnings from continuing operations before income taxes and non-recurring and extraordinary items 363.2 283.9 287.9 ------- ------- ------- Computed tax at the federal statutory rate of 35% 127.1 99.4 100.8 Foreign income and withholding taxes 41.2 4.9 11.3 Percentage depletion in excess of basis (26.6) (9.5) (9.0) State income taxes, net of federal income tax benefit 6.0 4.0 4.4 Benefit of foreign sales corporation (4.4) (5.6) (3.9) Amortization of goodwill 9.1 - - Other items (none in excess of 5% of computed tax) (18.3) 8.7 2.7 ------- ------- ------- Provision for income taxes $ 134.1 $ 101.9 $ 106.3 ======= ======= ======= Effective tax rate 36.9% 35.9% 36.9% ===== ===== =====
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 $228.9 million as of December 31, 1998, 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 $40.2 million would have been required. Income taxes paid, net of refunds received, were $84.9 million, $51.6 million and $73.8 million for 1998, 1997 and 1996, respectively. 17. CAPITAL STOCK Changes in the number of shares of common stock issued and in treasury were as follows:
1998 1997 ---- ---- Common stock issued: Balance, beginning of year 124,668,286 101,639,885 Common stock issued 10,033 22,737,681 Stock options exercised 394,492 290,720 ----------- ----------- Balance, end of year 125,072,811 124,668,286 Treasury common stock: Balance, beginning of year 10,691,520 5,545,884 Common stock issued - (211,364) Restricted stock awards (53,000) - Purchases 100,000 5,357,000 ----------- ----------- Balance, end of year 10,738,520 10,691,520 ----------- ----------- Common stock outstanding, end of year 114,334,291 113,976,766 =========== ===========
In connection with the FTX Merger, each share of common stock of FTX was exchanged for 0.90 share of the Company's common stock plus one-third of a warrant, with each whole warrant entitling the holder to purchase one share of the Company's common stock for $44.50 per share. As a result of the FTX Merger, 22.7 million shares were issued at an average market price of $32.28 per share. In addition, approximately 8.4 million warrants were issued, which are publicly traded on the New York Stock Exchange and will expire on the third anniversary of the FTX Merger. These warrants were valued at $3.56 per warrant and are convertible into approximately 8.4 million shares of common stock. See Note 2, "Acquisitions." Pursuant to a Shareholder 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 outstanding 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 $0.005 per Right under certain circumstances prior to their expiration on June 21, 1999. No event during 1998 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, stock appreciation rights (SARs) and restricted stock awards to officers and key managers of the Company, accounted for under APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company also has a non-qualified stock option plan for non-employee directors. The Stock Plans, as amended, provide for the issuance of a maximum of 10.6 million shares of common stock of the Company which may be authorized but unissued shares or treasury shares. Under the terms of the Stock Plans, the option price per share may not be less than 100 percent of the fair market value on the date of the grant. Stock options and SARs granted under the Stock Plans extend for ten years and generally become exercisable either 50 percent one year after the date of the grant and 100 percent two years after the date of the grant, or in one-third increments: one-third one year after the date of the grant, two-thirds two years after the date of the grant, and 100 percent three years after the date of the grant. In conjunction with the FTX Merger, outstanding FTX stock options for officers and key managers were converted into options of the Company to acquire approximately 1.4 million Company shares at a weighted average exercise price of $25.02 per share. Outstanding FTX stock options for non-employee directors of FTX were converted into options of the Company to acquire approximately 0.1 million Company shares at a weighted average exercise price of $18.50 per share. Additionally, FTX SARs and stock incentive units (SIUs) were converted into approximately 0.1 million Company SARs and approximately 0.2 million Company SIUs based on the Company's common stock at weighted average exercise prices of $15.63 and $24.44 per share, respectively. Due to change of control provisions, all converted FTX options, SARs and SIUs were considered fully vested at the date of the FTX Merger. See Note 2, "Acquisitions." At the Company's 1996 Annual Meeting, the stockholders approved the 1996 long-term incentive plan which replaced a predecessor plan. The new plan became effective in October 1996. Under the plan, officers and key managers may be awarded stock and/or cash upon achievement of specified objectives over a three-year period ending December 31, 1999. Final payouts are made at the discretion of the Compensation Committee of the Company's Board of Directors whose members are not participants in the plan. Approximately $7.5 million, $8.6 million and $4.4 million were charged to earnings in 1998, 1997 and 1996, respectively, for performance awards earned for the relevant three-year period under the 1996 long-term incentive plan. Excluding the SARs and SIUs converted in conjunction with the FTX Merger discussed above, there were no SARs granted in 1998, 1997 or 1996. For the SARs, a total of 69,357 shares, 8,525 shares and 26,775 shares were exercised in 1998, 1997 and 1996, respectively. For the SIUs, a total of 49,663 shares were exercised in 1998. There were no exercises during 1997 or 1996, as SIUs did not exist at the Company prior to the FTX Merger. When exercised, all SARs and SIUs are settled with cash payments to employees. The following table summarizes stock option activity:
1998 1997 1996 ----------------- ---------------- ----------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------ ----- ------ ----- ------ ----- Outstanding at January 1 5,972,350 $ 29.05 3,805,519 $ 27.33 3,816,654 $ 22.98 Granted 2,008,245 28.61 1,222,219 37.63 841,500 40.78 Exercised 350,966 18.12 297,162 18.88 670,727 19.02 Cancelled 274,813 33.28 161,419 36.68 181,908 29.13 Converted FTX options - - 1,403,193 25.02 - - --------- -------- --------- ------- --------- ------ Outstanding at December 31 7,354,816 $ 29.30 5,972,350 $ 29.05 3,805,519 $ 27.33 ========= ======== ========= ======= ========= ======= Exercisable at December 31 4,530,065 $ 27.91 4,216,057 $ 25.26 2,294,731 $ 21.92 Available for future grant at December 31 574,338 2,307,770 3,368,570
Data related to significant option ranges, weighted average exercise prices and contract lives as of December 31, 1998 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 ---------------- ---------- ------------ -------- ---------- -------- $10.17 to 16.50 413,862 4 years $ 16.07 413,862 $16.07 $16.51 to 24.16 1,718,189 4 years 19.34 1,210,189 19.82 $24.17 to 37.13 2,925,198 4 years 29.59 1,700,964 28.60 $37.14 to 40.88 2,297,567 7 years 38.75 1,205,050 39.14 --------- --------- $10.17 to 40.88 7,354,816 5 years $ 29.30 4,530,065 $27.91 ========= =========
The assumption regarding the stock options contractual life was that 100 percent of such options vested in the first year after issuance rather than ratably according to the applicable vesting period as provided by the terms of the grants. If the Company's stock option plans' compensation cost had been determined based on the fair value at the grant date for awards beginning in 1995, consistent with the provisions of SFAS No. 123 "Accounting for Stock-Based Compensation," the Company's net earnings and earnings per share would have been reduced to the following pro forma amounts:
1998 1997 1996 ---- ---- ---- Net earnings (loss): As reported $ (9.0) $ 62.9 $ 127.1 Pro forma (16.5) 51.4 123.6 Net earnings (loss) per share: Basic $ (0.08) $ 0.67 $ 1.37 Pro forma-basic (0.14) 0.55 1.33 Diluted (0.08) 0.67 1.31 Pro forma-diluted (0.14) 0.54 1.27
For the pro forma disclosures, the estimated fair value of the options is amortized to expense over their expected six-year life. These pro forma amounts are not indicative of anticipated future disclosures because SFAS No. 123 does not apply to grants before 1995. Weighted average fair values of options as of their grant date during 1998, 1997 and 1996 were $9.82, $12.74 and $14.61, respectively. 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:
1998 1997 1996 ---- ---- ---- Expected dividend yield 0.90% 0.85% 0.85% Expected stock price volatility 29.1% 25.0% 26.0% Risk-free interest rate (7 year government) 4.7% 5.8% 6.3% Expected life of options 6 years 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. 19. COMMITMENTS The Company purchases natural gas, ammonia, electricity and coal from third parties under contracts extending, in some cases, for multiple years. Purchases under these contracts are generally based on prevailing market prices. These contracts generally range from one to four years. The Company has entered into a third-party sulphur purchase commitment, the term of which is indeterminable. Therefore, the dollar value of the sulphur commitments has been excluded from the schedule below after the year 2003. The Company leases plants, warehouses, terminals, office facilities, railcars and various types of equipment under operating and capital leases. Lease terms generally range from three to five years, although some leases have longer terms. A schedule of future minimum long-term purchase commitments and minimum lease payments under non-cancelable operating and capital leases as of December 31, 1998 follows:
Purchase Operating Capital Commitments Leases Leases ----------- ------ ------ 1999 $ 410.1 $ 37.6 $ 5.8 2000 228.7 32.9 3.8 2001 203.9 30.6 2.6 2002 172.8 23.5 0.5 2003 173.0 22.6 0.5 Subsequent years 126.5 135.1 1.1 -------- ------- ------- $1,315.0 $ 282.3 $ 14.3 ======== ======= Less: Amount representing interest 1.7 ------- Present value of minimum capital lease payments $ 12.6 =======
Assets recorded under capital leases are included in machinery and equipment in Property, plant and equipment, net in the Company's Consolidated Balance Sheet and were $21.6 million at December 31, 1998. Capital leases for 1997 were not significant to the Company. Rental expense for 1998, 1997 and 1996 amounted to $54.5 million, $35.0 million and $31.5 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 at 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 amounts to an annual minimum of approximately 0.5 million tons, but no more than approximately 1.1 million tons. During 1998, production of potash for PCS amounted to 598,359 tons, or 16 percent of the Esterhazy mine's total tons produced. In conjunction with the FTX Merger, the Company, through its interest in PLP, participates in the Exploration Program. In accordance with the Exploration Program, PLP, MMR and the Investor fund 56.4 percent, 37.6 percent and 6.0 percent, respectively, of the exploration costs. As of December 31, 1998, PLP's total exploration spending-to-date was approximately $70.0 million. All revenue and other costs are allocated 47.0 percent to PLP, 48.0 percent to MMR and 5.0 percent to the Investor. In November 1998, Phosphate Chemicals Export Association, Inc. (PhosChem), of which the Company's IMC-Agrico joint venture is a member, reached a two-year agreement through the year 2000 to supply DAP to the China National Chemicals Import and Export Corporation (Sinochem). This agreement provides Sinochem with an option to extend the agreement to December 31, 2002. Sinochem is a state company with government authority for the import of fertilizers into China. Under the contract's terms, Sinochem will receive monthly shipments at prices reflecting the market at the time of shipment. 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 have been capitalized while others have been charged to expense, to control the inflow. Since the initial discovery of the inflow, the Company has been able to meet all sales obligations from production at the mines. The Company has considered, and continues to evaluate, alternatives to the operational methods employed at Esterhazy. However, the procedures utilized to control the water inflow have proven successful to date, and the Company currently intends to continue conventional shaft mining. Despite the relative success of these measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow, risk to employees or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. Sterlington Litigation In early 1998, the Company entered into a Preliminary Settlement Agreement with the plaintiffs in connection with the Louisiana class action arising out of a May 1991 explosion at a nitroparaffins plant located in Sterlington, Louisiana. The Preliminary Settlement Agreement settles all claims that members of the class have against the Company and releases the Company from further potential liabilities based on the claims of the members of the class. In January 1999, the court held a hearing on the fairness of the preliminary Settlement Agreement. In February 1999, the court entered a written order approving the Settlement Agreement. The Company also has settled all the known claims of individuals and entities who opted out of the Louisiana class action. Settlement of the Louisiana third-party claims is intended to resolve the Company's known potential future liabilities in connection with the Sterlington explosion. In addition, the settlement is intended to protect the Company from the remaining claims for contribution and indemnity filed by ANGUS Chemical Company and the other remaining defendants with respect to the Sterlington explosion. 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 (Court of Appeals). The Court of Appeals is expected to rule during calendar 1999. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California litigation, all proceedings have been stayed pending the decision of the Court of Appeals. FTX Merger Litigation In August 1997, five identical class action lawsuits were filed in Chancery Court in Delaware by unitholders of PLP. Each case named the same defendants and broadly alleged that FTX and FMRP Inc. (FMRP) had breached fiduciary duties owed to the public unitholders of PLP. The Company was alleged to have aided and abetted these breaches of fiduciary duty. In November 1997, an amended class action complaint was filed with respect to all cases. The amended complaint named the same defendants and raised the same broad allegations of breaches of fiduciary duty against FTX and FMRP for allegedly favoring the interests of FTX and FTX's common stockholders in connection with the FTX Merger. The plaintiffs claimed specifically that, by virtue of the FTX Merger, the public unitholders' interests in PLP's ownership of IMC-Agrico would become even more subject to the dominant interest of the Company. The amended complaint seeks certification as a class action and an injunction against the proposed FTX Merger or, in the alternative, rescissionary damages. The defendants' moved the Court to dismiss the amended complaint in November 1998. The plaintiffs have until March 1999 to file their response. IMC intends to defend this action vigorously. In May 1998, IMC and PLP (collectively, Plaintiffs) filed a lawsuit (IMC Action) in Delaware Chancery Court against certain former directors of FTX (Director Defendants), and MOXY. IMC alleges that the Director Defendants, as the directors of PLP's administrative managing general partner FTX, owed duties of loyalty to PLP and its limited partnership unitholders. IMC further alleges that the Director Defendants breached their duties by causing PLP to enter into a series of interrelated non-arm's-length transactions with MOXY, an affiliate of FTX. IMC also alleges that MOXY knowingly aided and abetted and conspired with the Director Defendants to breach their fiduciary duties. On behalf of the PLP public unitholders, IMC seeks to reform or rescind the contracts that PLP entered into with MOXY and to recoup the monies expended as a result of PLP's participation in those agreements. The Director Defendants and MOXY have filed motions to dismiss the Plaintiffs' claims. The defendants filed their briefs in support of their motions in January 1999. IMC filed its amended complaint, and its responses to the motions to dismiss in February 1999. No trial date has been scheduled. IMC intends to pursue this action vigorously. In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on behalf of himself and all other PLP unitholders against the Director Defendants, MOXY and IMC asserting the same claims that IMC asserts in the IMC Action. Because IMC and PLP had already asserted these claims, IMC has filed a motion to dismiss the Gottlieb Action. The court has not set a briefing schedule for IMC's motion to dismiss. IMC intends to defend this action vigorously. 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, Phosphates has agreed to obtain all environmental, regulatory and related permits necessary to commence mining on the property. Within five years from the date of this agreement, Phosphates is required to provide notice to CMI regarding one of the following: (i) whether 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, Phosphates is obligated to pay CMI an initial royalty payment of $28.9 million. In addition to this royalty payment, Phosphates 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 Company's contingent environmental liability arises from three sources: facilities currently or formerly owned by the Company or its predecessors; facilities adjacent to currently or formerly owned facilities; and third-party Superfund sites. At facilities currently or formerly owned by the Company or its corporate predecesssors, including FTX, PLP and their corporate predecessors, the historical use and handling of regulated chemical substances, crop nutrient products and salt has resulted in soil and groundwater contamination. Spills or other unintended releases of regulated substances have occurred previously at these facilities, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations (which currently are in progress) to determine whether remedial action may be required to address contamination. In a limited number of cases, the Company's current or former operations also allegedly have resulted in soil or groundwater contamination in neighboring areas. For instance, three lawsuits filed in 1998 in Louisiana contend that FTX's historic oil and gas operations may have resulted in contamination at and damage to neighboring marshland: Terrebone Parish School Board v. Texaco Inc.; Estate of Simoneaux v. Southern Natural Gas Co.; and Michael X. St. Martin v. Quintana Petroleum Corp. The suits seek unspecified damages for restoration of the marshes to their "pre- leased," "pre-operational," or "natural" conditions. Because the suits are in the early stages, it is difficult to determine the magnitude of exposure to the Company; however, the Company intends to vigorously contest these actions. Finally, the Superfund, and equivalent state statutes impose liability without regard to fault or to the legality of a party's conduct, on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved or concluding involvement at less than twenty Superfund or equivalent state sites. With regard to these contingent environmental liabilities, it is the Company's policy to accrue environmental investigatory and non-capital remediation costs for identified sites when litigation has commenced or a claim or assessment has been asserted or is probable and the likelihood of an unfavorable outcome is probable. In addition to these accrued amounts, material expenditures could be required by the Company in the future to remediate contamination at current or former sites or neighboring off-site areas. For other known sites, the Company estimates that any additional loss in excess of the accrued amounts would not be material. The Company cannot determine the cost of any remedial action that ultimately may be required at unknown sites, sites currently under investigation, sites for which investigations have not been performed, or sites at which unanticipated conditions are discovered. The Company's liability at the federal or state Superfund sites, either alone or in the aggregate, is not currently expected to be material. The Company believes that, pursuant to several indemnification agreements, it is entitled to at least partial, and in many instances complete, indemnification for a portion of the costs that may be expended by the Company to remedy environmental issues at certain facilities. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities or businesses from parties including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies, Inc.; Estech, Inc.; ARCO; Conoco; the Williams Companies; Kerr- McGee Inc.; and certain other private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date as well as any future anticipated expenditures. Other Most of the Company's export sales of phosphate and potash crop nutrients are marketed through two North American export associations, PhosChem and Canpotex Limited (Canpotex). As a member, the Company is, subject to certain conditions, contractually obligated to reimburse the export association for its pro rata share of any losses or other liabilities incurred. There were no such operating losses or other liabilities in 1998, 1997 and 1996. 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. OPERATING SEGMENTS The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. The Company's operations were restructured into a decentralized organizational structure with five stand-alone business units in July 1996. As of December 31, 1998, the Company had four reportable segments: Phosphates, Kalium, Salt and Chemicals. The Company produces and markets phosphate crop nutrients through the Phosphates business unit. Potash crop nutrients, industrial grade potash and salt are produced and marketed through the Kalium business unit. Salt produces salt for use in road de-icing, food processing, water softeners and industrial applications. Chemicals produces soda and boron chemicals principally used in the manufacture of glass and numerous industrial and specialty chemical products. In December 1998, a definitive agreement was signed to sell the Chemicals business unit. See Note 5, "Other Divestitures." The accounting policies of the segments are the same as those described in the summary of significant accounting policies. All intersegment sales prices are market-based. The Company evaluates performance based on operating earnings of the respective business units. Segment information for the years 1998, 1997 and 1996 was as follows(a):
1998 -------------------------------------------------- IMC-Agrico IMC IMC IMC Phosphates Kalium Salt Chemicals Other(b) Total ---------------------------------------------------------- Net sales from external customers $1,393.9 $ 604.2 $ 173.7 $ 311.8 $ 212.6 $2,696.2 Intersegment net sales 178.9 95.9 1.3 - 3.1 279.2 Gross margins(c) 375.6 283.1 57.0 40.8 5.0 761.5 Operating earnings(d) 337.3 257.1 33.3 21.9 (68.6) 581.0 Depreciation, depletion and amortization 84.5 54.0 26.5 38.0 48.7 251.7 Total assets 1,792.2 1,364.9 1,119.3 617.7 1,562.8 6,456.9 Capital expenditures 76.2 159.7 28.1 17.6 86.0 367.6 1997 -------------------------------------------------- IMC-Agrico IMC IMC IMC Phosphates Kalium Salt Chemicals Other(b) Total ---------------------------------------------------------- Net sales from external customers $1,312.5 $ 537.7 $ - $ - $ 265.8 $2,116.0 Intersegment net sales 172.3 79.7 - - 32.3 284.3 Gross margins 298.7 237.7 - - 38.5 574.9 Operating earnings(e) 257.4 214.8 - - (29.1) 443.1 Depreciation, depletion and amortization 100.5 35.9 - - 26.0 162.4 Total assets 1,752.2 891.1 - - 2,030.6 4,673.9 Capital expenditures 82.3 123.3 - - 38.4 244.0 1996 -------------------------------------------------- IMC-Agrico IMC IMC IMC Phosphates Kalium Salt Chemicals Other(b) Total ---------------------------------------------------------- Net sales from external customers $1,492.5 $ 392.2 $ - $ - $ 258.6 $2,143.3 Intersegment net sales 168.8 72.6 - - 155.8 397.2 Gross margins(f) 411.4 159.8 - - 45.9 617.1 Operating earnings(g) 372.6 136.8 - - (24.7) 484.7 Depreciation, depletion and amortization 96.3 30.1 - - 27.2 153.6 Total assets 1,670.8 697.4 - - 1,117.0 3,485.2 Capital expenditures 84.1 83.3 - - 41.6 209.0 (a) The operating results and assets of Great Salt Lake Minerals (included in Kalium), Salt and Chemicals, acquired as part of the Harris Acquisition, and FTX, acquired as part of the FTX Merger, are included in the segment information since the dates of acquisition. See Note 2, "Acquisitions." The operating results of AgriBusiness have not been included in the segment information provided as this business has been classified as discontinued operations. However, AgriBusiness' assets have been included as part of total assets in the Other column. See Note 4, "Discontinued Operations." (b) Segment information below the quantitative thresholds are attributable to two business units (Feed Ingredients and IMC Vigoro) and corporate headquarters. IMC Vigoro was sold in June 1998. Corporate headquarters includes the elimination of inter-business unit transactions, the goodwill recorded as a result of the FTX Merger in 1997 and oil and gas activities through its interest in PLP. See Note 2, "Acquisitions," Note 3, "Non-Recurring Charges" and Note 5, "Other Divestitures." (c) Before non-recurring charges of $4.1 million related to the sale of IMC Vigoro in June 1998 and $19.0 million related to the Company-wide profit improvement program recorded in December 1998. See Note 3, "Non-Recurring Charges" and Note 5, "Other Divestitures." (d) Before non-recurring charges of $14.0 million related to the sale of IMC Vigoro in June 1998 and $195.1 million primarily related to the Company-wide profit improvement program recorded in December 1998. See Note 3, "Non-Recurring Charges" and Note 5, "Other Divestitures." (e) Before a non-recurring charge of $183.7 million related to the write-down of Main Pass. See Note 2, "Acquisitions." (f) Before non-recurring charges of $20.8 million related to the Vigoro Merger. See Note 3, "Non-Recurring Charges." (g) Before non-recurring charges of $58.3 million related to the Vigoro Merger. See Note 3, "Non-Recurring Charges."
Financial information relating to the Company's operations by geographic area was as follows:
Net Sales(a) ---------------------------------- 1998 1997 1996 ---- ---- ---- United States $1,277.9 $1,044.2 $ 999.1 China 406.2 459.6 485.0 Other 1,012.1 612.2 659.2 -------- -------- -------- Consolidated $2,696.2 $2,116.0 $2,143.3 ======== ======== ======== (a) Revenues are attributed to countries based on location of customer. Sales through Canpotex, one of the Company's export associations, have been allocated based on the Company's share of total Canpotex sales. Amounts reflect continuing operations only.
Long-Lived Assets ----------------------------------- 1998 1997 1996 ---- ---- ---- United States $3,944.0 $3,233.2 $2,188.8 Canada 634.7 378.5 362.8 Other 395.6 - - -------- -------- -------- Consolidated $4,974.3 $3,611.7 $2,551.6 ======== ======== ========
QUARTERLY RESULTS (UNAUDITED) (In millions, except per share amounts) - - -----------------------------------------------------------------------
Quarter(a) ------------------------------------------------ First Second Third Fourth Year ----- ------ ----- ------ ---- 1998 Net sales $ 536.5 $ 793.4 $ 659.5 $ 706.8 $2,696.2 Gross margins 153.9 214.0 178.6 191.9 738.4 Earnings (loss) from continuing operations before income taxes 84.3 87.8 75.2 (105.7) 141.6 Earnings (loss) from continuing operations 54.7 56.9 48.7 (103.2) 57.1 Earnings (loss) before extraordinary item 48.0 87.0 37.8 (184.8) (12.0) Net earnings (loss) $ 45.3 $ 87.0 $ 36.9 $(178.2) $ (9.0) Basic earnings (loss) per share(b): Earnings (loss) from continuing operations $ 0.48 $ 0.50 $ 0.43 $ (0.90) $ 0.50 Earnings (loss) from discontinued operations (0.06) 0.26 (0.10) (0.71) (0.61) Extraordinary item - debt retirement (0.02) - (0.01) 0.06 0.03 ------- ------- ------- ------- -------- Net earnings (loss) per share $ 0.40 $ 0.76 $ 0.32 $ (1.55) $ (0.08) ======= ======= ======= ======= ======== Diluted earnings (loss) per share(b): Earnings (loss) from continuing operations $ 0.48 $ 0.50 $ 0.43 $ (0.90) $ 0.50 Earnings (loss) from discontinued operations (0.06) 0.26 (0.10) (0.71) (0.61) Extraordinary item - debt retirement (0.02) - (0.01) 0.06 0.03 ------- ------- ------- ------- -------- Net earnings (loss) per share $ 0.40 $ 0.76 $ 0.32 $ (1.55) $ (0.08) ======= ======= ======= ======= ======== 1997 Net sales $ 524.9 $ 558.4 $ 499.8 $ 532.9 $2,116.0 Gross margins 149.3 155.6 135.0 135.0 574.9 Earnings (loss) from continuing operations before income taxes 69.3 76.0 59.6 (104.7) 100.2 Earnings (loss) from continuing operations 43.5 51.8 36.9 (62.4) 69.8 Earnings (loss) before extraordinary item 39.1 88.3 26.7 (66.3) 87.8 Net earnings (loss) $ 39.1 $ 85.0 $ 26.7 $ (87.9) $ 62.9 Basic earnings (loss) per share(b): Earnings (loss) from continuing operations $ 0.46 $ 0.55 $ 0.40 $ (0.67) $ 0.74 Earnings (loss) from discontinued operations (0.05) 0.39 (0.11) (0.04) 0.19 Extraordinary item - debt retirement - (0.03) - (0.23) (0.26) ------- ------- ------- ------- -------- Net earnings (loss) per share $ 0.41 $ 0.91 $ 0.29 $ (0.94) $ 0.67 ======= ======= ======= ======= ======== Diluted earnings (loss) per share(b): Earnings (loss) from continuing operations $ 0.46 $ 0.55 $ 0.39 $ (0.66) $ 0.74 Earnings (loss) from discontinued operations (0.05) 0.38 (0.11) (0.04) 0.19 Extraordinary item - debt retirement - (0.03) - (0.23) (0.26) ------- ------- ------- ------- -------- Earnings (loss) per share $ 0.41 $ 0.90 $ 0.28 $ (0.93) $ 0.67 ======= ======= ======= ======= ======== (a) All quarterly amounts have been restated to reflect AgriBusiness as discontinued operations. (b) Due to weighted average share differences, when stated on a quarter and year-to-date basis, the earnings per share for the years ended December 31, 1998 and 1997 do not equal the sum of the respective earnings per share for the four quarters then ended.
1998 All four quarters operating results for 1998 reflect the FTX Merger while second, third and fourth quarter operating results reflect the Harris Acquisition. Second quarter operating results include a non-recurring charge of $9.1 million, or $0.08 per share, related to the sale of the IMC Vigoro business unit. Fourth quarter operating results include after-tax charges of $114.2 million, or $1.00 per share, related to a Company-wide profit improvement program and $48.7 million, or $0.42 per share, for the estimated loss on the divestiture of Chemicals. 1997 Fourth quarter operating results include an after-tax charge of $112.2 million, or $1.19 per share, from charges related to the write-down of the Company's 25.0 percent ownership in the Main Pass sulphur, oil and gas joint venture in connection with the FTX Merger. FIVE YEAR COMPARISON (In millions, except per share amounts) - - ----------------------------------------------------------------------
Years ended December 31, 1998(a)(b) 1997(b)(c) 1996(b)(d)(e) 1995(d) 1994(d)(f) --------- --------- ----------- ------ --------- Statement of Operations Data(g): Net sales $2,696.2 $2,116.0 $2,143.3 $2,132.7 $1,675.2 Non-recurring charges 253.2 183.7 84.9 - - Earnings from continuing operations before income taxes 141.6 100.2 203.0 307.9 180.9 Provision for income taxes 84.5 30.4 81.3 112.7 81.1 -------- -------- -------- -------- -------- Earnings from continuing operations before extraordinary item and cumulative effect of accounting change 57.1 69.8 121.7 195.2 99.8 Earnings (loss) from discontinued operations (69.1) 18.0 13.5 23.8 24.4 Extraordinary item - debt retirement 3.0 (24.9) (8.1) (3.5) (4.4) Cumulative effect of accounting change - - - - (5.9) -------- -------- -------- -------- -------- Net earnings (loss) $ (9.0) $ 62.9 $ 127.1 $ 215.5 $ 113.9 ======== ======== ======== ======== ======= Basic earnings (loss) per share: Earnings from continuing operations before extraordinary item and cumulative effect of accounting change $ 0.50 $ 0.74 $ 1.31 $ 2.15 $ 1.17 Earnings (loss) from discontinued operations (0.61) 0.19 0.15 0.26 0.29 Extraordinary item - debt retirement 0.03 (0.26) (0.09) (0.04) (0.05) Cumulative effect of accounting change - - - - (0.07) -------- -------- -------- -------- -------- Net earnings (loss) $ (0.08) $ 0.67 $ 1.37 $ 2.37 $ 1.34 ======== ======== ======== ======== ======= Diluted earnings (loss) per share: Earnings from continuing operations before extraordinary item and cumulative effect of accounting change $ 0.50 $ 0.74 $ 1.25 $ 2.09 $ 1.17 Earnings (loss) from discontinued operations (0.61) 0.19 0.14 0.25 0.28 Extraordinary item - debt retirement 0.03 (0.26) (0.08) (0.04) (0.05) Cumulative effect of accounting change - - - - (0.07) -------- -------- -------- -------- -------- Net earnings (loss) $ (0.08) $ 0.67 $ 1.31 $ 2.30 $ 1.33 ======== ======== ======== ======== ======== Balance Sheet Data (at end of period): Total assets $6,456.9 $4,673.9 $3,485.2 $3,521.8 $3,275.1 Working capital 577.5 389.1 582.6 507.6 355.2 Working capital ratio 1.6:1 1.6:1 2.7:1 2.0:1 1.9:1 Long-term debt, less current maturities 2,638.7 1,235.2 656.8 741.7 699.1 Total debt 3,047.0 1,424.1 711.9 889.5 791.2 Stockholders' equity 1,860.4 1,935.7 1,326.2 1,090.4 883.3 Total capitalization 4,907.4 3,359.8 2,038.1 1,979.9 1,674.5 Net debt/total capitalization 62.1% 42.4% 34.9% 44.9% 47.2% Other Financial Data: Cash provided by operating activities $ 269.1 $ 563.4 $ 486.7 $ 513.8 $ 403.2 Capital expenditures 367.6 244.0 209.0 146.0 97.7 Cash dividends paid 36.6 29.7 34.5 33.2 14.7 Dividends declared per share 0.32 0.32 0.32 0.31 0.19 Book value per share 16.28 16.98 13.80 11.25 9.20 (a) Non-recurring charges include the following: (i) $195.1 million, $114.2 million after tax benefits, or $1.00 per share, resulting from the Company-wide profit improvement program; (ii) $44.1 million, $48.7 million after tax expense, or $0.42 per share, due to the estimated loss on disposal of Chemicals; and (iii) $14.0 million, $9.1 million after tax benefits, or $0.08 per share, as a result of the loss on sale of IMC Vigoro. (b) See Notes to Consolidated Financial Statements for a description of acquisitions, divestitures, and non-recurring items. (c) Non-recurring charges of $183.7 million, $112.2 million after tax benefits, or $1.19 per share, resulted from the write-down of the historical carrying value of the Company's 25 percent interest in Main Pass. (d) Restated to reflect the Vigoro Merger which was accounted for as a pooling of interests. (e) Non-recurring charges of $84.9 million, $59.9 million after tax benefits, or $0.62 per share, resulted from the restructuring of the Company into a decentralized organizational structure with five stand-alone business units immediately after the Vigoro Merger. (f) Net earnings reflected the cumulative effect of adopting SFAS No. 112, "Employers' Accounting for Postemployment Benefits." (g) Restated to reflect AgriBusiness as discontinued operations.
- - ----------------------------------- (a) Earnings from continuing operations before non-recurring charges, minority interest, interest charges, taxes, depreciation and amortization, and after Phosphate Resource Partners Limited Partnership (PLP) distributions. EX-21 23 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Certain of IMC Global Inc.'s subsidiaries are listed below. These subsidiaries are all included in the Company's consolidated financial statements, and collectively, together with IMC Global Inc., account for more than 90 percent of consolidated net sales, earnings from continuing operations before income taxes. Jurisdiction of Percent Incorporation Ownership ------------- --------- IMC Global Operations Inc. Delaware 100% IMC-Agrico Company Delaware 53.5% IMC Global Potash Holdings Inc. Delaware 100% International Minerals & Chemical (Canada) Global Limited Canada 100% The Vigoro Corporation Delaware 100% 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% Phosphate Resource Partners Limited Partnership Delaware 51.6% IMC Inorganic Chemicals Inc. Delaware 100% IMC Global Australia Pty. Ltd. Australia 100% (Australia) A number of subsidiaries are not shown, but even as a whole they do not constitute a significant subsidiary. EX-23 24 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements of IMC Global Inc. and in the related prospectuses of our report dated January 28, 1999 with respect to the consolidated financial statements of IMC Global Inc. incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 1998. Commission File No. -------------------------- Form S-3 Form S-8 -------------------------- 333-27287 333-00189 333-40377 333-00439 333-70797 333-22079 333-22080 333-38423 333-40377 333-40781 333-40783 333-56911 333-59685 333-59687 333-70039 333-70041 ERNST & YOUNG LLP Chicago, Illinois March 29,1999 EX-24 25 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- Billie B. Turner 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- Donald F. Mazankowski POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- Robert W. Bruce III 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- Rene L. Latiolais 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 December 31, 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 th day of February, 1998. --- - - ------------------------------- James R. Moffett EX-27 26 FINANCIAL DATA SCHEDULE
5 1000 YEAR DEC-31-1998 DEC-31-1998 24,900 85,700 427,900 6,400 580,600 369,900 5,917,400 2,220,000 6,456,900 905,100 2,638,700 125,000 0 0 1,735,400 6,456,900 2,696,200 2,696,200 1,957,800 2,324,300 54,300 0 176,000 141,600 84,500 57,100 (69,100) 3,000 0 (9,000) (0.08) (0.08) Earnings per share has been calculated in accordance with Statement of Financial Accounting Standard No. 128, "Earnings Per Share," and is, therefore, stated on a basic and diluted basis.
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