-----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, Me8gQkHLjv1NKYUmbDZ5hXOnUazT4kFf/fqMnm1+f8nJlmUeftnMefqYtCYmdvU1 cLYRmhN2VU7YzdN8WURB/Q== 0000930661-96-001160.txt : 19960904 0000930661-96-001160.hdr.sgml : 19960904 ACCESSION NUMBER: 0000930661-96-001160 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960816 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960903 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI CHEMICAL CORP /MS/ CENTRAL INDEX KEY: 0000066895 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 640292638 STATE OF INCORPORATION: MS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20411 FILM NUMBER: 96625028 BUSINESS ADDRESS: STREET 1: HIGHWAY 49 EAST CITY: YAZOO CITY STATE: MS ZIP: 39194 BUSINESS PHONE: 6017464131 MAIL ADDRESS: STREET 1: P O BOX 388 CITY: YAZOO CITY STATE: MS ZIP: 39194 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI CHEMICAL CORP DATE OF NAME CHANGE: 19920703 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): September 3, 1996 (August 16, 1996) Mississippi Chemical Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) Mississippi 2-7803 64-0292638 --------------- ---------- ----------------- (State or other (Commission (IRS employer jurisdiction of file number) identification no.) incorporation) P.O. Box 388, Yazoo City, Mississippi 39194 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 601-746-4131 Page 1 of 163 sequentially numbered pages. Index to exhibits is located sequentially numbered page 5. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. (a) General. On August 16, 1996, Mississippi Acquisition I, Inc. and ------- Mississippi Acquisition II, Inc. (the "Buyers"), each wholly-owned subsidiaries of Mississippi Chemical Corporation (the "Company"), acquired substantially all of the assets and liabilities of Eddy Potash, Inc. ("Eddy") and New Mexico Potash Corporation ("NMPC"), respectively, pursuant to the terms and provisions of an Asset Purchase Agreement dated as of May 21, 1996 (the "Asset Purchase Agreement"). Eddy and NMPC (collectively the "Sellers") are wholly-owned subsidiaries of Trans-Resources, Inc. The Sellers are engaged in the business of mining, concentrating, converting and distributing potash. The Sellers operated two potash mines located near Carlsbad, New Mexico, which have a combined annual production capacity of approximately 870,000 tons of potash products. (b) Description of Purchase Price. ----------------------------- Pursuant to the Asset Purchase Agreement, the purchase price was $45,000,000 plus a working capital adjustment of $10,638,000, paid in cash, as well as the assumption of certain related liabilities. The purchase price was based on arm's-length negotiations between the parties. The purchase price was paid out of the Company's working capital plus a $17,000,000 advance under the Company's existing revolving credit facility established with NationsBank of Tennessee, N.A. pursuant to the terms and provisions of a Loan Agreement, dated as April 26, 1996 (the "Loan Agreement"). The Loan Agreement provides for borrowings up to an aggregate of $125,000,000 at an interest rate of prime or, at the Company's option, LIBOR plus 175 basis points, subject to adjustment upon the attainment of certain financial covenants. (c) Incorporation by Reference. Set forth above is a brief description of -------------------------- certain terms of the Asset Purchase Agreement and the Loan Agreement. Any description or disclosure made in this Current Report on Form 8-K with respect to the Asset Purchase Agreement and the Loan Agreement is qualified in its entirety by reference to the Asset Purchase Agreement which is Exhibit 2.1 hereto and the Loan Agreement which is Exhibit 4.1 hereto, respectively, and incorporated by reference herein. The Company will furnish supplemental copies of the exhibits and schedules to the Asset Purchase Agreement to the Securities and Exchange Commission upon request. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS. (a) Financial Statements of Business Acquired. It is impracticable for the Company to provide the required financial statements for the business acquired at this time. The financial information will be filed as soon as available and in any event within 60 days after this Current Report on Form 8-K is filed. The financial information will include the audited financial statements of the Sellers for the fiscal years ended December 31, 1994 and 1995. 2 (b) Pro Forma Financial Information. It is impracticable for the Company to provide the required pro forma financial statements for the business acquired at this time. The financial information will be filed as soon as available and in any event within 60 days after this Current Report on Form 8-K is filed. (c) Exhibits. See "Index to Exhibits." 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Mississippi Chemical Corporation Date: September 3, 1996 By: /s/ Robert E. Jones ------------------- Robert E. Jones Senior Vice President & General Counsel 4 INDEX TO EXHIBITS
Page Exhibit 2.1 Asset Purchase Agreement, dated as of May 21, 1996, by and among Mississippi Chemical Corporation, Mississippi Acquisition I, Inc., Mississippi Acquisition II, Inc., Eddy Potash, Inc. and New Mexico Potash Corporation. 6 Exhibit 4.1 Loan Agreement, dated as of April 26, 1996, by and among Mississippi Chemical Corporation, Mississippi Phosphates Corporation, Mississippi Potash, Inc., and MCC Pipeline, Inc., the various banks and lending institutions on the signature pages hereto together with all assignees of such banks and lending institutions (each a "Bank" and ---- collectively, the "Banks"), NationsBank of Tennessee, N.A., ----- as theSwingline bank, and NationsBank of Tennessee, N.A. 89
5 EX-2.1 2 ASSET PURCHASE AGREEMENT Exhibit 2.1 ================================================================================ ASSET PURCHASE AGREEMENT by and among MISSISSIPPI CHEMICAL CORPORATION, MISSISSIPPI ACQUISITION I, INC., MISSISSIPPI ACQUISITION II, INC., EDDY POTASH, INC. and NEW MEXICO POTASH CORPORATION Dated as of May 21, 1996 ================================================================================ TABLE OF CONTENTS ----------------- Page ---- Article 1 Defined Terms......................................... 3 1.1 Definitions........................................... 3 1.2 Additional Definitions................................ 10 1.3 Accounting............................................ 10 Article 2 Assets Purchased and Sold............................. 10 2.1 Assets................................................ 10 2.2 Excluded Assets....................................... 13 2.3 Contracts, Rights and Obligations..................... 13 2.4 Power of Attorney, Etc................................ 14 Article 3 The Closing; Purchase Price; Purchase Price Adjustment.................................................. 16 3.1 The Closing........................................... 16 3.2 Purchase Price........................................ 16 3.3 Assumption of Liabilities............................. 20 (a) Assumed Liabilities.............................. 20 (b) Excluded Liabilities............................. 21 3.4 Allocation............................................ 22 3.5 Payment of Taxes, Etc................................. 22 3.6 Closing Documents..................................... 23 (a) Sellers' Deliveries.............................. 23 (b) Designated Buyers' Deliveries.................... 25 3.7 Further Assurances.................................... 26 Article 4 Representations and Warranties........................ 27 4.1 Sellers............................................... 27 (a) Organization, Qualification and Corporate Power............................................ 27 (b) Due Authorization; Noncontravention.............. 27 (c) Legal Compliance................................. 28 (d) Title to Assets.................................. 28 (e) Tax Matters...................................... 29 (f) Consents......................................... 30 (g) Validity......................................... 30 (h) Employees........................................ 30 (i) Assets Necessary for Business.................... 31 (j) Financial Statements............................. 31 (k) Intellectual Property............................ 32 (l) Employee Benefit Plans........................... 33 (m) Environmental Matters............................ 35 (n) Insurance........................................ 37 (o) Brokers.......................................... 37 (p) No Material Adverse Effect....................... 37 (q) No Material Undisclosed Liabilities.............. 37 (r) Inventory........................................ 38 (s) Receivables...................................... 38 (t) Employee Relations............................... 38 -i- (u) Employee Matters.................................. 39 (v) Material Contracts................................ 39 (w) Reserve for Workers' Compensation................. 41 4.2 Parent and Designated Buyers........................... 41 (a) Organization...................................... 41 (b) Due Authorization; Noncontravention............... 41 (c) Validity.......................................... 42 (d) Brokers........................................... 42 (e) Legal Compliance.................................. 43 (f) Financing......................................... 43 Article 5 Pre-Closing Covenants.................................. 45 5.1 Pre-Closing Covenants.................................. 45 (a) General........................................... 45 (b) Notices and Consents; Hart-Scott Rodino and Other Antitrust Matters........................... 46 (c) Full Access....................................... 48 (d) Operation of Business............................. 48 (e) Exclusivity....................................... 50 (f) Letters of Credit; Security Deposits, Surety Bonds............................................. 51 (g) Confidentiality Agreements........................ 51 Article 6 Post-Closing Covenants................................. 51 6.1 Certain Employee Matters............................... 51 (a) Current Employees................................. 51 (b) Medical, Insurance and Other Benefits............. 53 (c) Designated Buyers' Plans.......................... 58 (d) Supersession...................................... 59 6.2 Record Retention and Winding Up........................ 59 6.3 Cooperation............................................ 60 6.4 Name Change............................................ 60 Article 7 Conditions to Obligation to Close...................... 61 7.1 Conditions to Obligation of Designated Buyers.......... 61 (a) Representations and Warranties.................... 61 (b) Performance by Seller............................. 61 (c) No Action or Proceedings.......................... 61 (d) Hart-Scott-Rodino................................. 61 (e) Satisfaction of Designated Buyers................. 62 (f) Intercompany Agreements........................... 62 (g) Third Party Consents.............................. 62 (h) Vicksburg Agreement............................... 63 7.2 Conditions to Obligation of Sellers.................... 63 (a) Representations and Warranties.................... 63 (b) Performance by Designated Buyers.................. 63 (c) No Action or Proceedings.......................... 64 (d) Hart-Scott-Rodino................................. 64 (e) Satisfaction of Sellers........................... 64 (f) Letters of Credit, Security Deposits, etc......... 64 -ii- (g) Cedar Release Under GECC Agreement................ 64 (h) Release of Sellers from Mine Closure.............. Liability......................................... 65 (i) Vicksburg Agreement............................... 65 Article 8 Termination............................................ 65 8.1 Termination............................................ 65 8.2 Effect of Termination.................................. 66 Article 9 Indemnification........................................ 67 9.1 Survival of Warranties; Etc............................ 67 9.2 Seller's Indemnification............................... 69 9.3 Designated Buyer's Indemnification..................... 70 9.4 Defense of Claims...................................... 71 9.5 Guarantee.............................................. 72 Article 10 Miscellaneous.......................................... 72 10.1 Press Releases and Public Announcements................ 72 10.2 Expenses............................................... 73 10.3 Assignment............................................. 73 10.4 Notice................................................. 73 10.5 Entire Agreement....................................... 74 10.6 Third Parties.......................................... 74 10.7 Construction........................................... 74 10.8 Captions............................................... 75 10.9 Counterparts........................................... 75 10.10 Applicable Law......................................... 75 10.11 Guarantee.............................................. 75 -iii- Schedules 2.1(1) - Property Plant and Equipment 2.1(2) - Inventories 2.1(3) - Real Property; Certain Permitted Liens 2.1(4) - Intellectual Property 2.1(5) - Leases, Etc. 2.1(8) - Excluded Records 2.2 - Excluded Assets 3.3(a)(2) - Assumed Agreements 3.3(a)(3) - Contingent Obligations 3.3(b) - Excluded Liabilities 3.4 - Purchase Price Allocation 4.1(b) - Defaults 4.1(c) - Litigation 4.1(e) - Tax Matters 4.1(f) - Required Consents 4.1(l) - ERISA 4.1(m) - Environmental Matters 4.1(n) - Insurance Policies 4.1(t) - Employee Relations 4.1(u) - Employee Matters 4.1(v) - Material Contracts 4.2(e) - Buyer Consents 5.1(d) - Severance 5.1(f) - Letters of Credit, Security Deposits, Surety Bonds 6.1(a) - Business Employees 7.1(g) - BLM Letters Relating to Mineral Leases 9.2 - Letter to BLM regarding indebtedness to BLM Exhibits A - Form of Agreement between NMPC and Vicksburg Chemical Company -iv- PURCHASE AGREEMENT ------------------ AGREEMENT, dated as of May 21, 1996, by and among Mississippi Chemical Corporation, a Mississippi corporation ("Parent"), Mississippi Acquisition I, Inc., a Mississippi corporation which is an indirect wholly-owned subsidiary of Parent ("MI"), Mississippi Acquisition II, Inc., a Mississippi corporation which is an indirect wholly-owned subsidiary of Parent ("MII;" MI and MII being herein sometimes referred to individually as a "Designated Buyer" and collectively as the "Designated Buyers"), New Mexico Potash Corporation, a New Mexico corporation ("NMPC") and Eddy Potash, Inc., a Delaware corporation ("EDDY;" NMPC and EDDY being herein sometimes referred to individually as a "Seller" and collectively as the "Sellers"). WHEREAS, MI wishes to purchase the Business Assets (as defined below) of NMPC and MII wishes to purchase the Business assets of EDDY upon the terms and conditions hereinafter set forth. NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein set forth, Sellers hereby agree with Designated Buyers as follows: -2- Article 1 Defined Terms. -------------- 1.1 Definitions. As used herein, the following terms shall have the ----------- following meanings (terms defined in the singular have the same meanings when used in the plural and vice versa): ---- ----- "Affiliate" shall mean, as to any Person, any other Person which directly --------- or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its ------- correlative meanings, "controlled by" and "under common control with") shall ------------- ------------------------- mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Applicable Designated Buyer" shall mean (a) MI when referring to the --------------------------- purchaser of the Business Assets of NMPC; and (b) MII when referring to the purchaser of the Business Assets of EDDY. "Business" shall mean the business of a Seller, of mining, concentrating, -------- converting and distributing potash. "Business Assets" shall mean the assets, rights and properties of a Seller --------------- conveyed to Applicable Designated Buyer pursuant to Section 2.1 hereof. "Business Day" shall mean any day on which commercial banks are not ------------ authorized or required to close in New York City. -3- "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, ------ and Liability Act, as amended. "Code" shall mean the Internal Revenue Code of 1986, as amended. ---- "Confidential Information" shall mean any information concerning the ------------------------ businesses and affairs of a Seller that is not already generally available to the public. "Controlled Group" means any entity with which Seller is considered to be a ---------------- "single employer" within the meaning of Section 414 of the Code. "Eddy Financial Statements" shall mean collectively the audited balance ------------------------- sheets of Eddy as of December 31, 1995 and 1994, and the related statements of income, stockholder's equity and cash flows for the years then ended and the unaudited balance sheet as of March 31, 1996 and the related cash flow data for the three month period then ended. "Employee" shall mean any current or former employee, officer, independent -------- contractor, agent or consultant working in the Business. "Employee Benefit Plan" shall mean any (a) nonqualified deferred --------------------- compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension -4- Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (excluding any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe benefit plan or program. "Employee Pension Benefit Plan" shall have the meaning set forth in ERISA ----------------------------- Sec. 3(2). "Employee Welfare Benefit Plan" shall have the meaning set forth in ERISA ----------------------------- Sec. 3(1). "Environmental Laws" shall mean all foreign, federal, state and local ------------------ environmental, health and safety laws and regulations, including without limitation, RCRA, CERCLA, the Superfund Amendments and Reauthorization Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act, all as amended to date, together with all regulations issued or promulgated thereunder, relating to particulate emissions, pollution, hazardous waste and effluent discharges, the protection of the environment or the health and safety of workers or the general public. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as ----- the same may be amended from time to time, and the regulations promulgated thereunder. "Excluded Assets" shall mean the assets, rights and properties of a Seller --------------- excluded from the Business Assets pursuant to Section 2.2 hereof. -5- "Excluded Liabilities" shall mean the liabilities and obligations of a -------------------- Seller which are not assumed by Applicable Designated Buyer pursuant to this Agreement as described in Section 3.3(b) hereof. "Financial Statements" shall mean collectively the Pro Forma Combined -------------------- Financial Statements, the Eddy Financial Statements and the NMPC Financial Statements. "Intellectual Property" shall mean patents (including all reissues, --------------------- divisions, continuations in part and extensions thereof), registrations of trademarks and other marks, registrations of trade names, labels or other trade rights, registered user entries, copyrights, copyright registrations and pending applications for patents, registrations or entries, and trademarks and other marks, trade names, labels, slogans, promotional material and other trade rights, whether or not registered. "Know-how" shall mean trade secrets, know-how (including, without -------- limitation, product know-how and use and application know-how), processes, product designs, specifications, quality control procedures, manufacturing, engineering and other drawings, computer databases and software, telephone numbers, facsimile numbers, technology and all other information and intangibles, including, without limitation, technical information, safety information, engineering data and design and engineering specifications, research records, market surveys and all promotional literature, customer and supplier lists and similar data. -6- "Knowledge" shall (i) mean the knowledge of senior management of the party --------- making the representation, and (ii) be construed to represent that the party making the representation has caused reasonable inquiry and investigation to be made into the matter represented to be true. "Leases" shall mean leases and subleases, whether capitalized or operating, ------ licenses, easements, grants and other attachment rights and similar instruments under which a party has the right to use real or personal property or rights of way or under which a party has the right to explore for, produce and sell minerals, including without limitation, potash. "Material Adverse Effect" shall mean any change or effect that, ----------------------- individually or when taken together with all other related changes or effects, would be materially adverse to the business, assets, financial condition, prospects or results of operations of a Seller, including without limitation, such Seller's ability to perform under this Agreement. "Multiemployer Plan" shall mean a plan as defined in Section 3(37) of ------------------ ERISA. "NMPC Financial Statements" shall mean collectively the audited balance ------------------------- sheet of NMPC as of December 31, 1994 and the related statement of income, stockholder's equity and cash flow for the year then ended, the NMPC column in the Cedar Chemical Corporation consolidating balance sheet and statement of income -7- as of and for the year ended December 31, 1995, and the unaudited balance sheet of NMPC as of March 31, 1996 and the related cash flow data for the three month period then ended. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity ---- succeeding to any or all of its functions under ERISA. "Permitted Liens" shall mean: (i) liens, claims or encumbrances imposed by --------------- law, such as carriers', warehousemen's, materialmen's and mechanics' liens, or liens arising out of judgments or awards against a Seller with respect to which (a) a Seller is currently prosecuting an appeal or proceedings for review, and (b) such Seller has posted the necessary bond in connection with such appeal or proceedings; (ii) liens for property taxes not yet subject to penalties for nonpayment and liens for property taxes the payment of which is being contested or the time for doing so has not yet expired and for which appropriate reserves are established and recorded in the Financial Statements; (iii) as to real property, encumbrances, easements and other liens or restrictions disclosed on Schedule 2.1(3) hereto or which do not in the aggregate materially impair the use or value of said properties in the operation of the Business; and (iv) unrecorded easements, covenants, rights of way, reservations or other encumbrances which do not in the aggregate materially impair the use of said properties in the operation of the Business. -8- "Person" shall mean an individual, a corporation, a partnership, a trust, ------ an unincorporated organization, an association, limited liability company, a joint venture, a trust or other similar organization, a government or any political subdivision thereof, or any other legal entity. "Pro Forma Combined Financial Statements" shall mean collectively the --------------------------------------- unaudited combined balance sheet data of Sellers as of December 31, 1995 and the related combined income statement and cash flow data for the three years then ended and the unaudited combined balance sheet data of Sellers as of March 31, 1996 and the related cash flow data for the three months then ended. "RCRA" shall mean the Resource Conservation and Recovery Act, as amended. ---- "Taxes" shall mean all federal, state, county, local, foreign and other ----- taxes, charges, fees, levies, customs, duties or other assessments (including, without limitation, income, property, withholding, excise, sales, use, gross receipts, franchise, employment and payroll related taxes), whether or not measured in whole or in part by net income, and including related interest, penalties and additions to tax. -9- 1.2 Additional Definitions. The following terms defined elsewhere in this ---------------------- Agreement shall have the respective meanings therein defined: Term Definition ---- ---------- Assumed Liabilities Section 3.3(a) BLM Section 7.1(g) Buyer Plan Section 6.1(c) Business Employees Section 6.1(a)(1) Cedar Section 5.1(d) Closing Section 3.1 Closing Date Section 3.1 Continued Employee Section 6.1(a)(2) Eddy Retiree Medical Trust Section 3.3(b) Environmental Losses Section 7.5(a) "losses," "damages" or "deficiency" Section 9.1(c) Purchase Price Section 3.1 Seller's Vacation Policy Section 6.1(b)(5) "TRI" Section 9.5 1.3 Accounting. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be delivered hereunder shall be prepared, in conformity with United States generally accepted accounting principles, consistently applied. Article 2 Assets Purchased and Sold. ------------------------- 2.1 Assets. ------ Upon the terms and subject to the conditions hereinafter set forth, each Seller hereby agrees to sell, assign, transfer and convey to Applicable Designated Buyer, and each of the Applicable Designated Buyers hereby agrees that it shall pur- -10- chase and accept from the respective Seller, on the Closing Date, all right, title and interest in and to such Seller's assets, rights and properties of every kind and description, tangible or intangible used or useful in the operation of the Business of such Seller as the same shall exist on the Closing Date (but excluding the Excluded Assets), free and clear of all liens, claims and encumbrances, other than Permitted Liens, including, without limitation: (1) All tangible personal property, plant, equipment, leasehold improvements and other operating and related facilities of such Seller, substantially all of which are listed on Schedule 2.1(1) hereto as of the date thereof. (2) All inventories of raw materials, finished goods and work in progress used or maintained by such Seller, substantially all of which items are listed on Schedule 2.1(2) hereto as of the date thereof, as well as all office supplies, spare parts and other supplies used or maintained by such Seller in connection with such Seller's Business and on hand at the Closing. (3) All of the real property of such Seller, the legal descriptions of which are set forth on Schedule 2.1(3) hereto, together with all water rights appurtenant thereto. (4) All of the Intellectual Property of such Seller, substantially all of which is listed on Schedule 2.1(4) -11- hereto, and all of such Seller's Know-how used, useful or held for use in the conduct of the Business. (5) All of the Leases and consents, permits, licenses, instruments and agreements which relate to the operation by such Seller of its Business, including, without limitation, such Seller's mining and mineral rights (all of the foregoing which are material to the operation of such Seller's Business are listed on Schedule 2.1(5) hereto). (6) All warranties in favor of such Seller with respect to any and all tangible personal property or pursuant to any permit, license, instrument or agreement, including, without limitation, warranties of any supplier of equipment sold to such Seller. (7) All contracts, agreements, options, sales or purchase orders, guarantees, commitments and other instruments of any kind, whether written or oral, to which such Seller is a party, attributable to the Business. (8) Except as set forth in Schedule 2.1(8) hereto, such Seller's files of correspondence, lists, records (in whatever medium the records are stored), manuals and books of account concerning past, present and prospective customers and compliance with the rules and regulations of all federal, state or local regulatory agencies, relating to such Seller's Business. -12- (9) Such Seller's claims or causes of action relating to its Business Assets, including, without limitation, claims and causes of action for infringement of its Intellectual Property. (10) Such Seller's accounts receivable. 2.2 Excluded Assets. Anything in Section 2.1 hereof to the contrary --------------- notwithstanding, there shall be excluded from the Business Assets any assets listed on Schedule 2.2 hereto. 2.3 Contracts, Rights and Obligations. Anything in this Agreement to the --------------------------------- contrary notwithstanding, this Agreement shall not constitute an assignment of any contract, license, lease, permit, commitment, sales order, purchase order or any claim or other rights of a Seller if an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach thereof or in any way materially and adversely affect the rights of Applicable Designated Buyer thereunder or the right of Applicable Designated Buyer to continue to conduct all or any part of the Business of a Seller in the manner and on the terms currently enjoyed by such Seller. Each Seller shall use its best efforts to obtain in writing, prior to the Closing Date, any and all such consents and shall deliver copies thereof to Applicable Designated Buyer promptly after such Seller's receipt thereof but no later than immediately prior to the Closing. If such consent has not been obtained, or if an attempted assignment thereof would be ineffective or would affect the rights of a Seller or -13- Applicable Designated Buyer thereunder so that Applicable Designated Buyer would not in fact receive all such rights or would materially and adversely affect the obligations of a Seller or Applicable Designated Buyer thereunder, subject to 7.1(g) hereof, the respective Seller and Applicable Designated Buyer will cooperate with each other in any reasonable arrangement requested by Applicable Designated Buyer designed to provide for Applicable Designated Buyer, at the expense of such Seller and Applicable Designated Buyer to be shared equally, the benefits under any such claim, contract, license, lease, permit, commitment, sales order or purchase order, including enforcement for the benefit of Applicable Designated Buyer of any and all rights of Seller against a third party thereto arising out of the breach or cancellation by such third party or otherwise. 2.4 Power of Attorney, Etc. ---------------------- (a) Effective upon the Closing, each Seller hereby constitutes and appoints Applicable Designated Buyer and its successors, legal representatives and assigns the true and lawful attorneys of such Seller, with full power of substitution, in the name of such Seller or Applicable Designated Buyer, but on behalf of and for the benefit of Applicable Designated Buyer and its successors, legal representatives and assigns and at the expense of Applicable Designated Buyer: (i) to demand and receive from time to time any and all of the Business Assets of such Seller and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; (ii) to institute, -14- prosecute, compromise and settle any and all proceedings at law, in equity or otherwise that Applicable Designated Buyer and its successors, legal representatives or assigns may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to such Seller's Business Assets; (iii) to defend or compromise any or all actions, suits or proceedings in respect of any of such Seller's Business Assets; and (iv) to do all such acts and things in relation to the matters set forth in the preceding clauses (i) through (iii) as Applicable Designated Buyer and its successors, legal representatives or assigns shall deem desirable. Each Seller hereby agrees that the appointment hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable by it in any manner or for any reason. Each Seller agrees to deliver to Applicable Designated Buyer at the Closing an acknowledged power of attorney to the foregoing effect. (b) From and after the Closing Date, Applicable Designated Buyer shall have the right to receive and open all mail, packages and other communications addressed to a Seller and relating to such Seller's Business, and each Seller agrees to deliver to Applicable Designated Buyer any such mail, packages or other communications received directly or indirectly by such Seller other than those relating to Excluded Assets or Excluded Liabilities. From and after the Closing Date, Applicable Designated Buyer shall have the right and authority to collect, for its own account, all of the receivables included in the Business -15- Assets, and each Seller shall transfer or deliver to Applicable Designated Buyer any cash or other property received directly or indirectly by such Seller in respect of such receivables, including any amounts payable as interest, and such funds will be deemed held in trust for the benefit of Applicable Designated Buyer until so transferred or delivered by the respective Seller. Article 3. The Closing; Purchase Price; Purchase Price Adjustment. ------------------------------------------------------- 3.1 The Closing. ----------- The purchase and sale of the Business Assets of each Seller (the "Closing") shall take place concurrently at the offices of Rubin Baum Levin Constant & Friedman, 30 Rockefeller Plaza, 29th Floor, New York, New York 10112, at 10:00 A.M. on the third Business Day following the satisfaction or waiver of all conditions to the obligations of the Designated Buyers and Sellers to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective party will take at the Closing itself) or at such other place and/or other date as the parties may mutually agree (the "Closing Date"). In no event shall the Closing Date be later than September 1, 1996. The parties hereto agree that the purchase of the Business Assets of one Seller cannot be consummated unless the purchase of the Business Assets of the other Seller is concurrently consummated hereunder. 3.2 Purchase Price. -------------- -16- (a) Subject to any adjustment pursuant to Section 3.2(b) hereof, the purchase price for the sale of NMPC's Business Assets (the "NMPC Purchase Price") and the purchase price for the sale of EDDY'S Business Assets (the "EDDY Purchase Price;" and collectively with the NMPC Purchase Price, the "Purchase Price") shall be an aggregate of $55,638,000, to be allocated by the parties hereto between the NMPC Purchase Price and the EDDY Purchase Price (the "Allocated Purchase Prices") within twenty days after the date hereof (the "Deadline"), plus in each case the assumption of liabilities provided for in Section 3.3 hereof, payable at the Closing by the Applicable Designated Buyer by wire transfer of immediately available funds in the amounts and to the respective accounts of the Sellers to be furnished by the respective Sellers to the Applicable Designated Buyer prior to the Closing Date. If the parties fail to agree on the Allocated Purchase Prices by the Deadline, on the first Business Day thereafter Sellers and Designated Buyers shall either agree upon a firm of certified public accountants to determine the Allocated Purchase Prices or shall each select a firm of certified public accountants of nationally recognized standing in order for such two firms to select on the second Business Day after the Deadline a third firm of certified public accountants to determine the Allocated Purchase Prices. If by the end of the fifth Business Day after the Deadline, a firm has not yet been selected pursuant to the foregoing procedures to determine the Allocated Purchase -17- Prices, then the firm shall be a firm of certified public accountants designated by the American Arbitration Association at the request of any party. The firm engaged shall be requested to determine the Allocated Purchase Prices no later than the fifteenth Business Day after the Deadline, and its decision shall be final and binding upon the parties. The parties shall be responsible for their respective expenses in connection with this determination, except that the fees of the firm agreed upon by the parties (or otherwise designated to determine the Allocated Purchase Prices in accordance herewith) shall be divided equally between Designated Buyers, on the one hand, and Sellers, on the other. (b) Promptly following the Closing Date (but in any event no later than seventy five days after the Closing Date) Sellers shall, at the expense of Designated Buyers and Sellers to be shared equally, prepare a combined balance sheet for Sellers' Businesses (after eliminating the Excluded Assets and the Excluded Liabilities), as at the Closing Date (the "Closing Balance Sheet") in a manner consistent with the preparation of the Pro Forma Financial Statements which shall be reported on without qualification by the independent auditing firm of one of the Sellers. If Designated Buyers do not give written notice to Sellers setting forth detailed objections to the Closing Balance Sheet (the "Objection Notice") within 20 days of said delivery, it shall be final and binding on the parties. If there is a dispute between Sellers and Designated Buyers with respect to the -18- Closing Balance Sheet and Sellers and Designated Buyers are unable to resolve such dispute within 15 days of receipt of the Objection Notice, such dispute shall be resolved as expeditiously as possible by a firm of certified public accountants mutually acceptable to the parties. If the parties are unable to agree upon a firm of certified public accountants within 5 days, then Sellers and Designated Buyers shall within 5 days thereafter, by notice to the other, set forth the name of a firm of certified public accountants. The two firms designated by the parties shall as promptly as possible select a third firm of certified public accountants to resolve the dispute; provided, however, that if the firms are unable to agree upon a third firm within seven Business Days after the second of such firms is selected or if Sellers or Designated Buyers fail to select a firm, then the third firm of certified public accountants shall be a firm of certified public accountants designated by the American Arbitration Association at the request of any party. The decision of the firm of certified public accountants mutually acceptable to the parties (or such other firm of certified public accountants designated in accordance herewith to resolve the dispute) shall be final and binding upon Sellers and Designated Buyers and the Closing Balance Sheet as approved by such firm of certified public accountants shall be the Closing Balance Sheet hereunder. The parties shall be responsible for their respective expenses in connection with such resolution, except for the fees of the firm of certified public accountants mutually acceptable to the par- -19- ties (or the third accounting firm designated in accordance herewith) which shall be divided equally between Designated Buyers, on the one hand, and Sellers, on the other. In the event that the combined working capital of Sellers' Businesses (computed by subtracting the current liabilities from the current assets (excluding deferred taxes and eliminating Excluded Assets, including, without limitation, prepaid insurance, and Excluded Liabilities), all as set forth in the Closing Balance Sheet)), is greater or less than $10,638,000, Designated Buyers shall pay to Sellers, in the aggregate, the amount of such excess, allocated as specified by Sellers, or Sellers shall pay to Designated Buyers, in the aggregate, the amount of such shortfall, allocated as specified by Designated Buyers, in cash within five days after the delivery of the Closing Balance Sheet. 3.3 Assumption of Liabilities. ------------------------- (a) Assumed Liabilities. In addition to payment of the Purchase ------------------- Price, each Applicable Designated Buyer hereby agrees to assume at the Closing and thereafter to pay, perform and discharge when due, to the extent not previously paid, performed and discharged, all obligations and liabilities of the Seller whose Business Assets it is acquiring (other than the Excluded Liabilities) attributable to such Seller's Business (the "Assumed Liabilities"), including, without limitation, the following: -20- (1) all obligations and liabilities of each such Seller provided or reserved for in the Financial Statements of such Seller or arising after the date of the most recent Eddy Financial Statements or NMPC Financial Statements, as the case may be, in the ordinary course of business; (2) all obligations and liabilities arising under the Leases and other agreements, consents, permits and other instruments listed on Schedule 3.3(a)(2) hereto; (3) any contingent obligations and liabilities listed on Schedule 3.3(a)(3) hereto, including, among other things, environmental costs and, with respect to Eddy, the contingent continuing liabilities to the Eddy retiree medical trust fund (the "Eddy Retiree Medical Trust") as described in Section 4.1(l)(7) below; (4) the National Labor Relations Board complaint against EDDY referred to in Schedule 4.1(c) hereto; (5) the employee matters described in Article 6 as being assumed by Buyer; and (6) the overriding royalties existing with respect to the mineral leases. (b) Excluded Liabilities. Designated Buyers shall not assume, or -------------------- agree to pay, perform or discharge, or otherwise have any responsibility for any of the liabilities or obligations -21- of Sellers, fixed or contingent, asserted or unasserted, and whether arising prior to, on or after the Closing Date, which are set forth on Schedule 3.3(b). 3.4 Allocation. The Eddy Purchase Price and the NMPC Purchase Price shall ---------- be allocated among, and considered paid for, the Business Assets of each Seller in accordance with the procedure set forth on Schedule 3.4 hereto. Designated Buyers and Sellers shall report the purchase and sale of the Business Assets for all Tax purposes in a manner consistent with such allocation. Designated Buyers and Sellers shall file forms as required under Section 1060 of the Code. 3.5 Payment of Taxes, Etc. Each Seller shall pay, promptly when due, all --------------------- gross receipts, income or gains taxes payable in connection with the transfer of its Business Assets. The Applicable Designated Buyer shall, with respect to the Business Assets which it is acquiring, pay (i) all transfer taxes, sales and use taxes, stamp taxes and other Taxes payable in connection with the transfer of the Business Assets, (ii) survey, search and title insurance and other title fees, (iii) all filing fees for trademark or patent assignments, and (iv) the cost of recordation of deeds and other instruments of transfer referred to in Section 3.6(a)(1). Each party shall pay its filing fees payable in connection with the filing of any Notification and Report Forms and related material required to be filed with the Federal Trade -22- Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act. 3.6 Closing Documents. ----------------- (a) Sellers' Deliveries. At the Closing, each Seller shall deliver to ------------------- the Applicable Designated Buyer the following documents: (1) Such deeds, bills of sale, endorsements, assignments, change of ownership forms with respect to water rights and other good and sufficient instruments of conveyance, transfer and consent, as shall (subject to Section 7.1(g) hereof) be effective to vest in Applicable Designated Buyer good and marketable title to the Business Assets of such Seller, free and clear of all liens, claims and encumbrances other than Permitted Liens or as resulting from Designated Buyers' or Parent's (or their Affiliates) acts and in form and substance reasonably satisfactory to Buyer's counsel. (2) An opinion, dated the Closing Date and addressed to Designated Buyers, from each of Rubin Baum Levin Constant & Friedman and the Law Offices of W. T. Martin, Jr., P.A., in scope, form and substance reasonably satisfactory to Designated Buyers. (3) Copies of the instruments, authorizations, approvals, consents and orders of third parties including, without limitation, all necessary approvals from federal, state and -23- local authorities as may be required for the valid assignment and transfer to Applicable Designated Buyer, as of the Closing, of all right, title and interest in, to and under the Leases and the other agreements, consents, permits, licenses and instruments of such Seller listed on Schedule 2.1(5). (4) A good standing certificate of such Seller, dated no earlier than seven Business Days prior to the Closing Date, issued by the Secretary of State of such Seller's state of incorporation and, in the case of EDDY, also a certificate issued by the Secretary of State of New Mexico as to EDDY's qualification to do business in such state. (5) A certificate from the Secretary or an Assistant Secretary of such Seller certifying as to (A) the corporate charter and by-laws of Seller, (B) the directors' resolutions and any other required corporate action, including any shareholders resolutions, authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; and (C) the names and authorized signatures of each of the officers of such Seller authorized to sign this Agreement and the other instruments executed and delivered by such Seller in connection herewith. (6) A certificate to the effect that each of the conditions specified in Section 7.1(a), (b) and (c) is satisfied in all respects with respect to such Seller. -24- (7) The Power of Attorney referred to in Section 2.4(a). (b) Designated Buyers' Deliveries. On the Closing Date, each ----------------------------- Applicable Designated Buyer shall deliver to the Seller whose Business Assets it is purchasing the following documents: (1) An opinion, dated the Closing Date, and addressed to each Seller, from Hughes & Luce, L.L.P., counsel to Parent and Designated Buyers, in scope, form and substance reasonably satisfactory to Sellers. In giving such opinion, such counsel may rely as to all matters of local law on local counsel provided such counsel states that they and Sellers may reasonably rely on the opinion of such local counsel. (2) Good Standing Certificates with respect to Parent and such Applicable Designated Buyer, dated no earlier than seven Business Days prior to the Closing Date, issued by the Secretary of State of Mississippi. (3) Certificates from the Secretary or any Assistant Secretary of each of Parent and each Applicable Designated Buyer certifying as to (A) the charter and by-laws of Parent and Applicable Designated Buyer, (B) the directors' resolutions and any other required corporate action, including any shareholders resolution, authorizing the execution and delivery of this Agreement and the consummation of the transactions con- -25- templated hereby; and (C) the names and authorized signatures of each of the officers of Parent and Applicable Designated Buyer authorized to sign this Agreement and the other instruments executed and delivered by Parent or Applicable Designated Buyer in connection herewith. (4) An instrument of assumption of liabilities in form and substance reasonably satisfactory to Seller's counsel. (5) A certificate to the effect that each of the conditions specified in Section 7.2(a), (b) and (c) is satisfied. 3.7 Further Assurances. Subject to the terms and conditions of this ------------------ Agreement, each of the Sellers and Designated Buyers shall use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the sale of the Business Assets and the other transactions contemplated by this Agreement. From time to time after the date hereof, without further consideration, each Seller shall, at Applicable Designated Buyer's expense, execute and deliver or cause to be executed and delivered such documents to Applicable Designated Buyer as such Applicable Designated Buyer may reasonably request in order more effectively to vest in such Applicable Designated Buyer good and marketable title to the Business Assets pursuant to this Agreement. -26- Article 4 Representations and Warranties. ------------------------------ 4.1 Sellers. NMPC and EDDY, respectively, severally (but not jointly) ------- represent and warrants to MI and MII, respectively, that the statements contained in this Section 4.1 with respect to itself and its Business Assets are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4.1). (a) Organization, Qualification and Corporate Power. NMPC and Eddy ----------------------------------------------- are each corporations duly organized, validly existing and in good standing, under the laws of the States of New Mexico and Delaware, respectively. Seller (1) has all requisite corporate power and governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being conducted and (2) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure to do so would not have a Material Adverse Effect. (b) Due Authorization; Noncontravention. The making and performance ----------------------------------- by Seller of this Agreement has been duly authorized by all necessary corporate action and does not in any material respect violate any law, rules, regulations, or orders to which Seller or any of its Business Assets is subject; or result -27- in a breach of, or constitute a default under, the Certificate of Incorporation or By-laws of Seller, or, except as provided in Schedule 4.1(b), any material indenture or other agreement or instrument by which Seller or any of its Business Assets may be bound or affected; or result in or require the creation or imposition of any lien, charge or encumbrance upon or with respect to any of its Business Assets; except in the case of any of the foregoing in this Section 4.1(b) where such violation, breach, default, lien, charge or incumbrance would not have a Material Adverse Effect. (c) Legal Compliance. Except as set forth in Schedule 4.1(c) hereto, ---------------- there are no lawsuits or other proceedings pending or to the Knowledge of Seller, threatened against Seller or any of its properties or assets, before any court or arbitrator or by or before any governmental commission, bureau or other regulatory authority, which could have a Material Adverse Effect. Except as set forth in Schedule 4.1(c) hereto, Seller is not in default under or in violation of any law, rule, regulation, order, writ, injunction or decree of any court, arbitrator, governmental commission, bureau or other regulatory authority, which could have a Material Adverse Effect. To the Knowledge of Seller, there are no judgments outstanding against Seller. (d) Title to Assets. Seller has good and marketable title to its --------------- Business Assets (in fee simple in the case of the real property described on Schedule 2.1(3) hereto), free and -28- clear of all liens, claims and encumbrances other than Permitted Liens and except for the need to obtain certain consents set forth in Schedule 4.1(f) in connection with any assignment of certain of the Business Assets. There are no pending or, to Seller's Knowledge, threatened condemnation or eminent domain proceedings that could materially and adversely affect Buyer's right to use any premises or use and enjoy the benefit of leasehold interests included in Seller's Business Assets from and after the Closing. Upon obtaining the above referenced consents and consummation of the transactions contemplated hereby, Applicable Designated Buyer will have acquired good and marketable title in and to, or a valid leasehold interest in, each of the Business Assets of Sellers, free and clear of any liens or encumbrances, except for Permitted Liens, or as may result from Parent's or Applicable Designated Buyers' (or their Affiliates) acts. (e) Tax Matters. Seller has filed all tax and information returns ----------- required to be filed by it on or prior to the date hereof and has paid all Taxes required to be paid except such Taxes, if any, as are not yet due and payable or which are being contested in good faith and by proper proceedings (and for which appropriate reserves are established and recorded in the Financial Statements), and except where any such failure to file or pay would not have a Material Adverse Effect. Except as set forth on Schedule 4.1(e) hereto, Seller is not a party to any Tax allocation or sharing agreement. -29- (f) Consents. True, correct and complete copies of each material -------- Lease, consent, permit, license, instrument and agreement of Seller listed on Schedule 2.1(5) have been delivered or made available to Buyer and all of the foregoing are in full force and effect, except where the failure to be in full force and effect would not have a Material Adverse Effect. Schedule 4.1(f) hereto contains a complete list of all consents and approvals of third parties (including, without limitation, governmental authorities) required for the consummation by Seller of the transactions contemplated by this Agreement. (g) Validity. This Agreement and the other agreements and -------- instruments executed and delivered by Seller pursuant hereto constitute the legal, valid and binding obligation of Seller each enforceable in accordance with its terms, except insofar as the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. (h) Employees. Concurrently with the execution and delivery of --------- this Agreement, Seller has delivered to Applicable Designated Buyer a list of the individuals currently employed by Seller indicating the positions which they now hold, their current rates of compensation and which employees, if any, are on short or long term disability, family and medical, military, workers' compensation, or any other type of leave of absence; -30- copies of all employee handbooks, and policy and procedure manuals; and copies of (or access to) documentation demonstrating compliance with all applicable notice and recordkeeping requirements including without limitation those required by the Fair Labor Standards Act, the Occupational Safety and Health Act, the Mine Safety and Health Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, the Immigration Reform and Control Act, and any other applicable federal, state or local law, regulation, rule or order relating to employment except where failure to so comply would not have a Material Adverse Effect. (i) Assets Necessary for Business. Seller's Business Assets ----------------------------- (together with Seller's Excluded Assets) constitute, and on the Closing Date will constitute, all of the assets, rights and property used or held for use in the Business by such Seller. (j) Financial Statements. True, correct and complete copies of -------------------- the NMPC Financial Statements and the Eddy Financial Statements have heretofore been delivered to Parent. Each of the NMPC Financial Statements and the Eddy Financial Statements has been prepared in conformity with generally accepted accounting principles on a consistent basis and fairly presents in all material respects the financial position of the respective Seller as of the date thereof and the results of the respective Seller's operations (in the case of annual statements) and cash flow data -31- for the period(s) which are included in said Financial Statements. The Pro Forma Combined Financial Statements have been prepared in conformity with generally accepted accounting principles on a basis consistent with the NMPC Financial Statements and the Eddy Financial Statements and fairly present in all material respects the combined financial position of Sellers as of December 31, 1995 and March 31, 1996 and the combined operating and/or cash flow data for the periods for which such information is included in said Financial Statements. (k) Intellectual Property. Seller has not used any Intellectual --------------------- Property material in the conduct of the Business other than that listed on Schedule 2.1(4) hereto. Seller validly owns, beneficially and of record, the trade secrets and confidential business information included in its Know-how, free and clear of any lien, claim or encumbrance; and has the right to use all of the other Know-how material in the conduct of its Business. Seller is not subject to any judgment, order, writ, injunction or decree of any court or any federal, state, local or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any arbitrator, nor has Seller entered into nor is it a party to any agreement or other instrument, which restricts or impairs Seller's use of any of its Intellectual Property or Know-how. -32- (l) Employee Benefit Plans. (1) Schedule 4.1(l) lists each Employee ---------------------- Benefit Plan that Seller maintains or to which Seller contributes. (2) To the Knowledge of Seller, except as set forth on Schedule 4.1(l), each such Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all respects with the applicable requirements of ERISA and the Code and other applicable law, except where the failure to comply would not have a Material Adverse Effect. (3) All contributions (including all employer contributions and employee salary reduction contributions or other employee contributions) which are due have been paid to each such Employee Benefit Plan or are otherwise accrued as current liabilities in the Financial Statements. (4) Except as set forth on Schedule 4.1(l), each such Employee Benefit Plan which is an Employee Pension Benefit Plan and is intended to be qualified under Code Sec. 401(a) has received a current, uncaveated determination letter from the Internal Revenue Service to the effect that it meets the requirements of Code Sec. 401(a). (5) Seller does not and has not maintained or made contributions to, or been required to maintain or make contributions to, any Employee Pension Benefit Plan which is subject to Title IV of ERISA. -33- (6) With respect to each such Employee Benefit Plan, as applicable, Seller has delivered to Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the Form 5500 Annual Reports for the three most recent plan years for which such reports have been required to be filed (except as set forth on Schedule 4.1(l) or where the failure to file such reports would not have a Material Adverse Effect); copies of the most recent determination letter application; medical claims data for the most recent annual period; and all related trust agreements, insurance contracts, and other funding agreements which implement each such Employee Benefit Plan. (7) With respect to the Eddy Retiree Medical Trust Fund: (i) EDDY has made all contributions required to be made to such trust prior to and as of the Closing Date; (ii) neither Eddy nor MII have or shall have any fiduciary or administrative duty or responsibility with respect to such trust or with respect to the payment of benefits related to such trust and (iii) EDDY's obligations with respect to such trust are fully and accurately described in Section 4.05 of the Fourth Amended Plan of Reorganization of Trans-Resources, Inc. and EDDY, as filed in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, on April 25, 1988. -34- (8) Seller does not contribute to and has never contributed to a Multiemployer Plan. (9) With respect to each Employee Benefit Plan that Seller maintains or ever has maintained or to which it contributes, ever has contributed, or ever has been required to contribute: (A) No liability exists as a result of the complete or partial termination of any such Employee Benefit Plan which is an Employee Pension Benefit Plan. (B) No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending, except where the action, suit, proceeding, hearing, or investigation would not have a Material Adverse Effect. (10) Seller has not incurred any liability with respect to an Employee Benefit Plan as a result of being a member of a "Controlled Group," except to the extent the liability would not have a Material Adverse Effect. (m) Environmental Matters. Other than as set forth on or referred to --------------------- on Schedule 4.1(m) hereto and to the Knowledge of Seller: -35- (1) Seller is not in material violation of any Environmental Law which could have a Material Adverse Effect. (2) There is no action or proceeding by any governmental or regulatory body of which Seller has actual notice pending against Seller or threatened against Seller by any governmental or regulatory body that alleges or would allege any violation of any Environmental Law. (3) There are no facts, events, conditions, circumstances, activities, practices, incidents, actions or omissions that could reasonably be expected to result in a material liability to Seller under any Environmental Law. (4) Seller has not received any notice that it may be a potentially responsible party at any waste disposal site. (5) The Business Assets are free of environmental liens, the presence of hazardous substances, hazardous waste, PCBs, petroleum products, radon, underground or above ground storage tanks, and other on-site conditions of environmental concern, any of which would have a Material Adverse Effect. (6) Seller has all environmental permits necessary for operations on any owned or leased property and is in material compliance with all such permits except where the failure with respect to any of the foregoing would not have a Material Adverse Effect. -36- (7) There has been no off-site disposal of hazardous substances or waste by Seller in violation of any Environmental Law which would have a Material Adverse Effect. (n) Insurance. Schedule 4.1(n) hereto contains a true and complete --------- list of all policies of insurance and fidelity or surety bonds currently in force covering Seller's Business. Also included on Schedule 4.1(n) is a list of all claims, if any, relating to Seller currently pending or which have been settled during the last 12 months under any of the policies set forth on Schedule 4.1(n). (o) Brokers. Except for Goldman, Sachs & Co., the fees of which shall ------- be paid by Sellers, neither Sellers nor anyone acting on behalf of Sellers has retained any broker, finder or agent or agreed to pay any brokerage fee, finder's fee or commission with respect to the transactions contemplated by this Agreement. (p) No Material Adverse Effect. Since March 31, 1996, Seller has -------------------------- conducted its business in the ordinary course consistent with past practices, and there has not been any Material Adverse Effect. (q) No Material Undisclosed Liabilities. Except as expressly set ----------------------------------- forth on the Schedules hereto, there are no liabilities of the Business of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, -37- other than (i) liabilities disclosed or provided for in the Financial Statements, (ii) current liabilities incurred in the ordinary course of business since December 31, 1995, which in aggregate are not material to the Business, taken as a whole, and (iii) Excluded Liabilities. (r) Inventory. All inventory set forth on the March 31, 1996 balance --------- sheet of Seller and not sold in the ordinary course of business will on the Closing Date be owned free and clear of any lien or encumbrance, other than Permitted Liens. All of the inventory recorded on the March 31, 1996 balance sheet of Seller consisted of, and all inventory related to the Business of Seller on the Closing Date will consist of, items of a quality usable or saleable in the normal course of such Seller's Business consistent with past practice. (s) Receivables. All accounts receivable and other receivables ----------- reflected on the March 31, 1996 balance sheet of Seller are (other than receivables collected since the date of this Agreement), and all accounts receivable and other receivables arising from or otherwise relating to the Business at the Closing Date will be, valid, genuine and to Seller's knowledge fully collectible in the aggregate amount thereof, subject to normal and customary trade discounts, less any reserves for doubtful accounts recorded on the Financial Statements. (t) Employee Relations. Except as set forth on Schedule 4.1(t): (i) ------------------ there is no strike, dispute, slow down, or stop- -38- page actually pending or threatened against or involving Seller; (ii) no representation questions exist respecting the employees of Seller; (iii) no material grievance exists which might have a Material Adverse Effect, (iv) no arbitration proceeding arising out of or under any collective bargaining agreement is pending, and no claim therefor has been asserted; (v) no collective bargaining agreement has existed or is currently being negotiated by Seller; (vi) and Seller has not experienced any material labor difficulty or organizing activity during the last three years. (u) Employee Matters. Except as set forth on Schedule 4.1(u), Seller ---------------- is in substantial compliance with all applicable federal, state and local laws, regulations and orders respecting wages and hours, leaves of absence, safety, and other terms and conditions of employment with respect to its employees except where the failure to be in such compliance would not result in a Material Adverse Effect. Except as set forth on Schedule 4.1(u) hereto, no employment discrimination, wage and hour, safety, unfair labor practice or other complaints, charges, citations or other notices of violations have been filed or issued against Seller or, to Seller's knowledge, threatened to be filed with or issued by any federal, state or local governmental authorities over Seller's labor or employment matters except where such filing or issuance would not have a Material Adverse Effect. (v) Material Contracts. Schedule 4.1(v) hereto contains a true and ------------------ complete listing of the following oral and writ- -39- ten contracts and agreements (and all amendments, supplements and modifications thereto) to which Seller is a party: (i) any contract or agreement relating to capital expenditures of more than $50,000; (ii) all current or pending contracts or agreements between Seller and any other party which involve, in the aggregate, the payment or receipt by Seller of more than $100,000, which cannot be cancelled without penalty upon thirty (30) days' notice; (iii) any loan or advance to, or investment in, any Person or any contract or agreement relating to the making of any such loan, advance, or investment, except that employee loans or travel advances need not be listed unless the aggregate of such loans or advances shall exceed $50,000; (iv) any guarantee or other contingent liability in respect of any indebtedness or obligation of any Person; (v) any management, consulting, employee, severance, union, termination agreement or similar contract or agreement; (vi) any contract or agreement limiting the freedom of Seller or its successors from engaging in any line of business, soliciting employees or customers, or competing with any Person and any contract or agreement where any Person has agreed not to compete with Seller or its Affiliates; (vii) any contract or agreement which, to the best knowledge of Seller, may be reasonably expected to have a Material Adverse Effect; and (viii) any contract, commitment, or agreement between (1) Seller and (2) any shareholder, officer, employee, or director (or any of their Affiliates) of Seller. Each contract or agreement disclosed on Schedule 4.1(v) hereto is a valid and binding agreement -40- of Seller and is in full force and effect, and neither Seller nor, to the knowledge of Seller, any other party thereto is in default in any material respect under the terms of any such contract or agreement. (w) Reserve for Workers' Compensation. All liabilities arising out of --------------------------------- or otherwise relating to Seller's Workers' Compensation program will be included as current liabilities in the Closing Balance Sheet, except to the extent such liabilities would not have a Material Adverse Effect. 4.2 Parent and Designated Buyers. Parent and MI (with respect to itself ---------------------------- and Parent), jointly and severally represent and warrant to NMPC, and Parent and MII (with respect to itself and Parent) jointly and severally represent and warrant to EDDY that the statements contained in this Section 4.2 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4.2). (a) Organization. Parent and Designated Buyer are each a corporation ------------ duly organized, validly existing and in good standing under the laws of the State of Mississippi. (b) Due Authorization; Noncontravention. The making and performance ----------------------------------- by Parent and Designated Buyer of this Agreement and the other agreements and instruments executed and delivered -41- by Parent and Designated Buyer pursuant hereto have been duly authorized by all necessary corporate action and do not and will not in any material respect violate any material provision of law, rules, regulations or orders; or result in a material breach of, or constitute a material default under, Parent or Designated Buyer's respective Certificates of Incorporation or By-laws or any indenture or other agreement or instrument by which Parent or Designated Buyer or any of their respective properties may be bound or affected; or result in, or require, the creation or imposition of any lien upon or with respect to any of Parent's or Designated Buyer's properties. (c) Validity. This Agreement and the other agreements and instruments -------- executed and delivered by Parent or Designated Buyer pursuant hereto constitute the legal, valid and binding obligation of Parent or Designated Buyer, as the case may be, enforceable in accordance with its terms, except insofar as the enforceability hereof and thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity. (d) Brokers. Neither Parent nor Designated Buyer nor anyone acting on ------- behalf of either of them has retained any broker, finder or agent or agreed to pay any brokerage fee, finder's fee or commission with respect to the transactions contemplated by this Agreement. -42- (e) Legal Compliance. There are no lawsuits or other proceedings ---------------- pending or to the Knowledge of Parent or Designated Buyer threatened against Parent or Designated Buyer or any of their respective properties or assets, before any court or arbitrator or by or before any governmental commission, bureau or other regulatory authority which affect Parent's or Designated Buyer's ability to consummate the transactions contemplated by this Agreement. Neither Parent nor Designated Buyer is in default under or in violation of any law, rule, regulation, order, writ, injunction or decree of any court, arbitrator, governmental commission, bureau or other regulatory authority, and there are no judgments outstanding against Parent or Designated Buyer, in each case which affect Parent's or Designated Buyer's ability to consummate the transaction contemplated by this Agreement. Other than the consents set forth on Schedule 4.2(e), to Parent's or Designated Buyer's Knowledge, no consents or approvals of third parties are necessary for the consummation by Parent and Designated Buyer of the transactions contemplated by this Agreement. (f) Financing. Designated Buyer either (i) has available on hand, --------- from its working capital or currently available unrestricted credit facilities, or (ii) has obtained (and delivered to each Seller) commitments for all financing that will be required to provide, all of the cash that Designated Buyer will need to consummate the purchase of the Business Assets. -43- (g) Inspections; Limitation of Seller's Warranties. Parent and ---------------------------------------------- Designated Buyer are each an informed and sophisticated participant in the transactions contemplated by this Agreement and have been advised by Persons experienced in the evaluation and purchase of enterprises such as the Business of each Seller, and along with such Persons have undertaken such investigation, and have been provided with and have evaluated such documents and information, as Parent and Designated Buyer and their advisors have deemed necessary to enable them to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement. Anything herein to the contrary notwithstanding, Parent and Designated Buyer acknowledge that Applicable Designated Buyer is acquiring the Business of a Seller without any representation or warranty, express or implied, by either Seller or any of its Affiliates except as expressly set forth herein. In furtherance of the foregoing, and not in limitation thereof, Parent and Designated Buyer acknowledge that neither Seller nor any of their advisors, including, without limitation, Goldman, Sachs & Co., or any of their respective Affiliates or representatives had made any representation or warranty, express or implied, with respect to and Parent and Designated Buyer are not relying upon (i) the information set forth in the Confidential Memorandum dated January 1996 which was provided to Parent, (ii) any other information provided to Parent or Designated Buyer pursuant to the confidentiality agreement which Parent executed prior to the Confidential Memorandum having -44- been furnished to it, or (iii) any financial projection or forecast delivered to Parent or Designated Buyer with respect to the revenues or profitability or financial position which may arise from the operation of the Business either before or after the Closing Date. With respect to any projection or forecast delivered by or on behalf of Seller to Parent or Designated Buyer, Parent and Designated Buyer acknowledge that (i) there are uncertainties inherent in attempting to make such projections and forecasts; (ii) they are each familiar with such uncertainties, generally; (iii) they are each taking full responsibility for making their own evaluation of the adequacy and accuracy of all such projections and forecasts furnished to them; and (iv) neither Parent nor either Designated Buyer shall have a claim against either Seller or any of its advisors including, without limitation, Goldman, Sachs & Co., or any of their respective Affiliates with respect to such projections or forecasts or the assumptions relating to such projections or forecasts. Article 5 Pre-Closing Covenants. --------------------- 5.1 Pre-Closing Covenants. Sellers, Parent and Designated Buyers agree as --------------------- follows with respect to the period between the execution of this Agreement and the Closing. (a) General. Each of the parties will use its reasonable best efforts ------- to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including -45- satisfaction, but not waiver, of the closing conditions set forth in Article 7 below). (b) Notices and Consents; Hart-Scott Rodino and Other Antitrust ----------------------------------------------------------- Matters. (i) Each Seller will give any notices to third parties, and (subject - ------- to Section 7.1(g)) use its reasonable best efforts to obtain any third party consents (set forth on Schedule 4.1(f)), necessary to consummate the transactions contemplated hereby, and Parent and Designated Buyers will use their reasonable best efforts to obtain the consents and approvals set forth on Schedule 4.2(e). Subject to Section 7.1(g), each of the parties will give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies necessary for consummation of the transactions contemplated hereby. (ii) Without limiting the generality of the foregoing, each of the parties will file any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act, will use its reasonable best efforts to obtain a waiver from the applicable waiting period, will make any further filings pursuant thereto or pursuant to any other applicable antitrust law that may be necessary, proper, or advisable in connection therewith, and will cooperate with each other in connection with their respective filings under any such antitrust law -46- and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement commenced by any governmental authority, including, without limitation, the Federal Trade Commission or the Antitrust Division of the Department of Justice or any state attorney general. (iii) Each party hereto shall promptly inform the other parties of any material communication received by such party from any governmental authority pursuant to any antitrust law (including from the Federal Trade Commission, the Antitrust Division of the Department of Justice or any state attorney general) regarding any of the transactions contemplated by this Agreement. Without limitation to the foregoing, Parent and Designated Buyers will advise Sellers promptly in respect of any understandings, undertakings or agreements (oral or written) which Parent or any Designated Buyer proposes to make or enter into with the Federal Trade Commission, the Antitrust Division of the Department of Justice, any state attorney general or any other domestic or foreign governmental authority in connection with the transactions contemplated hereby. (iv) In furtherance and not in limitation of the covenants contained in this Section 5.1(b), each party hereto shall use its best efforts to resolve such objections, if any, as may be asserted with respect to the transactions contemplated by this Agreement under any antitrust law. -47- (v) Notwithstanding the foregoing, each party hereto agrees and acknowledges that no party hereto shall be required to divest or hold separate or otherwise take or commit to take any material action that, prior to the Closing, materially limits its freedom of action with respect to, or its ability to retain, the business of such party. (c) Full Access. Each Seller will permit representatives of Parent ----------- and Applicable Designated Buyer to have full access at all reasonable times, and in a manner so as not to unreasonably interfere with its normal business operations, to all of its premises, properties, personnel, books, records (including tax records), contracts, and documents. Parent and Designated Buyers will, and will cause their representatives to, treat and hold as such any Confidential Information they receive from a Seller in the course of the reviews contemplated by this Section 5.1(c), will, and will cause their representatives to, not use any of the Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will, and will cause their representatives to, return to the respective Seller all tangible embodiments (and all copies) of the Confidential Information which are in their possession and will not take business advantage of any such information. (d) Operation of Business. Prior to the Closing Date, each Seller --------------------- shall conduct its business only in the ordinary -48- course consistent with past practices and shall use all commercially reasonable efforts to (i) preserve its present business organization, (ii) keep available the services of substantially all of its present officers and employees, (iii) preserve present material business relationships, (iv) maintain and keep the Business Assets, (v) not purchase, sell, lease, encumber or otherwise dispose of any assets, except in the ordinary course of business and consistent with past practice, (vi) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained, (vii) pay and perform, when due, all material obligations under contracts, leases and documents relating to or affecting the Business Assets and the Business of such Seller, except where such Seller is disputing the foregoing in good faith, and (viii) comply with and perform all material obligations and duties imposed by federal, state and local laws, and all rules, regulations and orders imposed by federal, state or local governmental authorities, except in the case of clauses (vii) or (viii) as set forth on Schedule 5.1(d) or where the failure to so pay, perform or comply would not have a Material Adverse Effect. In addition, prior to the Closing Date, a Seller shall not, without the prior written consent of Applicable Designated Buyer, borrow or agree to borrow any funds or guarantee or agree to guarantee the obligations of others, except pursuant to the $3,000,000 Credit Agreement, dated as of October 13, 1995, between EDDY and General Electric Capital Corporation, or that certain Credit Agreement, dated as of November 3, 1995, -49- between NMPC's parent corporation, Cedar Chemical Corporation ("Cedar"), The Chase Manhattan Bank, N.A., as Administrative Agent and the other parties thereto, or except where any such borrowing or guarantee will not result in any liability or obligation to be assumed by Designated Buyer. Each Seller shall notify Applicable Designated Buyer of any unexpected emergency or other change in the normal course of Seller's Business or in the operation of Seller's properties and of any governmental complaints, investigations, or hearings (or communications indicating that the same may be contemplated), adjudicatory proceedings, and keep Applicable Designated Buyer informed of such events. (e) Exclusivity. Sellers shall negotiate exclusively with Parent and ----------- Designated Buyers with respect to the acquisition of the Business Assets and shall not directly or indirectly: (i) solicit any other buyers for all or any part of the capital stock or assets of Sellers; (ii) encourage any third parties to bid for any of the assets of Sellers or to purchase shares of the capital stock of Sellers or participate in any negotiations or discussions with any such third parties with respect thereto; (iii) provide business or financial information (not otherwise publicly available) concerning Sellers to any third parties except in the ordinary course of business; or (iv) assist or cooperate with any third party to make any proposal to purchase all or any part of the capital stock or assets of Sellers. In addition, Sellers shall direct their financial and other advisors and representatives to comply with each of the foregoing covenants. -50- (f) Letters of Credit; Security Deposits, Surety Bonds. On or prior -------------------------------------------------- to the Closing Date, Parent and Applicable Designated Buyer will use their best efforts to cooperate with Seller to secure releases from all such Seller's obligations under all letters of credit, security deposits, surety and performance bonds, guarantees and other performance assurance obligations which are set forth on Schedule 5.1(f) and will furnish all instruments to the reasonable satisfaction of the party secured thereby. (g) Confidentiality Agreements. During the period from the date of -------------------------- this Agreement through the Closing Date, each Seller shall not terminate, amend, modify or waive any provision of any confidentiality agreement to which it is a party. During such period, each Seller shall enforce, to the fullest extent permitted under applicable law, the provisions of any such agreement, including, but not limited to, by obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States of America or of any state having jurisdiction. Article 6 Post-Closing Covenants. ---------------------- 6.1 Certain Employee Matters. ------------------------ (a) Current Employees. (1) The Applicable Designated Buyer agrees ----------------- to offer employment, as of the Closing Date, to substantially all individuals then currently employed by the -51- respective Seller or any Affiliate thereof, who are then currently engaged in the Business and are listed on Schedule 6.1(a) ("Business Employees"). On or before the Closing Date, each Applicable Designated Buyer shall deliver to Seller a list of Business Employees of such Seller to whom it will not be offering employment as of the Closing Date. Sellers make no representations or warranties regarding which, if any, Business Employees will accept Designated Buyers' offers of employment. (2) Applicable Designated Buyer shall continue the terms of employment of any Business Employee who accepts employment with such Designated Buyer ("Continued Employee") with respect to current rates of compensation, levels of job seniority and benefits that are, in the aggregate, substantially equivalent, until at least 90 days after the Closing Date. Thereafter, except as expressly provided elsewhere in this Agreement, including this Section 6.1, Applicable Designated Buyer, in its sole discretion, may modify the terms and conditions of employment of any Continued Employee. Nothing herein shall prevent Applicable Designated Buyer from disciplining any employee, or terminating any employee for cause, or, except as expressly provided in this Agreement, including this Section 6.1, from amending or terminating any Employee Benefit Plan, regardless of whether such action occurs within 90 days after the Closing Date. -52- (3) Nothing expressed or implied in this Agreement, including this Section 6.1, is intended to confer upon any Employee or his legal representatives any rights or remedies, including, without limitation, any rights of employment for any specified period, of any nature or kind whatsoever under or by reason of this Agreement. (b) Medical, Insurance and Other Benefits. (1) (A) All expenses or ------------------------------------- claims covered under medical, travel accident, accidental death and dismemberment and life insurance plans (if any) of a Seller and which have been incurred by Employees and their dependents before the Closing Date, irrespective of the time at which claims are presented, are the responsibility of such Seller and shall be paid directly by such Seller or its insurance carrier to such Employees and their dependents. No amount for the above-mentioned expenses or claims shall be included as current liabilities on the Closing Balance Sheet. All expenses or claims covered under medical, travel accident, accidental death and dismemberment and life insurance plans (if any) of a Designated Buyer and which are incurred by Continued Employees and their dependents on or after the Closing Date, including any expenses attributable to facts or conditions existing on or before the Closing Date, are the responsibility of such Designated Buyer and shall be paid directly by such Designated Buyer or its insurance carrier to such Continued Employees and dependents. To the extent permitted by law, each Designated Buyer agrees to provide credit toward the payment of any -53- deductible and to recognize past service of Continued Employees with a Seller or any Affiliate thereof for the purpose of any such plans it adopts for the benefit of Continued Employees. Except as expressly provided elsewhere in this Agreement, including this Section 6.1, nothing in this subsection (b)(1)(A) shall require a Designated Buyer to provide any such plans or benefits to any employee. (B) Except as expressly provided elsewhere in this Agreement, including this Section 6.1, each Designated Buyer in its sole discretion may determine the terms of any group health insurance plan that it may elect to provide Continued Employees and their dependents and may modify or terminate such plan at any time; provided, however, that effective as of the Closing Date, each Designated Buyer agrees to provide to Continued Employees and their dependents a group health plan without any exclusion for pre-existing conditions. As soon as practicable, each Applicable Designated Buyer agrees to furnish the respective Seller with information as to which Continued Employees have enrolled in such plan. (C) Notwithstanding anything in subsection (b)(1)(B) to the contrary, a Designated Buyer shall not be required to provide coverage for pre-existing conditions, or for persons who are not actively at work or who are confined in a hospital, other institution or at home under a physician's care as of the Closing Date, in a group health plan with respect to -54- Continued Employees if such Designated Buyer uses its best efforts to obtain coverage for pre-existing conditions and such persons either (i) from its stop- loss carrier on reasonable terms or (ii) by assuming or continuing Seller's existing stop-loss insurance coverage on reasonable terms and is unable to obtain such coverage from either such insurance carrier or to assume or continue such coverage on reasonable terms. Each respective Seller agrees to provide Applicable Designated Buyer such information as it may request for purposes of seeking such coverage. Prior to the Closing Date, each Designated Buyer agrees to furnish the respective Seller with information as to whether an exclusion for pre-existing conditions or for persons specified in this subsection (b)(1)(C) applies to Continued Employees. (2) All short-term, long-term and extended disability benefits under the terms of a Seller's plans (if any) payable to a Seller's Employees and their dependents who became disabled before the Closing Date are the responsibility of such Seller and shall be paid directly by such Seller or its insurance carrier to such Employees and their dependents. No amount for the above-mentioned benefits shall be included in current liabilities on the Closing Balance Sheet. All short-term, long-term and extended disability benefits under the terms of a Designated Buyer's plans (if any) payable to Continued Employees and their dependents who become disabled on or after the Closing Date shall be the responsibility of such Designated Buyer and -55- shall be paid directly by such Designated Buyer or its insurance carrier to such Continued Employees and their dependents. Except as expressly provided elsewhere in this Agreement, including this Section 6.1, nothing in this subsection (b)(2) shall require a Designated Buyer to provide any such plans or benefits to any Continued Employee. (3) Each Seller agrees to fulfill its obligations under continuation coverage rules of COBRA with respect to a "qualifying event," within the meaning of Section 4980B(f) of the Code or Section 603 of ERISA, occurring on or before the Closing Date with respect to any Employees and their dependents. Each Designated Buyer shall fulfill all such obligations with respect to any "qualifying event" that occurs after the Closing Date with respect to any Continued Employees and their dependents. (4) If any Employees are terminated from employment by a Seller as a result of the transactions contemplated by this Agreement or otherwise, any obligations arising out of such termination of employment, including but not limited to severance (including any severance payments due under the terms of the Eddy Potash, Inc. Severance Pay Benefit Plan, an Employee Welfare Benefit Plan and Trust), accrued vacation pay, COBRA obligations, notices or compensation required under the Worker Adjustment and Retraining Notification ("WARN") Act, employment discrimination complaints, unfair labor practice charges, grievance under any collective bargaining agreement, breach of contract claims, and -56- wrongful termination and related tort claims shall be the sole responsibility of such Seller. If any Continued Employees are terminated by Applicable Designated Buyer, any obligations arising out of such termination of employment, including but not limited to severance, accrued vacation pay, COBRA obligations, notices or compensation required under the Worker Adjustment and Retraining Notification ("WARN") Act, employment discrimination complaints, unfair labor practice charges, grievance under any collective bargaining agreement, breach of contract claims, and wrongful termination and related tort claims, shall be the sole responsibility of Applicable Designated Buyer. Nothing in this subsection (b)(4) shall require Applicable Designated Buyer to provide any severance pay benefits, medical coverage, vacation, or other benefits to any employee or former employee except as expressly provided elsewhere in this Agreement, including this Section 6.1. Except as expressly provided elsewhere in this Agreement, including this Section 6.1, each Applicable Designated Buyer reserves the sole right to design, structure, amend or terminate any severance plan, medical plan, vacation policy, or other plan or policy as it sees fit. (5) With respect to Continued Employees, Applicable Designated Buyer shall continue to apply the vacation policy of the respective Seller or any Affiliate thereof that is currently in effect (the "Seller's Vacation Policy") at least until December 31, 1996 so that each Continued Employee shall be entitled to use any vacation time and receive any vacation pay to -57- which he or she would otherwise be entitled until at least December 31, 1996 under such Seller's Vacation Policy. Thereafter, Applicable Designated Buyer may in its sole discretion amend, modify, or terminate such Seller's Vacation Policy. From and after the Closing Date, Applicable Designated Buyer will recognize past service of Continued Employees with the respective Seller or any Affiliate thereof for purposes of all vacation policies of Applicable Buyer applicable to Continued Employees. (6) After the Closing Date, each Designated Buyer and each Seller shall each provide the other on a continuing basis at no cost to the other such information regarding Continued Employees as the other shall reasonably request. (7) NMPC agrees that as of the Closing Date it shall terminate its severance policy for the benefit of its Employees. (c) Designated Buyers' Plans. Each Designated Buyer shall cause each ------------------------ Continued Employee to be eligible to participate in a defined contribution plan qualified under Code Section 401(a) and 401(k) ("Buyer Plan"). To the extent permitted by law, the Applicable Designated Buyer shall cause each Continued Employee to be granted credit for service with Seller or any affiliate thereof for purposes of eligibility and vesting in such Designated Buyer's Plan. -58- (d) Supersession. This Section 6.1 shall govern employee benefits and ------------ labor and employment matters and shall supersede any provision in this Agreement to the contrary. 6.2 Record Retention and Winding Up. All of a Seller's files of ------------------------------- correspondence, lists, records (in whatever medium the records are stored), manuals and books of account concerning past, present and prospective customers and compliance with the rules and regulations of all federal, state or local regulatory agencies including, without limitation, with respect to matters relating to the litigations which are set forth on Schedule 4.1(c) ("Litigations"), required by such Seller, including, without limitation, for use in connection with the Litigations or for the preparation of tax returns and the like (collectively, "Filings"), shall be made available to such Seller and its Affiliates, during normal business hours and without unreasonable interference with the business operations of the Applicable Designated Buyer or Parent, for examination and duplication (at such Seller's expense) after the Closing Date for a period of five years. Thereafter, at least 60 days prior to destroying any of said files, lists, records, manuals and books of account, the Applicable Designated Buyer shall give notice of its intention to do so to the respective Seller. If such Seller shall notify the Applicable Designated Buyer that it wishes to retain any of such files, lists, records, manuals or books of account which such Designated Buyer intends to destroy, the Applicable Designated Buyer shall (at such Seller's expense) deliver such files, lists, -59- records, manuals or books of account to a location designated by such Seller in said notification. 6.3 Cooperation. Each Designated Buyer agrees that it shall cooperate ----------- with each Seller in connection with the Litigations by providing upon reasonable notice the services of employees of such Designated Buyer having knowledge of facts in connection therewith in order to assist such Seller in the preparation of such Seller's defenses and to testify at depositions or trials thereof. Each Designated Buyer also agrees that it shall cooperate with Sellers in connection with any Filings by providing upon reasonable notice the services of Employees of such Designated Buyer having knowledge of facts in connection therewith in order to assist each Seller in connection therewith. In consideration of the foregoing, each Seller agrees that it shall pay to Designated Buyer the reasonable cost of the time expended by such Designated Buyer's personnel and shall reimburse the reasonable out-of-pocket costs incurred by such employees in providing such testimony or assistance and the costs of all photocopying and delivery of any documents provided to a Seller by such Designated Buyer. 6.4 Name Change. Within 30 days after the Closing, each Seller agrees to ----------- amend its charter documents to change its corporate name to a name bearing no resemblance to its current name so as to make each Seller's corporate name available to the Applicable Designated Buyer. -60- Article 7 Conditions to Obligation to Close. --------------------------------- 7.1 Conditions to Obligation of Designated Buyers. The obligation of each --------------------------------------------- Designated Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to the concurrent consummation of the other Designated Buyer's transaction with the other Seller pursuant hereto and to satisfaction of the following conditions: (a) Representations and Warranties. The representations and ------------------------------ warranties set forth in Section 4.1 above shall be true and correct in all material respects at and as of the Closing Date; (b) Performance by Seller. Each Seller shall have performed and --------------------- complied with all of its covenants hereunder in all material respects through the Closing, including without limitation, the deliveries set forth in Article 3.6(a) hereof; (c) No Action or Proceedings. There shall not be any injunction, ------------------------ judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (d) Hart-Scott-Rodino. All applicable waiting periods (and any ----------------- extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated; -61- (e) Satisfaction of Designated Buyers. All actions to be taken by a --------------------------------- Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Designated Buyers; (f) Intercompany Agreements. All agreements and arrangements between ----------------------- either Seller and any of its Affiliates shall have expired or been terminated effective prior to the Closing Date; (g) Third Party Consents. All consents and approvals from -------------------- governmental and regulatory bodies and from parties to contracts or other agreements listed on Schedule 4.1(f) shall have been obtained; provided, -------- however, that with respect to consents of the U.S. Bureau of Land Management ("BLM"), this Section 7.1(g) shall be deemed already satisfied by the three letters, each dated May 15, 1996, and attached hereto as Schedule 7.1(g)(A) hereto, from the District Manager of the Roswell District of the BLM as to: (i) waiver of the lessee acreage restrictions, (ii) acceptance of Designated Purchasers' assumption of responsibility for compliance with closure requirements relating to the mines, and (iii) approval of the Assignments and Applications for Approval of the Transfers upon the filing thereof, unless any of said letters shall be withdrawn -62- or materially adversely modified by the unilateral action of the BLM. A Designated Buyer may waive any condition specified in this Section 7.1 if it executes a writing so stating at or prior to the Closing. (h) Vicksburg Agreement. MI shall have entered into a Product Sales ------------------- Agreement, substantially in the form of Exhibit A hereto, with Vicksburg Chemical Company ("Vicksburg"), an affiliate of Sellers. 7.2 Conditions to Obligation of Sellers. The obligation of each Seller to ----------------------------------- consummate the transactions to be performed by it in connection with the Closing is subject to the concurrent consummation of the Applicable Designated Buyer's transaction with the other Seller and to satisfaction of the following conditions: (a) Representations and Warranties. The representations and ------------------------------ warranties set forth in Section 4.2 above shall be true and correct in all material respects at and as of the Closing Date; (b) Performance by Designated Buyers. Each Designated Buyer shall -------------------------------- have performed and complied with all of its covenants hereunder in all material respects through the Closing, including, without limitation, the deliveries set forth in Section 3.6(b) hereof; -63- (c) No Action or Proceedings. There shall not be any injunction, ------------------------ judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (d) Hart-Scott-Rodino. All applicable waiting periods (and any ----------------- extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated; (e) Satisfaction of Sellers. All actions to be taken by Parent or ----------------------- Designated Buyers in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to each Seller; (f) Letters of Credit, Security Deposits, etc. Each Seller shall have ------------------------------------------ been released, in a manner reasonably satisfactory to such Seller, from all obligations under all letters of credit, security deposits, surety and performance bonds, guarantees and other performance assurance obligations which are set forth on Schedule 5.1(f) and shall have received back all such security deposits; (g) Cedar Release Under GECC Agreement. Cedar shall have been ---------------------------------- released as a guarantor under the Master Lease Agreements between NMPC and General Electric Capital Corporation; -64- (h) Release of Sellers from Mine Closure Liability. The May 15, 1996 ---------------------------------------------- letter from the BLM releasing Sellers from any responsibility or liability for compliance with closure requirements relating to the mines, included in Schedule 3.3(a)(3), shall continue in full force and effect; and (i) Vicksburg Agreement. MI and Vicksburg shall have entered into the ------------------- agreement described in Section 7.1(h) hereof. A Seller may waive any condition specified in this Section 7.2 if it executes a writing so stating at or prior to the Closing. Article 8 Termination. ----------- 8.1 Termination. The parties may terminate this Agreement as provided ----------- below: (i) Designated Buyers and Sellers may terminate this Agreement by mutual written consent at any time prior to the Closing; (ii) Designated Buyers may terminate this Agreement by giving written notice to Sellers at any time prior to the Closing (A) in the event a Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Designated Buyers have notified Sellers of such breach, and such breach has continued without cure for a period of 30 days after the notice of -65- breach or (B) if the Closing shall not have occurred on or before September 1, 1996, by reason of the failure of any condition precedent under Section 7.1 hereof (unless the failure results from a Designated Buyer or Parent itself breaching any representation, warranty, or covenant contained in this Agreement); and (iii) Sellers may terminate this Agreement by giving written notice to Designated Buyers at any time prior to the Closing (A) in the event Parent or a Designated Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Sellers have notified Designated Buyers of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach or (B) if the Closing shall not have occurred on or before September 1, 1996, by reason of the failure of any condition precedent under Section 7.2 hereof (unless the failure results from a Seller itself breaching any representation, warranty, or covenant contained in this Agreement). 8.2 Effect of Termination. If any party terminates this Agreement --------------------- pursuant to Section 8.1 above, all rights and obligations of the parties hereunder shall terminate without any liability of any party to any other party; provided, however, that (i) the confidentiality provisions contained in Section 5.1(c) above and the publicity provisions contained in Section 10.1 -66- below shall survive termination, and (ii) if such termination shall result from the willful failure of any party to fulfill a condition to the performance of the obligations of another party or to perform a covenant of this Agreement or from a willful breach of any party to this Agreement, such party shall be fully liable for any and all losses and damages incurred or suffered by the other parties as a result of such failure or breach. Article 9 Indemnification. --------------- 9.1 Survival of Warranties; Etc. --------------------------- (a) The representations and warranties made in this Agreement, the Schedules hereto and any documents delivered by any of the parties pursuant hereto shall survive and remain in full force and effect from and after the date hereof, for the periods set out below: (1) Except for the representation and set forth in Sections 4.1(d), 4.1(e) and 4.1(g) hereof, all of the representations and warranties in this Agreement shall expire and be of no further force and effect after the six month anniversary of the Closing Date. (2) The representations and warranties made by Sellers in Section 4.1(d) hereof shall survive and remain in full force and effect from and after the date hereof without expiration. -67- (3) The representations and warranties made by Sellers in Sections 4.1(e) and 4.1(g) shall survive and remain in full force and effect until the expiration of the applicable statutes of limitation by which any governmental authority, or party, as the case may be, may assert a claim with respect to the subject matter of such Section. (b) Each of the parties acknowledges that there are no representations or warranties by or on behalf of any party hereto or any of its respective Affiliates or representatives other than those expressly set forth in this Agreement or on a Schedule hereto. (c) All references in this Article 9 to "losses," "damages" or any "deficiency" suffered or incurred by a party or its Affiliates shall be: (i) deemed to include all reasonable costs and expenses (including reasonable attorneys' fees, amounts paid as judgments or settlements and costs of investigation) incurred by the Person entitled to indemnification in connection with any action, suit, proceeding, demand, assessment or judgment incident to any of the matters for which such person is indemnified against under this Agreement; and (ii) reduced by the amount of proceeds recovered from any indemnification, contribution or right over, or from and against, any Person who is not an Affiliate of such party. Parent, each Designated Buyer and each Seller, as the case may be, shall each take all reasonable steps to recover under any applicable right of indemnification or -68- contribution from Persons other than a party hereto, but its failure to make any such recovery shall not serve to limit or impair its rights under this Article 9. 9.2 Seller's Indemnification. Subject to the limitations and restrictions ------------------------ contained elsewhere in this Article 9, each Seller hereby agrees (severally and not jointly) to indemnify, defend and hold the Applicable Designated Buyer and Parent, their Affiliates, successors and assigns and their respective representatives (collectively, "Buyer's Indemnitees") harmless from and against any and all losses that such Buyer's Indemnitees may at any time suffer or incur, or become subject to, as a result of or in connection with (i) any breach or inaccuracy of any of the representations and warranties made by such Seller in or pursuant to this Agreement if asserted by Buyer's Indemnitees during the period that such representations and warranties survive; (ii) any failure by such Seller to carry out perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and instruments delivered by such Seller pursuant to this Agreement; (iii) claims by third parties against the Applicable Designated Buyer relating to the operation and ownership by such Seller of the Business Assets, the performance by such Seller under the Assumed Liabilities, the conduct of the business of such Seller prior to the Closing Date and the performance by Seller under the Excluded Liabilities and (iv) indebtedness, if any, of the Sellers which Applicable Designated -69- Buyer pays to BLM pursuant to the letter from Designated Buyers to BLM attached hereto as Schedule 9.2. Notwithstanding the foregoing, Sellers shall not be required to indemnify Buyer's Indemnitees under this Section 9.2 (other than under clause (iv) above) unless and until the aggregate amount of such losses shall exceed $250,000 at which time Sellers will be obligated to indemnify Buyer's Indemnitees for all additional losses in excess of $250,000; provided, -------- however, in no event shall Sellers be liable to Buyer's Indemnitees hereunder - ------- (including pursuant to (iv) above) for an amount in excess of $5,000,000 (in the aggregate for both Sellers and for Buyer's Indemnitees of both Designated Buyers). 9.3 Designated Buyer's Indemnification. The Designated Buyers hereby ---------------------------------- jointly and severally agree to indemnify, defend and hold each Seller, its Affiliates, successors and assigns and their respective representatives (collectively, "Seller's Indemnitees") harmless from and against any and all losses that Seller's Indemnitees may at any time suffer or incur, or become subject to, as a result of or in connection with (i) any breach or inaccuracy of any of the representations and warranties made by Parent or a Designated Buyer in or pursuant to this Agreement; (ii) any failure of a Designated Buyer to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the documents and instruments delivered by a Designated Buyer pursuant to this Agreement; and (iii) claims by third par- -70- ties against a Seller or its Affiliates relating to the operation and ownership by a Designated Buyer of the Business Assets, the performance by a Designated Buyer under the Assumed Liabilities and the conduct of the business of a Designated Buyer (so long as such claims or losses arise from events that occurred after the Closing Date). 9.4 Defense of Claims. A Seller and a Designated Buyer shall each give ----------------- prompt notice to the other of any claim against the party giving notice which might give rise to a claim based upon any indemnity contained herein. The notice shall set forth in reasonable detail the nature and basis of the claim and the actual or estimated amount thereof. The failure to provide such notice promptly will not relieve the indemnifying party of its obligations under Article 9 unless and only to the extent that the failure to give such notice promptly materially prejudiced the ability of the indemnifying party to defend against such claim. In the event any action, suit or proceeding is brought against a party with respect to which the other party hereto may have liability under any indemnity contained herein, the indemnifying party shall have the right, at its sole cost and expense, to defend such action in the name and on behalf of the indemnified party with counsel reasonably satisfactory to the indemnified party. The parties hereto agree to render to each other such assistance as may reasonably be required in order to ensure the proper and adequate defense of any such action, suit or proceeding. The indemnified party shall have the right to partici- -71- pate, at its own expense and with counsel of its choosing, in the defense of any claim against which it is indemnified hereunder and it shall be kept fully informed with respect thereto. The party seeking indemnification hereunder shall not make any settlement of any claim which might give rise to liability of another party under any indemnity contained herein without the prior written consent of such other party, which consent shall not be unreasonably withheld. 9.5 Guarantee. NMPC covenants that on or prior to Closing, it will --------- deliver to MI a guarantee of Cedar, in a form reasonably satisfactory to MI, of NMPC's obligations under Section 9.2. EDDY covenants that on or prior to Closing, it will deliver to MII a guarantee of Trans-Resources, Inc. ("TRI"), in a form reasonably satisfactory to MII, of EDDY's obligations under Section 9.2. Article 10 Miscellaneous. ------------- 10.1 Press Releases and Public Announcements. No party hereto or Affiliate --------------------------------------- thereof shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of Parent and TRI; provided, however, that any party hereto or Affiliate thereof may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly- traded securities (in which case the disclosing -72- entity will use its reasonable best efforts to advise the other (unaffiliated) party hereto prior to making the disclosure). 10.2 Expenses. Except as otherwise specified herein, each Seller and -------- Designated Buyer shall each pay their own expenses in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby. 10.3 Assignment. This Agreement shall be binding upon and inure to the ---------- benefit of the parties hereto and their respective successors and permitted assigns. No party hereto may assign or transfer its rights or obligations arising under this Agreement, without the written consent of the other parties hereto. 10.4 Notice. All notices and other communications provided for herein ------ shall be in writing and telecopied, mailed or delivered by overnight courier or by hand to the intended recipient at the telephone number or "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other telephone number or address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all notices and other communications hereunder shall be deemed to have been duly given when transmitted by telecopier or delivered to an overnight courier service, in each case addressed as aforesaid or personally delivered or, in the case of a mailed notice, when actually received by the intended recipient. -73- 10.5 Entire Agreement. This Agreement, together with the Schedules ---------------- hereto, contains the entire understanding between the parties hereto concerning the subject matter hereof and supersedes any and all prior representations, warranties, undertakings, covenants and agreements between the parties. This Agreement may not be changed, modified, altered or terminated except by an agreement in writing executed by the parties hereto. Any waiver by any party of any of its rights under this Agreement shall not constitute a waiver of any other rights or of any other future breach. 10.6 Third Parties. Except as expressly set forth herein, nothing herein ------------- expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 10.7 Construction. The parties have participated jointly in the ------------ negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless -74- the context requires otherwise. The word "including" shall mean including without limitation. 10.8 Captions. Captions and descriptive headings are for convenience of -------- reference only and shall not control or affect the meaning or construction of any provisions of this Agreement. 10.9 Counterparts. This Agreement may be executed in any number of ------------ counterpart copies and by telecopier, each of which shall be deemed an original, but which together shall constitute a single instrument. 10.10 Applicable Law. This Agreement shall be governed and controlled as -------------- to validity, enforcement, interpretation, construction effect and in all other respects by the internal laws of the State of New York applicable to contracts made and to be wholly performed in that state. 10.11 Guarantee. Parent hereby unconditionally guarantees each Designated --------- Buyer's obligations to close the transactions contemplated herein in accordance with the terms and provisions hereof and to pay the cash purchase price set forth in Section 3.2(a) and (b) hereof in accordance with the terms and provisions hereof. Sellers agree and acknowledge that Parent is not assuming or guaranteeing the Assumed Liabilities and, except as set forth in the preceding sentence or in Section 4.2 hereof, Parent shall have no liability or responsibility for any of Designated Buyers' duties or obligations under this Agreement. -75- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. NEW MEXICO POTASH CORPORATION By: /s/ John Lewandowski ------------------------------------ John Lewandowski Title: President - Address for Notices - c/o Trans-Resources, Inc. 9 West 57th Street New York, New York 10019 Telecopier No.: 212-888-3708 Attention: Chief Financial Officer with copies to: Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Telecopier No.: (212) 698-7825 Attention: Edward Klimerman, Esq. EDDY POTASH, INC. By: /s/ John Lewandowski ------------------------------------ John Lewandowski Title: President - Address for Notices - c/o Trans-Resources, Inc. 9 West 57th Street New York, New York 10019 Telecopier No.: 212-888-3708 Attention: Chief Financial Officer with copies to: Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Telecopier No.: (212) 698-7825 Attention: Edward Klimerman, Esq. MISSISSIPPI CHEMICAL CORPORATION By: /s/ C.E. McCraw ------------------------------------ C.E. McCraw Title: Senior Vice President -Operations - Address for Notices - Post Office Box 388 Yazoo City, Mississippi 39194-0388 Telecopier No.: (601) 751-2912 Attention: Secretary with copies to: Hughes & Luce, L.L.P. 1717 Main Street Suite 2800 Dallas, Texas 75201 Telecopier No.: (214) 939-6100 Attention: Alan J. Bogdanow MISSISSIPPI ACQUISITION I, INC. By: /s/ C.E. McCraw ------------------------------------ C.E. McCraw Title: Vice President - Address for Notices - Post Office Box 388 Yazoo City, Mississippi 39194-0388 Telecopier No.: (601) 751-2912 Attention: Corporate Secretary with copies to: Hughes & Luce, L.L.P. 1717 Main Street Suite 2800 Dallas, Texas 75201 Telecopier No.: (214) 939-6100 Attention: Alan J. Bogdanow MISSISSIPPI ACQUISITION II, INC. By: /s/ C.E. McCraw ------------------------------------ C.E. McCraw Title: Vice President - Address for Notices - Post Office Box 388 Yazoo City, Mississippi 39194-0388 Telecopier No.: (601) 751-2912 Attention: Corporate Secretary with copies to: Hughes & Luce, L.L.P. 1717 Main Street Suite 2800 Dallas, Texas 75201 Telecopier No.: (214) 939-6100 Attention: Alan J. Bogdanow EX-4.1 3 LOAN AGREEMENT EXHIBIT 4.1 ----------- LOAN AGREEMENT DATED AS OF APRIL 26, 1996 AMONG MISSISSIPPI CHEMICAL CORPORATION MISSISSIPPI PHOSPHATES CORPORATION MISSISSIPPI POTASH, INC. MCC PIPELINE, INC. AND NATIONSBANK OF TENNESSEE, N.A. AS AGENT AND THE BANKS NAMED HEREIN TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1 1.1 Definitions 1 1.2 Accounting Terms 16 1.3 Other Definitional Provisions 16 ARTICLE II LOANS 16 2.1 Syndicated Loans 16 2.2 Syndicated Loan Advances 17 2.3 Repayment 19 2.4 Interest 19 2.5 Syndicated Notes 20 2.6 Swingline Loans 20 2.7 Letters of Credit 21 2.8 Conditions of Lending 24 2.9 Fees 25 2.10 Reduction of Commitment 27 2.11 Liability 27 ARTICLE III ADDITIONAL PROVISIONS REGARDING LOANS AND LETTERS OF CREDIT 28 3.1 Default Rate 28 3.2 Prepayments 28 3.3 Conversion 29 3.4 Illegality, etc. 29 3.5 Increased Costs and Reduced Return 30 3.6 Compensation 31 3.7 Taxes 32 3.8 Change of Lending Office 33 3.9 Late Payment Fee 34 3.10 Payments and Computations 34 3.11 Replacement or Removal of Bank 34 ARTICLE IV CONDITIONS PRECEDENT TO INITIAL LOANS 35 4.1 Executed Loan Documents 35 4.2 No Default; Representations and Warranties 35 4.3 Opinion of Counsel 35 4.4 Corporate Documents 36 4.5 Termination of Existing Agreements 36
i ARTICLE V REPRESENTATIONS AND WARRANTIES 36 5.1 Organization and Power; Qualification; Good Standing; Subsidiaries 36 5.1.1 Organization and Power 36 5.1.2 Qualification; Good Standing 36 5.1.3 Subsidiaries 37 5.2 Authorization of Borrowing; No Conflicts; Binding Obligations; etc. 37 5.2.1 Authorization of Borrowing 37 5.2.2 No Conflicts 37 5.2.3 Governmental Consents 37 5.2.4 Binding Obligation 37 5.3 Financial Condition; No Changes 37 5.3.1 Financial Statements 37 5.3.2 Contingent Obligations 38 5.3.3 No Material Adverse Change 38 5.3.4 Restricted Payments 38 5.4 Title to Properties; Liens 38 5.5 Litigation 38 5.6 Compliance with Law 38 5.7 Payment of Taxes 39 5.8 Contractual Obligations: Performance 39 5.8.1 Contractual Obligations 39 5.8.2 Performance 39 5.9 Environmental Protection 39 5.10 Employee Benefit Plans 40 5.11 Certain Fees 40 5.12 Defaults 40 5.13 Disclosure 40 5.14 Margin Stock 41 5.15 Investment Company Act; Public Utility Holding Company Act 41 ARTICLE VI AFFIRMATIVE COVENANTS 41 6.1 Financial Statements and Other Reports 41 6.2 Corporate Existence, etc. 43 6.3 Payment of Taxes and Claims 44 6.4 Maintenance of Properties; Insurance 44 6.5 Inspection 44 6.6 Security for Obligations 44 6.7 Compliance with Laws, etc. 45 6.8 Pari Passu 45 ARTICLE VII NEGATIVE COVENANTS 45 7.1 Liens 45 7.2 Investments 46 7.3 Contingent Obligations 47 7.4 Restricted Payments 48
ii 7.5 Financial Covenants 48 7.5.1 Consolidated Tangible Net Worth 48 7.5.2 Consolidated Funded Indebtedness to Consolidated Capital 48 7.5.3 Consolidated Funded Indebtedness to Consolidated EBITDA 48 7.5.4 Consolidated EBIT to Consolidated Total Interest Expense 49 7.5.5 Capital Expenditures 49 7.6 Restrictions on Fundamental Changes; Acquisitions 49 7.7 ERISA 49 7.8 Transactions with Shareholders and Affiliates 50 7.9 Subsidiary Securities 50 7.10 Indebtedness 50 7.11 Subsidiary Formation; Restrictions on Subsidiary Dividends 50 7.12 Independence of Covenants 51 ARTICLE VIII EVENTS OF DEFAULT 51 8.1 Events of Default 51 8.1.1 Failure to Make Payments When Due 51 8.1.2 Default in Other Agreements 51 8.1.3 Breach of Certain Covenants 51 8.1.4 Warranty 51 8.1.5 Other Defaults under this Loan Agreement 51 8.1.6 Involuntary Bankruptcy; Appointment of Receiver, etc. 52 8.1.7 Voluntary Bankruptcy: Appointment of Receiver, etc. 52 8.1.8 Judgments and Attachments 52 8.1.9 Change of Control 52 8.1.10 Condemnations and Seizures 52 8.1.11 Dissolution 52 8.1.12 Unfunded ERISA Liabilities 52 ARTICLE IX AGENCY PROVISIONS 54 9.1 Appointment 54 9.2 Delegation of Duties 54 9.3 Exculpatory Provisions 54 9.4 Reliance on Communications 54 9.5 No Default 55 9.6 Non-Reliance on Agent and Other Banks 55 9.7 Indemnification 56 9.8 Agent in its Individual Capacity 56 9.9 Successor Agent 56 ARTICLE X MISCELLANEOUS 56 10.1 Notices 56 10.2 Right of Set-Off 57 10.3 Participations and Assignments 57 10.4 No Waiver; Remedies Cumulative 60 10.5 Payment of Expenses, etc. 60
iii 10.6 Amendments, Waivers and Consents 60 10.7 Counterparts 61 10.8 Headings 61 10.9 Survival 61 10.10 Calculations; Computations 61 10.11 Governing Law; Submission to Jurisdiction; Venue 61 10.12 Severability 62 10.13 Entirety 62 10.14 Survival 62 10.15 Pro Rata, Sharing 62 10.16 Indemnity 62 10.17 Change in Accounting Principles 64
EXHIBITS Exhibit 1.1 Compliance Certificate Exhibit 2.2 Notice of Borrowing Exhibit 2.5 Syndicated Notes Exhibit 2.6 Swingline Note Exhibit 2.7 Existing Letters of Credit Exhibit 4.3 Opinion of Counsel Exhibit 5.1.3 Subsidiaries Exhibit 5.3.2 Farmland MissChem Project Contingent Obligations Exhibit 5.3.4 Pre-Closing Restricted Payments Exhibit 5.5 Litigation Exhibit 5.8.1 Contractual Obligations Exhibit 10.3 Assignment and Acceptance iv LOAN AGREEMENT THIS LOAN AGREEMENT, dated as of April 26, 1996 (the "Loan Agreement"), is -------------- by and among Mississippi Chemical Corporation, a Mississippi corporation, Mississippi Phosphates Corporation, a Delaware corporation, Mississippi Potash, Inc., a Mississippi corporation, and MCC Pipeline, Inc., a Mississippi corporation (individually a "Borrower" and collectively the Borrowers"); the -------- --------- various banks and lending institutions on the signature pages hereto together with all assignees of such banks and lending institutions under Section 10.3(b) hereof (each a "Bank" and collectively, the "Banks"); NationsBank of Tennessee, ---- ----- N.A., as the Swingline bank (in such capacity, together with its successors in such capacity, the "Swingline Bank"); NationsBank of Tennessee, N.A., a national -------------- banking association, as agent for the Banks (in such capacity, the "Agent"). ----- WHEREAS, the Borrowers have requested that the Banks provide $125,000,000.00 in credit facilities for the purposes hereinafter set forth; WHEREAS, the Banks have agreed to provide the requested credit facilities, and the Agent has accepted its duties hereunder, on the terms and conditions hereinafter set forth; NOW THEREFORE, IT IS AGREED: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS -------------------------------- 1.1 Definitions. As used herein, the following terms shall have the ----------- meanings herein specified unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular: "Acquisition" means any transaction, or any series of related ----------- transactions, by which any Person, in the transaction or as of the most recent transactions in a series of transactions, directly or indirectly: (a) acquires any going concern or all or a substantial part of the assets of any corporation, partnership or other entity or any division of any such entity; or (b) any such entity or any division of such an entity becomes a Subsidiary of such Person. "Adjusted Eurodollar Rate" means for the Interest Period for each ------------------------ Eurodollar Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate equal to the per annum rate obtained by dividing (a) the rate of interest determined by the Agent to be the average (rounded upward to the nearest whole multiple of 1/16 of l% per annum, if such average is not such a multiple) of the per annum rates at which deposits in U.S. dollars are offered to the Agent in the London interbank eurodollar market at 11:00 a.m. (London time) (or as soon thereafter as is practicable), in each case two Business Days before the first day of such Interest Period in an amount substantially equal to such Eurodollar Loan comprising part of such borrowing (including conversions, extensions and renewals) 1 and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Adjusted Eurodollar Reserve Percentage, if any, for such Interest Period. As used herein, "Adjusted Eurodollar Rate Reserve -------------------------------- Percentage" for the Interest Period for each Eurodollar Loan comprising ---------- part of the same borrowing (including conversions, extensions and renewals), means the percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including eurocurrency liabilities, as such term is defined in Regulation D (or with respect to any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined), having a term equal to the Interest Period for which such Adjusted Eurodollar Reserve Percentage is determined. "Affiliate" means as to any Person (A) any Person which, directly, --------- or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person, or (B) any Person who is a director or executive officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (A) above. For purposes of this definition, "control" of a Person shall mean the power, direct or indirect, (i) to vote or direct the voting of more than five percent (5%) of the outstanding shares of voting stock of such Person, or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. In no event shall any of the Banks be deemed to be an Affiliate of the Borrower. "Agent" means NationsBank of Tennessee, N.A. in its capacity as ----- agent for the Banks pursuant to Article IX hereof, and not in its individual capacity as a Bank, the Swingline Bank, or the Letter of Credit Bank, and any successor agent appointed pursuant to Article IX. "Applicable Base Rate Margin" means as of the Closing Date through --------------------------- June 30, 1996, 0.0 percent (0%) per annum, and thereafter one-eighth of one percent (0.125%) per annum; provided however, that during any fiscal ---------------- quarter of the Borrowers where MCC and its Subsidiaries shall have satisfied the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio test indicated in the table below, the Applicable Base Rate Margin for the Effective Period (as defined below) shall be the percentage rate per annum set forth opposite the appropriate test in the table below:
Consolidated Funded Indebtedness to Applicable Base Rate Margin ----------------------------------- --------------------------- Consolidated EBITDA ------------------- Greater than 3.0 to 1.0 .125% per annum Equal to or Less than 3.0:1.0 0.00% per annum
The Consolidated Funded Indebtedness to Consolidated EBITDA Ratio shall be confirmed by the Agent on the basis of the Compliance Certificates delivered pursuant 2 to Paragraph 6.1(c), the quarter-annual consolidated financial statements of MCC and its Subsidiaries delivered to the Agent and Banks pursuant to Paragraph 6.1(a), and year end consolidated financial statements delivered pursuant to Paragraph 6.1(b). The "Effective Period" shall be the period commencing after review and approval of such Compliance Certificate computations by the Agent (which review shall be completed within three (3) Business Days following delivery to the Agent of the Compliance Certificate and financial statements of MCC and its Subsidiaries pursuant to Section 6.1), which Certificate and financial statements indicate that the applicable test set forth above has been satisfied for the immediately preceding fiscal quarter. If the Borrowers fail to timely furnish to Agent any financial statements and related Compliance Certificate as required by this Loan Agreement, then the maximum Applicable Base Rate Margin shall apply from the date those financial statements and the related Compliance Certificate are required to be delivered and shall remain in effect until the Borrowers furnish them to the Agent and the same are reviewed by the Agent. "Applicable Eurodollar Rate Margin" means as of the Closing Date --------------------------------- through June 30, 1996, one-half of one percent (0.5%) per annum, and thereafter one and three-quarters percent (1.75%) per annum; provided -------- however, that during any fiscal quarter of the Borrowers where MCC and its ------- Subsidiaries shall have satisfied the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio test indicated in the table below, then the Applicable Eurodollar Rate Margin for the Effective Period (as defined below) shall be the percentage rate per annum set forth opposite the appropriate test in the table below:
Consolidated Funded Indebtedness to Applicable Eurodollar Rate Margin ----------------------------------- --------------------------------- Consolidated EBITDA ------------------- Greater than 3.0 to 1.0 1.75% per annum Equal to or Less than 3.0:1.0 and Greater than 2.5:1.0 1.50% per annum Equal to or Less than 2.5:1.0 and Greater than 2.0:1.0 1.0% per annum Equal to or Less than 2.0:1.0 and Greater than 1.0:1.0 0.75% per annum Equal to or Less than 1.0:1.0 0.50% per annum
The Consolidated Funded Indebtedness to Consolidated EBITDA Ratio shall be confirmed by the Agent on the basis of the Compliance Certificates delivered pursuant to Paragraph 6.1(c), the quarter-annual consolidated financial statements of MCC and its Subsidiaries delivered to the Agent and Banks pursuant to Paragraph 6.1(a), and year end consolidated financial statements delivered pursuant to Paragraph 6.1(b). The "Effective Period" shall be the period commencing after review and approval of such Compliance Certificate computations by the Agent (which review shall be completed within three (3) Business Days following delivery to the Agent of the Compliance Certificate and financial statements of MCC and its Subsidiaries pursuant to Section 6.1), which Certificate and financial statements indicate that the applicable test set forth above has been satisfied for the immediately preceding fiscal quarter. If the Borrowers fail to timely furnish to Agent any financial statements and related Compliance 3 Certificate as required by this Loan Agreement, then the maximum Applicable Eurodollar Rate Margin shall apply from the date those financial statements and the related Compliance Certificate are required to be delivered and shall remain in effect until the Borrowers furnish them to the Agent and the same are reviewed by the Agent. "Assignment and Acceptance" means an Assignment and Acceptance ------------------------- entered into between a Bank and an Eligible Assignee, in substantially the form of Exhibit 10.3. ------------ "Base Rate" means, for any Interest Period or any other period, the --------- greater of either (i) the annual interest rate most recently publicly announced by Agent as its Prime Rate (which may not necessary represent the lowest or best rate actually charged to any customers) in effect at its principal office in Nashville, Tennessee, automatically fluctuating upward and downward as specified in each announcement without special notice to any Borrower or any other Person, or (ii) the sum of the Federal Funds Rate plus one-half of one percent per annum. "Base Rate Loan" means a Loan which bears interest based on the Base -------------- Rate. "Business Day" means any day other than a Saturday, a Sunday, a ------------ legal holiday in the States of Tennessee, North Carolina, or New York or a day on which banking institutions in such states are authorized by law or other governmental action to close except that, in the case of Eurodollar loans, such day is also a day on which dealings between banks are carried on in U.S. dollar deposits in the London interbank Eurodollar market. "Capital Expenditures" for any period means the aggregate of all -------------------- expenditures (including that portion of Capital Leases which is capitalized on the consolidated balance sheet of MCC and its Subsidiaries, but without duplication in the case of Capital Leases arising out of a sale-leaseback of property, plant or equipment previously acquired through Capital Expenditures by the Borrowers or their Subsidiaries) by the Borrowers and their Subsidiaries during that period that, in conformity with GAAP, have been or should have been included in the property, plant or equipment reflected in the consolidated balance sheet of the Borrowers and their Subsidiaries, other than additions to property, plant or equipment arising out of the acquisition of the stock of any Person or of all or substantially all of the assets of any Person or of any division or business unit of any Person. "Capital Guideline" means any law, rule, regulation, policy, ----------------- guideline or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful, and including, without limitation, any law, rule, regulation, governmental policy, guideline or directive contemplated by the report dated July, 1988 entitled "International Convergence of Capital Measurement and Capital Standards" issued by the Basle Committee on Banking Regulations and Supervisory Practices): (i) regarding capital adequacy, capital ratios, capital requirements, the calculation of a bank's capital or similar matters, or (ii) affecting the amount of capital required to be obtained or maintained by the Banks or the manner in which the Banks allocate capital to any of their contingent liabilities (including letters of credit), advances, commitments, assets or liabilities. 4 "Capital Lease" as applied to any Person, means any lease of any ------------- property (whether real, personal or mixed) by that Person as lessee which would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of that Person. "Change of Control" means the occurrence, after the date of this Loan ----------------- Agreement, of (i) any Person or two or more Persons acting in concert acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of MCC (or other securities convertible into such securities) representing more than 50% of the combined voting power of all securities of MCC entitled to vote in the election of directors; or (ii) commencing after the date of this Loan Agreement, individuals who at the beginning of this Loan Agreement were directors of MCC ceasing for any reason to constitute a majority of the Board of Directors of MCC unless the Persons replacing such individuals were nominated by the Board of Directors of MCC; or (iii) any Person or two or more Persons acting in concert acquiring by contract or otherwise, or entering into a contract or arrangement which upon consummation will result in its or their acquisition of, or control over, securities of MCC (or other securities convertible into such securities) representing more than 50% of the combined voting power of all securities of MCC entitled to vote in the election of directors. "Closing Date" means the date on which this Loan Agreement is executed ------------ and delivered and each of the conditions set forth in Article IV is satisfied. "Code" means the Internal Revenue Code of 1986, as amended from time ---- to time. "Commitment" means for any Bank, such Bank's Three Year Commitment and ---------- 364 Day Commitment to make Syndicated Loans and to participate in Letter of Credit Obligations to the Borrowers hereunder, which Commitments together shall equal such Bank's Committed Amount. "Commitment Percentage" means, for any Bank, the proportion (stated as --------------------- a percentage) that its Commitment bears to the total Commitments of all Banks then in effect. "Committed Amount" means, for each Bank, the amount identified as its ---------------- Committed Amount opposite such Bank's name on the signature pages hereto as such amount may be reduced pro rata based on reductions in the Maximum Commitment made in accordance with the terms hereof. "Compensation Notice" shall have the meaning given to such term in ------------------- Section 3.11 hereof. "Compliance Certificate" means an Officer's Certificate in the form ---------------------- attached hereto as Exhibit 1.1 demonstrating in such detail as the Agent ----------- may reasonably require the Borrowers' calculation of the Applicable Base Rate and Eurodollar Rate Margins and 5 their compliance with the covenants set forth in Sections 2.4, 7.3, 7.4, 7.5 and 7.10 hereof and delivered to the Banks by the Borrowers pursuant to Section 6.1(c). "Consolidated Capital" means, as to MCC and its Subsidiaries at any -------------------- time of determination, the sum of their Indebtedness plus the difference between the sum of their capital stock, additional paid-in capital and retained earnings (or minus accumulated deficit) less treasury stock, all on a consolidated basis determined in accordance with GAAP. "Consolidated Depreciation and Amortization" means, for any period, ------------------------------------------ the depreciation and amortization of MCC and its Subsidiaries on a consolidated basis determined in conformity with GAAP. "Consolidated EBIT" means, for any period, the Consolidated Net Income ----------------- for such period plus (i) Consolidated Total Income Tax Expense, and (ii) Consolidated Total Interest Expense, in each case determined for such period on a consolidated basis in accordance with GAAP. "Consolidated EBITDA" means, for any period, the Consolidated Net ------------------- Income for such period plus (i) Consolidated Total Income Tax Expense, (ii) Consolidated Depreciation and Amortization, and (iii) Consolidated Total Interest Expense, in each case determined for such period on a consolidated basis in accordance with GAAP. "Consolidated Funded Indebtedness" means, as at any date of -------------------------------- determination, all Indebtedness of MCC and its Subsidiaries that has an original maturity in excess of one year plus the amount then outstanding under the 364 Day Facility. "Consolidated Funded Indebtedness to Consolidated EBITDA Ratio" means, ------------------------------------------------------------- as of any fiscal quarter-end of MCC and its Subsidiaries, Consolidated Funded Indebtedness at the end of such fiscal quarter divided by Consolidated EBITDA for the four (4) quarter period ending on such fiscal quarter-end. "Consolidated Net Income" means, for any period, the net earnings (or ----------------------- loss) of MCC and its Subsidiaries on a consolidated basis for such period taken as a single accounting period, but excluding extraordinary items of gain and any taxes on such excluded gains as well as any extraordinary noncash losses resulting from a change in accounting principles, all as determined in conformity with GAAP. "Consolidated Tangible Net Worth" means, as at any date of ------------------------------- determination, the sum of the capital stock (including nonredeemable preferred stock but subtracting treasury stock) and additional paid-in capital plus retained earnings (or minus accumulated deficit) of MCC and ---- its Subsidiaries, on a consolidated basis determined in conformity with GAAP, minus intangible assets such as organization costs and franchise ----- costs, intangible assets recorded in accordance with Financial Accounting Standards No. 87, deferred debits not relating to future tax benefits and all good will, trade names, trademarks, patents and other like intangibles. 6 "Consolidated Total Income Tax Expense" means, for any period, the ------------------------------------- total income tax expense of MCC and its Subsidiaries for such period, on a consolidated basis determined in accordance with GAAP. "Consolidated Total Interest Expense" means, for any period, total ----------------------------------- interest expense of MCC and its Subsidiaries, on a consolidated basis determined in conformity with GAAP. "Consolidated Total Operating Lease Expense" means, for any period, ------------------------------------------ total rental expense (excluding real estate taxes and other pass-through expenses) attributable to Operating Leases to which MCC and/or any of its Subsidiaries are a party, on a consolidated basis determined in accordance with GAAP for the immediately preceding fiscal year. "Contingent Obligation" as applied to any Person, means any direct or --------------------- indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend, letter of credit or other obligation of another Person, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made, or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including, without limitation, any such obligation for which that Person is in effect liable through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet, income or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation, services or lease regardless of the non-delivery or non-furnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof. The amount of any Contingent Obligation shall be equal to the amount of the obligation or portion thereof so guaranteed or otherwise supported. "Contractual Obligation" as applied to any Person, means any provision ---------------------- of any Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "Current Assets" means, as at any date of determination, the total -------------- assets of any Person which may properly be classified as current assets in conformity with GAAP. "Current Liabilities" means, as at any date of determination, the ------------------- total liabilities of any Person which may properly be classified as current liabilities in conformity with GAAP. 7 "Eligible Assignee" means (A) a commercial bank organized under the ----------------- laws of the United States, or any State thereof, and having a combined capital and surplus of at least $300,000,000.00; (B) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $300,000,000.00, provided that such bank is acting through a branch or agency located in the United States; (C) any Bank and any Affiliate of a Bank; and (D) any Federal Reserve Bank. "Environmental Laws" shall mean federal, state, local and foreign laws ------------------ or regulations, codes, plans, orders, decrees, judgments, injunctions, notices or demand letters issued, promulgated, approved or entered thereunder relating to: (i) pollution or protection of the environment, including, without limitation, laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes ("Regulated Substances") into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), (ii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemical or industrial wastes or Regulated Substances, and/or (iii) protection of workers from exposure to Regulated Substances. "Environmental Laws" shall include, without limitation, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendment and Reauthorization Act of 1986, the Emergency Planning and Community Right-to-Know Act and the Occupational Safety and Health Act, each as amended, and the regulations and interpretations issued thereunder. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, and the regulations promulgated and the rulings issued thereunder. "ERISA Affiliate" as applied to any Person, means any trade or --------------- business (whether or not incorporated) which is a member of a group of which that Person is a member and which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code or is under common control within the meaning of Section 414(c) of the Code. "Eurodollar Loan" means a Loan which bears interest based on the --------------- Adjusted Eurodollar Rate. "Event of Default" has the meaning specified in Article VIII. ---------------- "Facility" means the Three Year Facility or the 364 Day Facility, as -------- the context may require, and "Facilities" means both the Three Year ---------- Facility and the 364 Day Facility. "Farmland MissChem, Ltd." means that Trinidad limited liability ----------------------- company equally owned between MCC and Farmland Industries, Inc. which was formed to develop and operate the Farmland MissChem Project. 8 "Farmland MissChem Project" means that project commenced by Farmland ------------------------- MissChem, Ltd. to develop an ammonia plant in Trinidad having a capacity to produce approximately 650,000 metric tons of ammonia per year. "Federal Funds Rate" means, for any day, the rate per annum (rounded ------------------ upward to the nearest 1/100th of 1% per annum, if such average is not such a multiple) 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 date, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided -------- that if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published, on such next succeeding Business Day, the Federal Funds Rate for such date shall be the average rate quoted to on such date on such transactions as determined by the Agent. "Financial Statements" means the audited consolidated financial -------------------- statements of MCC and its Subsidiaries for the fiscal periods ended June 30, 1994 and June 30, 1995 and the unaudited consolidated interim financial statements of MCC and its Subsidiaries for the six months ended December 31, 1995. "Fiscal Year" means the fiscal year of the Borrowers ending on June 30 ----------- of each year. "GAAP" means, subject to the provisions of Section 10.17, generally ---- accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board, and the American Institute of Certified Public Accountants and the Securities and Exchange Commission and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "Indebtedness" as applied to any Person, means (i) all indebtedness ------------ for borrowed money, (ii) that portion of obligations with respect to Capital Leases which is capitalized on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, including, without limitation, any indebtedness evidenced by notes issued pursuant to note agreements or indentures, (iv) any obligation owed for all or any part of the deferred purchase price of property or services which purchase price is (x) due more than six months from the date of incurrence of the obligation in respect thereof, or (y) evidenced by a note or similar written instrument, and (v) all indebtedness secured by any mortgage, pledge, Lien, security interest or vendor's interest under any conditional sale or other title retention agreement existing on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; provided, however, that Indebtedness shall not include trade payables, accrued expenses, deferred income taxes, deferred reclamation, and deferred 9 workman's compensation liability, in each case arising in the ordinary course of business. "Interest Payment Date" means (a) as to Base Rate Loans, the last day --------------------- of each calendar quarter and the respective Termination Date applicable to such Loans and (b) as to Eurodollar Loans, the last day of each Interest Period for such Loan and the respective Termination Date applicable to such Loans; in addition, where the applicable Interest Period is more than 3 months, in the case of Eurodollar Loans, then also the date 3 months from the beginning of the Interest Period, and each 3 months thereafter. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day. "Interest Period" means as to Eurodollar Loans, a period of one, two, --------------- three or six month's duration, as the Borrowers may elect; provided, -------- however, (i) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (ii) no Interest Period shall extend beyond the respective Termination Date applicable to such Loans, and (iii) where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last day of such calendar month. "Investment", as applied to any Person, means any direct or indirect ---------- purchase or other acquisition by that Person of, or a beneficial interest in, any other Person, whether by the acquisition of Securities of that Person or otherwise, or any direct or indirect loan, advance (other than advances to employees for moving and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by that Person to any other Person, including all indebtedness and accounts receivable from that other Person, which are not Current Assets or did not arise from sales or the providing of goods or services in the ordinary course of business. The amount of any Investment shall be the amount at which such Investment is carried on the books of the Borrowers in accordance with GAAP. "Letter of Credit Bank" means the issuer of a Letter of Credit, which --------------------- shall be NationsBank of Tennessee, N.A., its successors and assigns. "Letter of Credit Interest" means, for each Bank, such Bank's ------------------------- participation interest (or, in the case of the Letter of Credit Bank, the Letter of Credit Bank's retained interest) in the Letter of Credit Bank's liability under Letters of Credit and such Bank's rights and interests in reimbursement obligations and fees, interest and other amounts payable in connection with Letters of Credit. "Letter of Credit Obligations" means, at any time, the sum of (a) the ---------------------------- maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding plus (b) the aggregate ---- amount of all drawings under Letters of Credit honored by the Letter of Credit Bank and not theretofore reimbursed. 10 "Letters of Credit" shall have the meaning given to such term in ----------------- Section 2.7 hereof. "Lien" means any lien, mortgage, pledge, security interest, charge or ---- encumbrance, of any kind to secure the payment, performance or discharge of any liability (as determined in accordance with GAAP) including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest. "Line of Business" means the fertilizer production business and the ---------------- distribution of fertilizer. "Loan" or "Loans" means the Syndicated Loans and Swingline Loans, ---- ----- collectively or individually, as appropriate. "Loan Agreement" means this Loan Agreement, as it may be amended, -------------- restated or modified from time to time. "Loan Documents" means this Loan Agreement, the Notes, any Letters of -------------- Credit, and any guaranty agreements hereafter executed with respect to the Obligations. "MCC" means Mississippi Chemical Corporation, a Mississippi --- corporation. "Majority Banks" means, at a particular time, any combination of Banks -------------- holding at least either (a) more than 50% of all Commitments while there are no Obligations or Letter of Credit Obligations or (b) more than 50% of the Obligations (including the Letter of Credit Obligations) while there are any outstanding Obligations or Letters of Credit. "Maximum Commitment" means the sum of the Three Year Commitments and ------------------ the 364 Day Commitments (initially the collective amount of $125,000,000.00), all as adjusted pursuant to the terms of this Loan Agreement and maturing on the respective Termination Dates for each Facility. "Moody's" means Moody's Investors Service, and any successor thereof. ------- "Multiemployer Plan" means a "multiemployer plan" as defined in ------------------ Section 4001(a)(3) of ERISA which is maintained for employees of any Borrower or any ERISA Affiliate of a Borrower. "Notes" means a collective reference to the Syndicated Notes and the ----- Swingline Note, as modified, renewed, and extended from time to time. "Notice of Borrowing" shall have such meaning as provided in Section ------------------- 2.2(a). "Notice of Conversion" shall have such meaning as provided in Section -------------------- 3.3. "NSI" means NSI Land Corporation. --- 11 "Obligations" means all obligations of every nature of any Borrower ----------- from time to time owed to the Agent, any Bank, or NationsBanc Capital Markets, Inc. under this Loan Agreement and the Notes (including all Letter of Credit Obligations), whether principal, interest, fees, costs, attorneys fees or otherwise, and including the reimbursement of the Agent and the Banks on demand for out-of-pocket expenses and costs and the reasonable fees and expenses of Agent's counsel in connection with preparing or amending this Loan Agreement and the documents required hereunder and the reasonable fees of Agent's and Banks' respective counsel in enforcing this Loan Agreement, the Notes and any related documents. "Officer's Certificate" means a certificate executed on behalf of the --------------------- Borrowers by MCC by and through its Vice President-Finance, its Treasurer or its Controller. "Operating Lease" means, as applied to any Person, any lease of any --------------- property (whether real, personal or mixed) which is not a Capital Lease, other than any such lease under which that Person is the lessor. "Other Taxes" shall have such meaning as provided in Section 3.7. ----------- "Pension Plan" means any employee pension plan which is subject to the ------------ provisions of Title IV of ERISA and which is maintained for employees of the Borrowers or any ERISA Affiliate of the Borrowers, other than a Multiemployer Plan. "Person" means and includes natural persons, corporations, limited ------ liability companies, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Potential Default" means a condition or event which, after notice or ----------------- lapse of time or both, would constitute an Event of Default if that condition or event were not cured or removed within any applicable grace or cure period. "Quarterly Dates" means the first day of each April, July, October or --------------- January, the first of which shall be April 1, 1996. "Quarterly Period" means (a) the period from the Closing Date to the ---------------- next succeeding Quarterly Date and (b) thereafter, any period from the first day after a Quarterly Date to the next succeeding Quarterly Date. "Regulation D" means Regulation D of the Board of Governors of the ------------ Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "Regulation G" means Regulation G of the Board of Governors of the ------------ Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "Regulation U" means Regulation U of the Board of Governors of the ------------ Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. 12 "Regulation X" means Regulation X of the Board of Governors of the ------------ Federal Reserve System as from to time in effect and any successor to all or a portion of establishing margin requirements. "Replacement Bank" shall have the meaning given to such term in ---------------- Section 3.11 hereof. "Requisite Banks" means, at any time of determination, Banks holding --------------- eighty percent (80%) or more of the Three Year Commitments when the amounts outstanding under the Three Year Facility (including all Letter of Credit Obligations) as of the prior month's end exceed Forty-Two Million Five Hundred Thousand Dollars ($42,500,000.00) or Banks holding seventy percent (70%) or more of the Three Year Commitments when the amounts outstanding under the Three Year Facility (including all Letter of Credit Obligations) as of the prior month's end equal or are less than Forty Two Million Five Hundred Thousand Dollars ($42,500,000.00) "Restricted Payment" means (i) any dividend or other distribution, ------------------ direct or indirect, on account of any shares of any class of stock of any Borrower or any of their Subsidiaries now or hereafter outstanding, except (A) dividends payable by a Subsidiary of a Borrower to such Borrower or to another Subsidiary of such Borrower, (B) dividends payable solely in shares of capital stock of a Borrower, and (C) dividends or other distributions of Shareholder Rights; and (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of a Borrower now or hereafter outstanding, or of any Shareholder Rights, except (A) acquisitions of shares of capital stock of any Borrower issued under such Borrowers' employee stock plans solely in exchange for the indebtedness of the trustee under such plans to such Borrower, (B) acquisitions of shares of capital stock of any Borrower in exchange for shares of another class of capital stock of the Borrowers, including any such acquisition in which cash is paid in lieu of fractional shares, and (C) redemptions, purchases or acquisitions for value of Shareholder Rights. "S&P" means Standard & Poors Ratings Services, a division of McGraw- --- Hill Companies, and any successor thereof. "Securities" means any stock, shares, voting trust certificates, ---------- certificates of interest or participation in any profit-sharing agreement, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "Shareholder Right" means a right distributed to holders of the ----------------- Borrowers' common stock pursuant to a shareholders' rights plan adopted by the Board of Directors of the Borrowers which is more fully described in the Borrowers' Prospectus dated August 18, 1994, copies of which have been provided to the Agent. "Subordinated Indebtedness" means all Indebtedness incurred at any ------------------------- time by a Borrower or the Borrowers, so long as that Indebtedness (a) has a maturity beyond the 13 then Three Year Facility Termination Date, (b) allows no principal payments thereon prior to the then latest Three Year Facility Termination Date in effect on the date the Subordinated Indebtedness is incurred, (c) allows interest payments thereon only so long as there is no Event of Default or Potential Default in existence hereunder, (d) is unsecured, (e) contains standstill provisions which either prevent suit and any other remedial actions by the holder thereof during the term of this Agreement or contains waiting periods otherwise acceptable to the Majority Banks, and (f) is upon such other terms and conditions as are reasonably acceptable to the Majority Banks. "Subsidiary" means any corporation, association or other business ---------- entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Swingline Bank" means NationsBank of Tennessee, N.A., together with -------------- its successors and assigns in such capacity. "Swingline Request Notice" shall have the meaning as provided in ------------------------ Section 2.6. "Swingline Sublimit" means those optional loans made by the Swingline ------------------ Bank pursuant to Section 2.6 in an aggregate amount at any one time outstanding up to but not to exceed $5,000,000. "Swingline Loans" means the Swingline loans provided pursuant to --------------- Section 2.6. "Swingline Note" means the promissory note of the Borrowers in favor -------------- of the Swingline Bank evidencing the Swingline Loans and provided in accordance with Section 2.6. "Syndicated Loans" means syndicated revolving credit loans made ---------------- pursuant to Section 2.1, including both the Three Year Facility and the 364 Day Facility. "Syndicated Note" or "Syndicated Notes" means the promissory notes of --------------- ---------------- the Borrowers in favor of each Bank evidencing the Syndicated Loans and provided in accordance with Section 2.5, collectively or individually, as appropriate, as such promissory notes may be amended, modified, supplemented or replaced from time to time. "Taxes" shall have such meaning as provided in Section 3.7. ----- "Termination Dates" means with respect to the Three Year Facility and ----------------- related Commitments, the date of April 26, 1999, and with respect to the 364 Day Facility and related Commitments, the date of April 25, 1997; provided, however, such dates may be extended for periods of one (1) year -------- ------- and 364 days, respectively, as may be requested of the Banks by written notice from MCC to the Agent at least thirty days (but not more than sixty days) prior to April 26 of each year. The Termination Date for the Three Year Facility and the 364 Day Facility may be extended as to all Banks only if all Banks unanimously agree; provided, with respect to the Three Year -------- Facility, if at least five days prior to April 26 of any year the Borrowers receive written acceptance of their request 14 from the Requisite Banks, the Termination Date for the Three Year Commitment will be extended as to those Banks who accept the request of the Borrowers but will not be extended as to any other Banks; and provided -------- further, with respect to the 364 Day Facility, if at least five days prior ------- to the expiration of the Termination Date for the 364 Day Commitment the Borrowers receive written acceptance of their request from the Majority Banks, the Termination Date for the 364 Day Commitment will be extended as to those Banks who accept the request of the Borrowers but shall not be extended as to any other Banks. To the extent that the Termination Date for any Commitment(s) then in effect is not extended as to any Bank pursuant to this method or by other prior written agreement executed by such Bank on or before such Termination Date, the Commitment of such Bank which is not extended shall automatically terminate in whole on such unextended Termination Date without any further notice or other action by the Borrowers, such Bank or any other Person. It is understood that no Bank shall have any obligation whatsoever to agree to any request made by the Borrowers for the extension of the Termination Dates for the Commitments. "Termination Effective Date" shall have the meaning given to such term -------------------------- in Section 3.11 hereof. "Termination Event" means: (a) a "Reportable Event" described in ----------------- Section 4043 of ERISA and the regulations issued thereunder; or (b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA; or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC; or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (f) the partial or complete withdrawal of any Borrower or any ERISA Affiliate from a Multiemployer Plan; or (g) the imposition of a Lien pursuant to Section 412 of the IRC or Section 302 of ERISA; or (h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Three Year Commitment" means, with respect to any Bank at any time, --------------------- the amount set forth opposite such Bank's name on its signature page hereto under the caption "Three Year Commitment" or, if such Bank has entered into one or more Assignments and Acceptances, the amount set forth for such Bank at such time in the Register maintained with the Agent pursuant to Section 10.3 as such Bank's Three Year Commitment, as such amount may be reduced at or prior to such time pursuant to the terms hereof. "Three Year Facility" means that revolving credit facility established ------------------- by the Banks under Section 2.1 hereof in the initial aggregate principal amount of Eighty-Five Million Dollars ($85,000,000.00) which has a Termination Date on the third anniversary of the Closing Date, subject to extension as herein set forth. 15 "364 Day Commitment" means, with respect to any Bank at any time, the ------------------ amount set forth opposite such Bank's name on its signature page hereto under the caption "364 Day Commitment" or, if such Bank has entered into one or more Assignments and Acceptances, the amount set forth for such Bank at such time in the Register maintained with the Agent pursuant to Section 10.3 as such Bank's 364 Day Commitment, as such amount may be reduced at or prior to such time pursuant to the terms hereof. "364 Day Facility" means that revolving credit facility established by ---------------- the Banks under Section 2.1 hereof in the initial aggregate principal amount of Forty Million Dollars ($40,000,000.00) which has a Termination Date that is 364 days after the Closing Date, subject to extension as herein set forth. 1.2 Accounting Terms. For purposes of this Loan Agreement, all accounting ---------------- terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. 1.3 Other Definitional Provisions. References to "Articles," "Sections" ----------------------------- and "Subsections" shall be to Articles, Sections and Subsections, respectively, of this Loan Agreement unless otherwise specifically provided. Any of the terms defined in Section 1.1 may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. ARTICLE II LOANS ----- 2.1 Syndicated Loans. Subject to and upon the terms and conditions and ---------------- relying upon the representations and warranties herein set forth, each Bank severally agrees, at any time and from time to time from the Closing Date until the respective Termination Dates, to make revolving credit loans (each a "Syndicated Loan" and, collectively, "Syndicated Loans") to the Borrowers - ---------------- ---------------- jointly and severally under its Three Year Commitment and 364 Day Commitment for the general corporate purposes of the Borrowers; provided, however, none of the ----------------- Banks shall be obligated to make any Syndicated Loan to the extent that immediately after making any such Syndicated Loan the sum of the outstanding principal balance of all Syndicated Loans, Swingline Loans and Letter of Credit Obligations would exceed the then applicable Maximum Commitment; provided -------- further, no Bank shall be obligated to make any Syndicated Loan to the extent - ------- that immediately after the making of any such Syndicated Loan either (i) such Bank's pro rata share (based upon its Three Year Commitment to all Three Year Commitments then in effect) of Syndicated Loans and Letter of Credit Obligations under the Three Year Facility shall exceed such Bank's Three Year Commitment, (ii) such Bank's pro rata share (based upon its 364 Day Commitment to all 364 Day Commitments then in effect) of Syndicated Loans under the 364 Day Facility shall exceed such Bank's 364 Day Commitment, or (iii) such Bank's pro rata share (based upon its Commitment Percentage) of all outstanding Syndicated Loans and Letter of Credit Obligations shall exceed such Bank's Committed Amount. The failure of any Bank to make its pro rata share of any such Syndicated Loan shall not in itself relieve any other Bank of its obligation under this Section 2.1. Prior to the respective Termination Dates, the Borrowers may borrow, repay and reborrow under each Facility up to the full amount of the aggregate Commitments applicable to the corresponding Facility in accordance with the terms of this Agreement. Syndicated Loans hereunder may 16 consist of Base Rate Loans or Eurodollar Loans (or a combination thereof) as the Borrowers may request, and may be repaid and reborrowed in accordance with the provisions hereof; provided, however, no more than ten (10) Syndicated Loans may be outstanding hereunder at any time. All advances, continuations and conversions of Loans shall be made by the Banks pro rata on the basis of each Bank's Three Year Commitment to all Three Year Commitments and/or each Bank's 364 Day Commitment to all 364 Day Commitments, as the case may be, rounded to the nearest dollar. 2.2 Syndicated Loan Advances. ------------------------ (a) Notices. Whenever the Borrowers desire a Syndicated Loan advance ------- hereunder, MCC shall give irrevocable written or telephonic notice (confirmed immediately thereafter in writing) (a "Notice of Borrowing") on ------------------- behalf of all Borrowers to the Agent in the form attached hereto as Exhibit ------- 2.2 not later than 11:00 a.m. (Charlotte, North Carolina time) on the --- Business Day of the requested advance in the case of Base Rate Loans and on the third Business Day prior to the requested advance in the case of Eurodollar Loans. Each such notice shall be irrevocable and shall specify (i) that a Syndicated Loan advance is requested and indicating whether it is to be funded under the Three Year Facility or the 364 Day Facility, (ii) the date of the requested Syndicated Loan advance (which shall be a Business Day), (iii) the aggregate principal amount of Syndicated Loan advances requested, and (iv) whether the Syndicated Loan advance requested shall consist of Base Rate Loans, Eurodollar Loans, or a combination thereof, and if Eurodollar Loans, the Interest Periods with respect thereto. If MCC shall fail to specify in any Notice of Borrowing (A) the type of Facility, then such notice shall be deemed a request for an advance under the Three Year Facility, or, if it has been fully funded, under the 364 Day Facility, (B) an applicable Interest Period in the case of a Eurodollar Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (C) the type of Syndicated Loan requested, then such notice shall be deemed to be a request for a Base Rate Loan hereunder. The Agent shall as promptly as practicable give each Bank notice of each requested Syndicated Loan advance, of such Bank's pro rata share thereof and of the other matters covered in the Notice of Borrowing. (b) Minimum Amounts. The aggregate minimum principal amount of each --------------- Syndicated Loan advance hereunder shall be not less than $2,500,000 (and integral multiples of $100,000.00 in excess thereof); provided, Eurodollar Loan advances shall be in the minimum amount of $2,500,000.00 and shall be in integral multiples of $250,000.00 in excess thereof. (c) Advances. Each Bank will make its pro rata share of each -------- Syndicated Loan advance available to the Agent by 1:00 p.m. (Charlotte, North Carolina time) on date specified in the Notice of Borrowing by deposit in U.S. dollars of immediately available funds to account number 0112500392 at the offices of the Agent in Nashville, Tennessee as provided in the signature pages, or at such other address as the Agent may designate in writing. All Syndicated Loan advances shall be made by the Banks pro rata on the basis of each Bank's Three Year Commitment or 364 Day Commitment, as the case may be, to the total Three Year Commitments or 364 Day Commitments, respectively, then in effect. No Bank shall be responsible for the failure or delay by any other Bank in its obligation to make Syndicated Loan advances provided, however, that the failure of any Bank to fund its Commitments hereunder shall not relieve any other 17 Bank of its Commitments hereunder. Unless the Agent has been notified by any Bank prior to the making of any such Syndicated Loan advance that such Bank does not intend to make available to the Agent its portion of the Syndicated Loan advance to be made on such date, the Agent may assume that such Bank has made such amount available to the Agent on the date of such Syndicated Loan advance, and the Agent, in reliance upon such assumption, may (in its sole discretion without any obligation to do so) make available to the Borrowers a corresponding amount. If such corresponding amount is not in fact made available to the Borrowers, the Agent shall be entitled to recover such corresponding amount from such Bank. If such Bank does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent will promptly notify the Borrowers and the Borrowers shall immediately pay such corresponding amount to the Agent. The Agent shall also be entitled to recover from such Bank or the Borrowers, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Borrowers to the date such corresponding amount is recovered by the Agent, at a per annum rate equal to (i) if paid by such Bank, within two Business Days of making such corresponding amount available to the Borrowers, the overnight Federal Funds Rate, and thereafter the Base Rate, and (ii) if paid by the Borrowers, the then applicable rate calculated in accordance with Section 2.4. (c) Swingline Bank Notices. At any time from the date on which a ---------------------- Swingline Loan is made until such Swingline Loan shall have been paid in full, the Swingline Bank may in its sole discretion, and the Borrowers hereby irrevocably authorize and empower (which power is coupled with an interest) the Swingline Bank to, deliver, on behalf of the Borrowers, to the Agent a notice of borrowing of Syndicated Loans that are Base Rate Loans in an amount equal to the then unpaid principal amount of such Swingline Loan together with all accrued and unpaid interest, which borrowing shall not be subject to the provisions of Section 2.8. The proceeds of such Syndicated Loans shall be applied solely to refinance such Swingline Loan. In the event that the power of the Swingline Bank to give such notice of borrowing on behalf of the Borrowers is terminated for any reason whatsoever (including a termination resulting from the occurrence of an event specified in Section 8.1.6 or 8.1.7 of Article VIII with respect to the Borrowers), or the Swingline Bank is otherwise precluded for any reason whatsoever from giving a notice of borrowing on behalf of the Borrowers as provided in the preceding sentence, each Bank shall, upon notice from the Swingline Bank, promptly purchase from the Swingline Bank a participation in (or, if and to the extent specified by the Swingline Bank, a direct interest in) such Swingline Loan in the amount of such Loan it would have been obligated to make pursuant to such notice of borrowing. Anything in Section 2.2(a) to the contrary notwithstanding, each Bank shall, not later than 4:00 p.m. (Charlotte, North Carolina time) on the Business Day on which such notice is given (if such notice is given by 2:15 p.m. (Charlotte, North Carolina time)) or 9:00 a.m. (Charlotte, North Carolina time) on the next succeeding Business Day (if such notice is given after 2:15 p.m. (Charlotte, North Carolina time)), make available the amount of such Loan to be made by it (or the amount of the participation or direct interest to be purchased by it, as the case may be) to the Agent at the account specified in Section 2.2(c) and the amount so received by the Agent shall be made available to the Swingline Bank by depositing the same, in immediately available funds, in an account of the Swingline Bank at the office designated by the Swingline Bank. Promptly following its receipt of any payment in respect of a Swingline Loan, the Swingline Bank 18 shall pay to each Bank that has acquired a participation in such Loan such Bank's proportionate share of such payment. Anything in this Agreement to the contrary notwithstanding (including in Section 2.8), the obligation of each Bank to make its Base Rate Loan (or purchase its participation or direct interest in the Swingline Loan, as the case may be) pursuant to this Section 2.2(d) is unconditional under any and all circumstances whatsoever and shall not be subject to set-off, counterclaim or defense to payment that such Bank may have or have had against the Borrowers, the Agent, Swingline Bank or any other Bank and, without limiting any of the foregoing, shall be unconditional irrespective of (i) the occurrence of any Event of Default or Potential Default, (ii) the financial condition of the Borrowers, any Subsidiary or Affiliate of the Borrowers, the Agent, the Swingline Bank or any other Bank or (iii) the termination or cancellation of the Commitments (provided that such Swingline Loan was made prior to the date of such termination or cancellation). The Borrowers agree that any Bank so purchasing a participation (or direct interest) in such Swingline Loan may exercise all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a direct holder of a Swingline Loan in the amount of such participation. If any Bank shall default in its obligation to make its Base Rate Loan to refinance any Swingline Loan (or purchase its participation or direct interest in such Swingline Loan, as the case may be) pursuant to the first paragraph of this Section 2.2(d), then for so long as such default shall continue, the Agent shall at the request of the Swingline Bank, withhold from any payments received by the Agent under this Agreement or any Note for account of such Bank the amount so in default, and the Agent shall pay the same to the Swingline Bank up to the amount and in satisfaction of such defaulted obligation, which amount the Swingline Bank will apply to the repayment of the principal of such Swingline Loan (if such Bank defaulted in its obligation to make its Base Rate Loan) or otherwise to the purchase of the participation or direct interest to be purchased by such Bank. 2.3 Repayment. The Syndicated Loans hereunder shall be due and payable in --------- full on their respective Termination Dates and in accordance with whether they were advanced under the Three Year Facility or the 364 Day Facility. 2.4 Interest. Subject to the provisions of Section 3.1, Syndicated Loans -------- shall bear interest as follows: (a) Base Rate Loans. During such periods as Syndicated Loans shall --------------- consist of Base Rate Loans, at a per annum rate equal to the Base Rate plus the Applicable Base Rate Margin, said rate to change contemporaneously with any change in the Base Rate. (b) Eurodollar Loans. During such periods as Syndicated Loans shall ---------------- consist of Eurodollar Loans, at a per annum rate equal to the Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate Margin. (c) Payment of Interest. Interest on Syndicated Loans hereunder ------------------- shall be payable in arrears on each Interest Payment Date. 19 2.5 Syndicated Notes. The Syndicated Loans by each Bank shall be ---------------- evidenced by two (2) duly executed promissory notes of the Borrowers to each such Bank dated as of the Closing Date in the aggregate principal amount equal to such Bank's Committed Amount, prorated between the Three Year Facility and the 364 Day Facility, and substantially in the form of Exhibit 2.5. ----------- 2.6 Swingline Loans. --------------- (a) Advances. The Swingline Bank may, from time to time in its sole -------- discretion, make loans on an uncommitted basis ("Swingline Loans") to the --------------- Borrowers jointly and severally during the period from and including the date of this Agreement to but not including the Termination Date of the Three Year Facility in an aggregate principal amount at any one time outstanding up to but not exceeding the Swingline Sublimit; provided that -------- the Swingline Bank shall not make any Swingline Loan pursuant hereto if (i) the Borrowers are not in compliance with all the conditions to the making of Syndicated Loans set forth in this Loan Agreement, or (ii) after giving effect to such Swingline Loan, the aggregate unpaid principal amount of all Swingline Loans, together with the aggregate unpaid principal amount of all Syndicated Loans outstanding under the Three Year Facility and the aggregate amount of all Letter of Credit Liabilities outstanding exceeds the aggregate amount of the Three Year Commitments. Subject to the approval in each instance of the Swingline Bank, the Borrowers may borrow, repay and reborrow the amount of the Swingline Sublimit at a rate or rates of interest to be negotiated and determined from time to time between the Borrowers and the Swingline Bank. (b) Notice of Swingline Borrowing. The Borrowers shall, not later ----------------------------- than 12:00 noon (Charlotte, North Carolina time) on the date on which the Borrowers desire to request a Swingline Loan, give both the Swingline Bank and the Agent (if different) notice of such request (a "Swingline Request ----------------- Notice"), which notice shall be irrevocable and effective only upon receipt ------ by the Agent and shall specify the principal amount of the Swingline Loan requested (which shall be at least $100,000 and in larger multiples of $100,000) and the date of the requested advance. Not later than 4:00 p.m. (Charlotte, North Carolina time), on the date specified in each Swingline Request Notice, the Swingline Bank shall, if it agrees to fund the loan, make the amount of the Swingline Loan to be made by it on such date available to the Borrower in account number 0112500392 maintained by the Agent in immediately available funds, for account of the Borrowers. The amount so received by the Agent shall, subject to the terms and conditions of this Agreement, be made available to the Borrowers on such date by depositing the same, in immediately available funds, in an account of the Borrowers maintained with Agent. If the Swingline Bank declines the request, it shall promptly notify the Borrowers and the Agent of such decision, and the Borrowers may submit a Notice of Borrowing under Section 2.2(a) in the alternative. (d) Repayment. Swingline Loans hereunder shall be due and payable in --------- accordance with the terms of any Swingline Note or Notes executed by the Borrowers from time to time, in addition to any mandatory prepayments required thereon pursuant to Section 3.2(b) hereof. (e) Swingline Notes. Swingline Loans shall be evidenced from time to --------------- time by Swingline Notes from the Borrowers to the Swingline Bank substantially in the form 20 of Exhibit 2.6 with the interest rate and payment provisions completed and ----------- filled in as agreed to by the Borrowers and the Swingline Bank. 2.7 Letters of Credit. ----------------- (a) Issuance. Subject to the terms and conditions hereof, the Letter -------- of Credit Bank has issued the Letters of Credit described in Exhibit 2.7 ----------- hereof (which Letters of Credit shall be deemed issued and outstanding hereunder upon the effectiveness of this Loan Agreement) and the Letter of Credit Bank will from time to time issue standby letters of credit and commercial letters of credit from the Closing Date to, but not including, the Three Year Facility Termination Date as the Borrowers may request, each to be in a form acceptable to the Letter of Credit Bank (hereinafter the Letters of Credit described on Exhibit 2.7 and the standby letters of ----------- credit and commercial letters of credit issued on and after the Closing Date pursuant to this Section 2.7, together with all extensions, renewals, modifications and replacements thereto, shall be referred to as the "Letters of Credit"); provided, however, the Letter of Credit Bank shall ------------------ -------- ------- issue any Letter of Credit to the extent that immediately after the issuance of such Letter of Credit the sum of the outstanding principal balance of all Syndicated Loans and Swingline Loans outstanding under the Three Year Facility plus the amount of all Letter of Credit Obligations would exceed the then aggregate Three Year Commitments of the Banks; provided further, the Letter of Credit Bank shall not issue any Letter of -------- ------- Credit to the extent that immediately after the issuance of such Letter of Credit the Letter of Credit Obligations relating to all Letters of Credit would exceed $25,000,000; provided further, the Letters of Credit shall be -------- ------- issued solely for the general corporate purposes of the Borrowers and shall be jointly and severally binding on each of Borrowers, regardless of whether any application is signed by one or more of the Borrowers. No Letter of Credit shall be automatically renewable or have an expiry date extending beyond the fifth (5th) Business Day preceding the Termination Date of the Three Year Facility. (b) Notice. The request for the issuance of a Letter of Credit shall ------ be submitted to the Letter of Credit Bank and the Agent (if different) at least three Business Days prior to the requested date of issuance. Upon issuance of a Letter of Credit, the Agent shall promptly notify the Banks of the amount and terms thereof. The Letter of Credit Bank shall notify the Agent promptly of all payments, reimbursements, extensions, expirations, transfers and other activity with respect to outstanding Letters of Credit. Upon the request of any Bank, the Agent shall promptly notify such Bank of all of such payments, reimbursements, expirations, transfers and other activity with respect to outstanding Letters of Credit. (c) Participations. Each Bank shall be deemed to have purchased, -------------- without recourse to the Letter of Credit Bank, a participation from the Letter of Credit Bank in each Letter of Credit issued or deemed issued hereunder, in each case in an amount equal to its pro rata share (based upon its Three Year Commitment to all Three Year Commitments) of the amount of such Letter of Credit. Without limiting the scope and nature of each Bank's participation in any Letter of Credit, to the extent that the Letter of Credit Bank has not been reimbursed by the Borrowers for any payment required to be made by the Letter of Credit Bank under any Letter of Credit, each Bank shall pay to the Agent for payment to the Letter of Credit Bank each Bank's pro rata share of such unreimbursed drawing in same day funds on the day of notification by the Letter of Credit Bank of an unreimbursed drawing pursuant to the provisions of subsection 2.7(d) 21 (or on the next Business Day if such notification is made after 2:00 p.m. Charlotte time); provided, however, the Banks shall not be obligated to reimburse the Letter of Credit Bank as provided above to the extent that such reimbursement obligation has arisen solely on account of the gross negligence or willful misconduct of the Letter of Credit Bank, as determined by a court of competent jurisdiction. The obligation of each Bank to so reimburse the Letter of Credit Bank shall be absolute and unconditional and shall not be affected by the occurrence of a Potential Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of any Borrower to reimburse the Letter of Credit Bank under any Letter of Credit, together with interest as hereinafter provided. (d) Reimbursement. In the event of any drawing under any Letter of ------------- Credit, the Letter of Credit Bank will promptly notify the Borrowers and the Agent. Unless the Borrowers shall immediately notify the Letter of Credit Bank of their intent to otherwise reimburse the Letter of Credit Bank, the Borrowers shall be deemed to have jointly and severally requested a Base Rate Loan under the Three Year Facility in the amount of the drawing, the proceeds of which will be used to satisfy the reimbursement obligations of the Borrowers to the Letter of Credit Bank in connection with such drawing. The Borrowers shall reimburse the Letter of Credit Bank on the day of such drawing under any Letter of Credit (either with the proceeds of a Syndicated Loan obtained hereunder or otherwise) in same day funds as provided in the Letter of Credit Application. If for any reason the Borrowers cannot draw under the Three Year Facility or shall otherwise fail to reimburse the Letter of Credit Bank as provided hereinabove, the unreimbursed amount of such drawing shall bear interest at a per annum rate equal to the Base Rate plus 2%. The Borrowers' reimbursement obligations hereunder shall be absolute, unconditional and joint and several under all circumstances irrespective of any rights of set-off, counterclaim or defense to payment any Borrower may claim or have against the Letter of Credit Bank, the Agent, the Banks, the beneficiary of any Letter of Credit or any other Person, including without limitation any defense based on any failure of the Borrowers to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The Letter of Credit Bank will promptly notify the Agent and the Agent will promptly notify the other Banks of the amount of any unreimbursed drawing and each Bank will promptly pay the Letter of Credit Bank for its pro rata share of such unreimbursed drawing as provided in subsection 2.7(c). (e) Modification, Extension. The issuance of any supplement, ----------------------- modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder. (f) Indemnification; Nature of Letter of Credit Bank's Duties. (1) In --------------------------------------------------------- addition to its other obligations under this Section 2.7, the Borrowers hereby agree to protect, indemnify, pay and save the Letter of Credit Bank and each Bank harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that the Letter of Credit Bank or any Bank may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the Letter of Credit Bank to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions, herein called "Government Acts") or (C) any action or nonaction taken at --------------- any Borrower's request with respect to any Letter of Credit. 22 (2) As between the Borrowers on the one hand and the Letter of Credit Bank and the Banks on the other hand, the Borrowers shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Letter of Credit Bank and the Banks shall not be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for, issuance of and drawing under any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) for the performance of any beneficiary of a Letter of Credit of its obligations to the Borrowers or any failure of any such beneficiary to comply fully with conditions required in order to draw upon a Letter of Credit; (D) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) for errors in interpretation of technical terms; (F) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (G) for any consequences arising from causes beyond the control of the Letter of Credit Bank or any Bank, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting or enforcement of the Letter of Credit Bank's or any Bank's rights or powers hereunder. (3) In issuing each Letter of Credit, the Letter of Credit Bank is expressly authorized to make changes from the terms set forth in the request for such Letter of Credit as the Letter of Credit Bank, in its sole discretion, may deem advisable, provided that no such changes will vary the principal terms thereof. Except as otherwise expressly agreed herein or in any particular instance, all Letters of Credit issued hereunder shall be subject to the "Uniform Customs and Practices for Documentary Credits" (1993 Revision), International Chamber of Commerce Publication No. 500. (4) If there is any discrepancy between the documents accompanying a draft or other demand for payment or acceptance under a Letter of Credit and the specifications for such documents in the Borrowers' request for such letter of Credit or the Letter of Credit, and either (A) the Letter of Credit Bank delivers telephonic or written notice to MCC's principal office of such discrepancy, and the Borrowers do not deliver telephonic or written instruction to the Letter of Credit Bank's letter of credit department to dishonor the draft or demand by noon (Charlotte, North Carolina time) for the Letter of Credit Bank on the Business Day after the Business Day on which the Letter of Credit Bank shall have delivered notice to the Borrowers of the discrepancy, or (B) in the case of a commercial Letter of Credit, the Borrowers have obtained possession of the goods that are the subject of such Letter of Credit; then the Letter of Credit Bank may conclusively presume that the Borrowers have waived any objection to payment or acceptance, as the case may be, based on such discrepancy, and the Letter of Credit Bank may, but shall not be obligated to, honor the draft or other demand under the Letter of Credit (and may honor such draft after noon on such Business Day, if such Business Day is the last day to which the Letter of Credit Bank is entitled to defer honor of such draft under applicable law). In such event, the Borrowers shall be liable to the 23 Letter of Credit Bank pursuant to subsection 2.7(d) as if the discrepancy had not been in the documents. (5) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Letter of Credit Bank or any Bank, under or in connection with any Letter of Credit or the related documents, if taken or omitted in good faith, shall not put such Letter of Credit Bank or such Bank under any resulting liability to the Borrowers. It is the intention of the parties that this Loan Agreement shall be construed and applied to protect and indemnify the Letter of Credit Bank and the Banks against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrowers, including, without limitation, whether rightful or wrongful, of any present or future Government Acts. The Letter of Credit Bank and the Banks shall not, in any way, be liable for any failure by the Letter of Credit Bank or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Letter of Credit Bank. (6) Nothing in this subsection (f) is intended to limit the reimbursement obligation of any Borrower contained in subsection 2.7(d). The obligations of the Borrowers under this subsection (f) shall survive the termination of this Loan Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Letter of Credit Bank or any Bank to enforce any right, power or benefit under this Loan Agreement. (7) Notwithstanding anything to the contrary contained in this subsection (f), the Borrowers shall have no obligation to indemnify any Letter of Credit Bank or any Bank in respect of any liability incurred by such Letter of Credit Bank or such Bank arising solely out of the gross negligence or willful misconduct of the Letter of Credit Bank or such Bank in connection with issuing a Letter of Credit, as the case may be, as finally determined by a court of competent jurisdiction. 2.8 Conditions of Lending. --------------------- (a) Conditions. The obligation of any Bank to make any Syndicated ---------- Loan or the Letter of Credit Bank to issue any Letters of Credit hereunder is subject to satisfaction of the following conditions: (1) receipt of a Notice of Borrowing pursuant to Section 2.2(a) or a Letter of Credit Application pursuant to Section 2.7(a); (2) the representations and warranties set forth in Article V hereof shall be true and correct in all material respects as of the date of such notice or request and as of the proposed date of such Loan or the issuance of such Letter of Credit (except for those which expressly relate to an earlier date); (3) immediately after giving effect to the requested Loan or the issuance of the requested Letter of Credit, the sum of the outstanding principal balance of all Syndicated Loans, Swingline Loans and Letter of Credit Obligations would not exceed the then applicable Maximum Commitment, and the sum of all Letter of Credit Obligations does not exceed $25,000,000.00; 24 (4) no Potential Default or Event of Default shall exist and be continuing either prior to or after giving effect thereto. (b) Reaffirmation. Each request for a Loan or a Letter of Credit, as ------------- the case may be, shall be deemed to be a representation and warranty of the correctness of the matters specified in these subsections (a)(ii), (iii) and (iv) hereof. 2.9 Fees. ---- (a) Three Year Non-Use Fee. The Borrowers shall pay to the Agent for ---------------------- the account of each Bank a nonusage fee on the average daily undisbursed amount of such Bank's Three Year Commitment for the period from and including the Closing Date to but not including the earlier of the date such Commitment is terminated or the Three Year Facility Termination Date, at the rate of (a) for the first Quarterly Period, 0.15% per annum and (b) thereafter, 0.375% per annum or, for any Quarterly Period prior to the first day of which (and in any event no later than 45 days after the end of the fiscal quarter most recently ended) the Borrowers have delivered to the Agent a Compliance Certificate and related financial statements of the Borrowers pursuant to Section 6.1 calculating the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio as at the last day of such fiscal quarter (other than such portion of such period during which an Event of Default shall be continuing), the percentage per annum set forth below opposite the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio for the Borrowers reflected on such certificate:
Consolidated Funded Indebtedness to Percentage Rate ----------------------------------- --------------- Consolidated EBITDA ------------------- Greater than 3.0 to 1.0 .375% per annum Equal to or Less than 3.0:1.0 and Greater than 2.0:1.0 .25% per annum Equal to or Less than 2.0:1.0 and Greater than 1.0:1.0 .20% per annum Equal to or Less than 1.0:1.0 .15% per annum
For purposes of the foregoing, the undisbursed amount of each Bank's Three Year Commitment shall mean, from time to time, the Three Year Commitment of such Bank minus such Bank's pro rata share of the then outstanding ----- principal amount of Syndicated Loans disbursed under the Three Year Facility (but not Swingline Loans) and the Letter of Credit Obligations. Said Non- Use Fee shall be calculated on a 360 day year counting the actual number of elapsed days. Accrued fees shall be payable in arrears on each Quarterly Date and on the earlier of the date such Commitment is terminated and the Three Year Facility Termination Date. In the event the Borrowers fail to timely furnish to Agent any Compliance Certificate and related financial statements as required by this Loan Agreement, then the maximum percentage rate for Three Year Non-Use Fees shall apply from the date such Compliance Certificate and related financial statements are required to be delivered and shall remain in effect until the Borrowers furnish them to the Agent and the same are approved by the Agent. 25 (b) 364 Day Non-Use Fee. The Borrowers shall pay to the Agent for ------------------- the account of each Bank a nonusage fee on the average daily undisbursed amount of such Bank's 364 Day Commitment at a rate equal to one-tenth of one percent per annum (0.10%). Said fees shall be payable quarterly in arrears on each Quarterly Date and shall be calculated on a 360 day year counting the actual number of elapsed days. Any accrued and unpaid fees hereunder shall be paid on the earlier of the date such Commitment is terminated and the 364 Day Facility Termination Date. (c) Letter of Credit Fees. The Borrowers shall pay to the Agent for --------------------- the account of the Letter of Credit Bank in respect of each Letter of Credit an issuance fee in an amount equal to 0.125% of the face amount of such Letter of Credit (such fee to be nonrefundable and to be paid in advance on such date of issuance) plus all commissions, charges, costs and expenses in the amounts customarily charged by the Letter of Credit Bank from time to time in like circumstances with respect to the issuance of each Letter of Credit and drawings and other transactions relating to such Letter of Credit. In addition, Borrowers shall pay to the Agent for the account of each Bank a letter of credit fee in respect of each Letter of Credit on the daily average undrawn face amount of such Letter of Credit for the period from and including the date of issuance of such Letter of Credit to and including the date such Letter of Credit is drawn in full, expires or is terminated (such fee to be non-refundable, to be paid in arrears on each Quarterly Date and on the Termination Date of the Three Year Facility and to be calculated, for any day, after giving effect to any payments made under such Letter of Credit on such day) in an amount equal to (a) for the First Quarterly Period, 0.50% per annum, and (b) thereafter, 1.75% per annum or, for any Quarterly Period prior to the first day of which (and in any event no later than 45 days after the end of the fiscal quarter most recently ended) the Borrowers have delivered to the Agent a Compliance Certificate and related financial statements of the Borrowers pursuant to Section 6.1 calculating the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio as at the last day of such fiscal quarter (other than such portion of such period during which a Default shall be continuing), the percentage per annum set forth below opposite the Consolidated Funded Indebtedness to Consolidated EBITDA Ratio for the Borrowers reflected on such certificate:
Consolidated Funded Indebtedness to Percentage Rate ----------------------------------- --------------- Consolidated EBITDA ------------------- Greater than 3.0 to 1.0 1.75% per annum Equal to or Less than 3.0:1.0 and Greater than 2.5:1.0 1.50% per annum Equal to or Less than 2.5:1.0 and Greater than 2.0:1.0 1.0% per annum Equal to or Less than 2.0:1.0 and Greater than 1.0:1.0 0.75% per annum Equal to or Less than 1.0:1.0 0.50% per annum
All calculations of Letter of Credit fees shall be based on a 360 day year counting the actual number of elapsed days. In the event the Borrowers fail to timely furnish to Agent any Compliance Certificate and related financial statements as required by this Loan Agreement, then the maximum percentage rate for Letter of Credit Fees shall 26 apply from the date such Compliance Certificate and related financial statements are required to be delivered and shall remain in effect until the Borrowers furnish them to the Agent and the same are approved by the Agent. (d) Agent's Fees. The Borrowers shall pay to the Agent, for its own ------------ account, and NationsBanc Capital Markets, Inc. the fees specified in the letter agreement dated October 17, 1995 by and between MCC and the Agent, as such agreement may be modified and supplemented from time to time, the terms and provisions of which letter agreement are incorporated herein by reference. 2.10 Reduction of Commitment. The Borrowers shall have the right to reduce ----------------------- the amount of the aggregate Commitments, at any time upon three (3) Business Days notice to the Agent, in any integral multiple of Ten Million Dollars ($10,000,000.00); provided that the Commitments may not be reduced to an amount less than the aggregate amount of the Loans and Letters of Credit then outstanding. The Borrowers shall further have the right to specify how the reduction shall be applied to reduce the Three Year Facility and the 364 Day Facility; provided, if the Borrowers fail to specify, then the reduction shall be made to each Facility pro rata based on the ratio of the amount of the Three -------- Year Commitments and/or 364 Day Commitments, as the case may be, to the then Maximum Commitment. Each such reduction shall, unless otherwise agreed in writing, reduce each Bank's Commitments pro rata in accordance with its -------- percentage amount of all outstanding Three Year Commitments and its percentage amount (if different) of all 364 Day Commitments. Contemporaneously with each such reduction, the Borrowers shall repay to the Agent for the account of each Bank in accordance with the foregoing percentages the amounts, if any, by which the then outstanding principal balance of each Note exceeds each Commitment as so reduced. After each such reduction: (i) the Borrowers shall immediately pay the Agent any Non-Use Fees provided for in Section 2.9 with respect to the amount by which the Commitments are so reduced, but only with respect to the time any such Commitment existed and only to the extent not previously paid; (ii) the Non-Use Fees provided for in Section 2.9 shall be calculated with respect to the aggregate Commitments as so reduced; and (iii) the Commitments may not be increased without the written consent of the Banks. 2.11 Liability. The unconditional liability of each Borrower for the --------- entire Obligations shall not be impaired by any event whatsoever, including, but not limited to, the merger, consolidation, dissolution, cessation of business or liquidation of any Borrower; the financial decline or bankruptcy of any Borrower; the failure of any other party to guarantee the Obligations or to provide collateral therefor; any Bank's or Agent's compromise or settlement with or without release of any Borrower; any Bank's or Agent's release of any collateral for the Obligations, with or without notice to Borrowers; any Bank's or Agent's failure to file suit against any Borrower (regardless of whether Borrower is becoming insolvent, is believed to be about to leave the state or jurisdiction or any other circumstance); any Bank's or Agent's failure to give any Borrower notice of default; the unenforceability of the Obligations against any Borrower due to bankruptcy discharge, counterclaim or for any other reason; any Bank's or Agent's acceleration of the Obligations at any time; the extension, modification or renewal of the Obligations; any Bank's or Agent's failure to undertake or exercise diligence in collection efforts against any party or property; the termination of any relationship of any Borrower with any other Borrower, including, but not limited to, any relationship of commerce or ownership; any Borrower's change of name or use of any name other than the name used to identify such Borrower in this Agreement; or any Borrower's use of the credit extended for any purpose whatsoever. Should the liability of any Borrower hereunder for the entire amount of the 27 Obligations be subject to avoidance or limitation, notwithstanding the contrary agreement and intention of the parties hereto, under any state or federal fraudulent conveyance law or other similar law that may be determined to be applicable, then the liability of such Borrower shall be limited to the maximum amount for which the Borrower may be liable without legal impairment. ARTICLE III ADDITIONAL PROVISIONS REGARDING LOANS AND ----------------------------------------- LETTERS OF CREDIT ----------------- 3.1 Default Rate. Upon the occurrence, and during the continuance, of an ------------ Event of Default hereunder, and regardless of whether the Loans have been accelerated or not, the principal of and, to the extent permitted by law, interest on all Loans hereunder and any other amounts owing hereunder or under the other Loan Documents shall bear interest, payable on demand, at a per annum rate 2% greater than the rate which would otherwise be applicable. Likewise, the Letter of Credit fees due in respect of the daily average undrawn amount of each Letter of Credit as specified in Section 2.9(c) above shall be increased by two percent (2%) per annum upon the occurrence and during the continuation of an Event of Default hereunder. 3.2 Prepayments. ----------- (a) Voluntary Prepayments. The Borrowers shall have the right to --------------------- prepay Syndicated Loans in whole or in part from time to time without premium or penalty without prior notice with respect to Base Rate Loans and upon one Business Day's prior written notice or telephonic notice (confirmed immediately thereafter in writing) to the Agent with respect to all other Loans; provided, however, that each such partial prepayment shall be a minimum principal amount of $2,500,000; provided further, the Borrowers shall pay all amounts payable under Section 3.6 hereof in connection with any such prepayment. Swingline Loans may be prepaid in whole or in part at any time in any integral multiples of $1,000. Amounts prepaid on the Loans may be reborrowed in accordance with the provisions hereof, subject to the approval of the Swingline Bank on Swingline Loans. If the Borrowers shall fail to specify the manner of application, prepayments shall be applied first to Swingline Loans, second to Base Rate Loans and third to Eurodollar Loans (taken as a group) in direct order of their Interest Period maturities. (b) Mandatory Prepayments. If at any time the sum of the outstanding --------------------- principal balances of the Syndicated Loans, Swingline Loans and Letter of Credit Obligations shall exceed the then applicable Maximum Commitment, then the Borrowers shall immediately pay the Agent for the account of the Banks an amount equal to such excess. If at any time the sum of the outstanding principal balances of the Syndicated Loans, Swingline Loans and Letter of Credit Obligations advanced and outstanding under the Three Year Commitments shall exceed the sum of the then applicable Three Year Commitments, then the Borrowers shall immediately pay the Agent for the account of the Banks an amount equal to such excess. If at any time the sum of the outstanding principal balances of the Syndicated Loans disbursed under the then applicable 364 Day 28 Commitments shall exceed the sum of the 364 Day Commitments, then the Borrowers shall immediately pay the Agent for the account of the Banks an amount equal to such excess. 3.3 Conversion. The Borrowers shall have the option, on any Business Day, ---------- to extend existing Syndicated Loans into a subsequent Interest Period or to convert Syndicated Loans into Syndicated Loans of another type; provided, -------- however, that (i) except as provided in Section 3.4, Eurodollar Loans may be converted into Loans of another type only on the last day of an Interest Period applicable thereto, (ii) Eurodollar Loans may be extended, and Loans may be converted into Eurodollar Loans, only if no Potential Default or Event of Default is in existence on the date of extension or conversion, (iii) Loans extended as, or converted into, Eurodollar Loans shall be in such minimum amounts as provided in Section 2.2(b), and (iv) any request for extension or conversion of a Eurodollar Loan which shall fail to specify an Interest Period shall be deemed to be a request for an Interest Period of one month. Each such extension or conversion shall be effected by the Borrowers by having MCC on behalf of the Borrowers give written notice (or telephone notice promptly confirmed in writing) to the Agent (including requests for extensions and renewals, a "Notice of Conversion") prior to 11:00 a.m. (Charlotte, North -------------------- Carolina time) on the Business Day of, in the case of existing Base Rate Loans, and on the third Business Day prior to, in the case of existing Eurodollar Loans, the date of the proposed extension or conversion, specifying the date of the proposed extension or conversion, the Syndicated Loans to be so extended or converted, the types of Loans into which such Syndicated Loans are to be converted and, if appropriate, the applicable Interest Periods with respect thereto. Each request for extension or conversion shall be deemed to be a reaffirmation by the Borrowers that no Potential Default or Event of Default then exists and is continuing and that the representations and warranties set forth in Article V are true and correct in all material respects as of the date of such Notice of Conversion (except to the extent they relate to an earlier period). In the event the Borrowers fail to request extension or conversion of any Eurodollar Loan in accordance with this Section, or any such conversion or extension is not permitted or required by this Section, then such Syndicated Loans shall be automatically converted into Base Rate Loans at the end of their respective Interest Periods. The Agent shall give each Bank notice as promptly as practicable of any such proposed conversion affecting any Syndicated Loans. 3.4 Illegality, etc. In the event any Bank shall determine (which --------------- determination shall be final and conclusive and binding on all the parties hereto absent manifest error): (a) Unavailability. On any date for determining the appropriate -------------- Adjusted Eurodollar Rate for any Interest Period, that by reason of any changes arising on or after the date of this Loan Agreement affecting the London interbank Eurodollar market, dollar deposits in the principal amount requested are not generally available in the London interbank Eurodollar market, and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of Adjusted Eurodollar Rate; then Eurodollar Loans will no longer be available, and requests for a Eurodollar Loan shall be deemed requests for Base Rate Loans, until such time as such Bank shall notify the Borrowers that the circumstances giving rise thereto no longer exist. (b) Illegality. At any time, that the making or continuance of any ---------- Eurodollar Loan has become unlawful by compliance by such Bank in good faith with any law, governmental rule, regulation, guideline or order (or would conflict with any such governmental rule, regulation, guideline or order not having the force of law even 29 though the failure to comply therewith would not be unlawful), or has become impractical as a result of a contingency occurring after the date of this Loan Agreement which materially and adversely affects the London interbank Eurodollar market; then Eurodollar Loans will no longer be available, requests for Eurodollar Loans shall be deemed requests for Base Rate Loans and the Borrowers may, and upon direction of the Bank, shall, as promptly as possible and, in any event within the time period required by law, have any such Eurodollar Loans then outstanding converted into Base Rate Loans. 3.5 Increased Costs and Reduced Return. ---------------------------------- (a) If any Bank shall have determined that the adoption or implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in the interpretation or administration thereof by, any court, central bank or other administrative or governmental authority, or the compliance by any Bank or any lending office of any Bank with any directive of or guideline from any central bank or other governmental authority or the introduction of or change in any accounting principles applicable to any Bank or any lending office of any Bank (in each case, whether or not having the force of law), shall (i) change the basis of taxation of payments to any Bank or any lending office of any Bank of any amounts payable hereunder (except for taxes on the overall income of any Bank or any lending office of any Bank), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan or Letter of Credit or against assets of or held by, or deposits with or for the account of, or credit extended by, any Bank or any lending office of any Bank, or (iii) impose on any Bank or any lending office of any Bank any other condition regarding this Loan Agreement, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to any Bank or any lending office of any Bank of making any Loan or participating in a Letter of Credit, maintaining its Commitment to make any Loan, or to reduce any amount received or receivable by any Bank hereunder, then, upon demand by such Bank, the Borrowers shall pay to such Bank such additional amounts as will compensate such Bank for such increased costs or reductions in amount, together with interest on such additional amounts calculated from the date such costs or reductions are incurred. (b) If any Bank shall have determined that any Capital Guideline or adoption or implementation of, or any change in, any Capital Guideline by the governmental authority charged with the interpretation or administration thereof, or compliance by any Bank or any lending office of such Bank with any Capital Guideline or with any request or directive of any such governmental authority with respect to any Capital Guideline, or the implementation of, or any change in, any applicable accounting principles (in each case, whether or not having the force of law), either (i) affects or would affect the amount of capital required or expected to be maintained by any Bank or any lending office of such Bank, and such Bank determines that the amount of such capital is increased as a direct or indirect consequence of any Loans made or maintained or any Commitment to make Syndicated Loans, or such Bank's or such lending office's other obligations hereunder, or (ii) has or would have the effect of reducing the rate of return on such Lender's or such lending office's capital to a level below that which such Bank could have achieved but for such circumstances as a consequence of any Loans made or maintained, or the Commitment to make Syndicated Loans, such Bank's or such lending office's other obligations hereunder (in each case, taking into consideration 30 the Bank's or such lending office's policies with respect to capital adequacy), then, upon demand by such Bank, the Borrowers shall pay to such Bank from time to time such additional amounts as will compensate such Bank for such cost of maintaining such increased capital or such reduction in the rate of return on the such Bank's or such lending office's capital. (c) Upon determining in good faith that any additional amounts will be payable pursuant to this Section, any Bank will give prompt written notice thereof to the Agent and the Borrowers, which notice shall set forth the basis of the calculation of such additional amounts and, if requested by the Borrowers, supporting documentation therefore, although the failure to give any such notice shall not release or diminish any of the Borrowers' obligations to pay additional amounts pursuant to this Section; provided, -------- however, the Borrowers shall not be obligated to pay any of such amounts to ------- any such Bank until it receives the applicable notice from such Bank together with any requested supporting documentation. Determination by any Bank of amounts owing under this Section shall, absent manifest error, be final and conclusive and binding on the parties hereto. Failure on the part of any Bank to demand compensation for any period hereunder shall not constitute a waiver of such Bank's rights to demand any such compensation in such period or in any other period. (d) The Borrowers will reimburse the Letter of Credit Bank on demand for all charges and expenses made or incurred by the Letter of Credit Bank in connection with each Letter of Credit including any increased expense to the Letter of Credit Bank resulting from the application of any tax (other than income tax), reserve requirement or deposit insurance premiums; the amount of such charges and expenses to be determined by the Letter of Credit Bank in good faith. (e) All amounts payable under this Section 3.5 shall bear interest from the date that is ten (10) Business Days after the date of demand by any Bank until payment in full to such Bank at a per annum rate equal to the Base Rate plus 2%. 3.6 Compensation. The Borrowers shall compensate each Bank, upon its ------------ written request (which request shall set forth the basis for requesting such compensation), for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Bank to fund its Eurodollar Loans) which such Bank may sustain: (a) if for any reason (other than a default by such Bank or Agent) a borrowing of Eurodollar Loans does not occur on a date specified therefor in a Notice of Borrowing or Notice of Conversion; (b) if any repayment or conversion of any Eurodollar Loan occurs on a date which is not the last day of an Interest Period applicable thereto; (c) if any prepayment of any Eurodollar Loan is not made on any date specified in a notice of prepayment given by the Borrowers; or (d) as a consequence of any other default by the Borrowers to repay their Loans or any Letter of Credit when required by the terms of this Loan Agreement. 31 Calculation of all amounts payable to a Bank under this Section shall be made as though such Bank has actually funded its relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate, in an amount equal to the amount of that Loan, having a maturity comparable to the relevant Interest Period and in the case of Eurodollar Loans, through the transfer of such Eurodollar deposit from an offshore office of that Bank to a domestic office of that Bank in the United States of America; provided, however, -------- ------- that each Bank may fund each of its Eurodollar Loans in any manner it sees fit and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section. 3.7 Taxes. (a) All payments made by the Borrowers hereunder, under the ----- Notes or under any Loan Document will be made without setoff, counterclaim, deduction or other defense. All such payments shall be made free and clear of and without deduction for any present or future income, franchise, sales, use, excise, stamp or other taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions or conditions of any nature now or hereafter imposed, levied, collected, withheld or assessed by any jurisdiction (whether pursuant to United States Federal, state, local or foreign law) or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or similar liabilities, excluding taxes on the overall income of a Bank or any lending office of such Bank, (such nonexcluded taxes are hereinafter collectively referred to as the "Taxes"). If the Borrowers shall be required by law to deduct or to withhold any Taxes from or in respect of any amount payable hereunder, (i) the amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including Taxes on amounts payable to the Banks pursuant to this sentence) the Banks receive an amount equal to the sum they would have received had no such deductions or withholdings been made, (ii) the Borrowers shall make such deductions or withholdings, and (iii) the Borrowers shall pay the full amount deducted or withheld to the relevant taxation authority in accordance with applicable law; provided, however, if any Bank subsequently recovers any of such deductions or - -------- ------- withholdings, such Bank shall promptly refund to the Borrowers the amount of such deductions or withholdings. Whenever any Taxes are payable by a Borrower, as promptly as possible thereafter, the Borrowers shall send the Banks and the Agent an official receipt showing payment. In addition, the Borrowers agree to pay any present or future taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, recordation or filing of, or otherwise with respect to, this Loan Agreement, the Notes or any other Loan Document (hereinafter referred to as "Other Taxes"). (b) The Borrowers will indemnify the Banks for the amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.7) paid by any Bank and any liability (excluding penalties, interest and expenses for nonpayment, late payment or otherwise) whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be paid within 30 days from the date on which such Bank makes written demand; provided, however, the Borrowers shall have the right to contest any such Taxes before any appropriate administrative agency or court of competent jurisdiction so long as such Bank is not adversely affected by any such contest, as reasonably determined by such Bank. (c) Each Bank which is a foreign person (i.e., a Person other than a United States Person for United States Federal income tax purposes) hereby agrees that: 32 (1) it shall, no later than the Closing Date (or, in the case of a Bank which becomes a party hereto pursuant to Section 10.3(b) hereof after the Closing Date, the date upon which such Bank becomes a party hereto) deliver to the Borrowers through the Agent: (A) two accurate and complete signed originals of Form 4224, or (B) two accurate and complete signed originals of Form 1001, in each case indicating that such Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees for the account of such lending office or offices under this Loan Agreement free from withholding of United States Federal income tax; (2) if at any time such Bank changes its lending office or offices or selects an additional lending office, it shall, at the same time or reasonably promptly thereafter, deliver to the Borrowers through the Agent in replacement for, or in addition to, the forms previously delivered by it hereunder; (A) if such changed or additional lending office is located in the United States, two accurate and complete signed originals of Form 4224, or (B) otherwise, two accurate and complete signed originals of Form 1001, in each case indicating that such Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees for the account of such changed or additional lending office under this Loan Agreement free from withholding of United States federal income tax; and (3) it shall, promptly upon the Borrower's reasonable request to that effect, deliver to the Borrowers such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Bank's tax status for withholding purposes. (d) If the Borrowers fail to perform their obligations under this Section 3.7, the Borrowers shall indemnify the Banks for any incremental taxes, interest or penalties that may become payable as a result of any such failure. 3.8 Change of Lending Office. Each Bank agrees that, upon the ------------------------ occurrence of any event giving rise to the operation of Section 3.4(a) or (b) or 3.7, it will, if requested by the Borrowers, use reasonable efforts (subject to overall policy considerations of such Bank) to designate another lending office for any Loans affected by such event, provided that such designation is -------- made on such terms that such Bank and its lending office suffer no disadvantage (including, without limitation, no economic, legal or regulatory disadvantage), with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section shall affect or postpone any of the obligations of the Borrowers or the right of any Bank provided in Sections 3.4, 3.5, or 3.7. 33 3.9 Late Payment Fee. Should any principal installment payment be in ---------------- default for more than 15 days, and if no default rate of interest has yet been imposed, then there may be imposed, to the extent permitted by law, a delinquency charge not to exceed 2% of such installment in default. In addition, at the Majority Banks' option, any overdue interest, fees and charges may, for purposes of computing and accruing interest, be deemed to be a part of the corresponding principal Obligation and interest shall accrue on a daily compounded basis after such date (at the applicable rate, including any default rate under Section 3.1) thereon. 3.10 Payments and Computations. Except as otherwise specifically provided ------------------------- herein, all payments hereunder shall be made to the Agent in U.S. dollars in immediately available funds at its offices in Charlotte, North Carolina, not later than 1:00 p.m. (Charlotte, North Carolina time) on the date when due. Payments received after such time shall be deemed to have been received on the next succeeding Business Day. The Agent will thereafter cause to be distributed promptly like funds relating to the payment of principal or interest or fees ratably to the Banks entitled to receive such payments in accordance with the terms of this Loan Agreement. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and fees for the period of such extension), except that in the case of Eurodollar Loans, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. All computations of interest and fees shall be made on the basis of actual number of days elapsed over a year of 360 days. Interest shall accrue from and include the date of such Loan, but exclude the date of payment. 3.11 Replacement or Removal of Bank. In the event that either: ------------------------------ (a) any Bank or Banks refuse to consent to certain proposed changes, waivers or discharges which have been approved by the Majority Banks as provided in Section 10.6, or (b) any Bank or Banks refuse to consent to any extension to a Termination Date with respect to the 364 Day Facility which the Majority Banks have agreed to extend, or (c) the Agent receives one or more notices claiming compensation reimbursement or indemnity (each, a "Compensation Notice") pursuant to the provisions of Sections 3.4, 3.5 or 3.7 and the aggregate amount of all such compensation, reimbursement or indemnity payments made or required to be made by the Borrowers to such Bank pursuant to Sections 3.4, 3.5 or 3.7 is materially greater (as determined by the Borrowers in their reasonable judgment) than the weighted average amount of payments made or required to be made to the other Banks pursuant to Sections 3.4, 3.5 or 3.7 and/or such Bank refuses or is unable to change lending offices pursuant to Section 3.8 after a request from the Borrowers to do so, then, so long as no Potential Default or Event of Default shall have occurred - ---- and be continuing, the Borrowers may, within 60 days after any such refusal or receipt of any such Compensation Notice, elect to terminate such Bank as a party to this Loan Agreement; provided, the Borrowers may elect to terminate such Bank under subparagraphs (a) or (b) above only if, together with its notice of termination, it provides to the Agent a commitment from another 34 financial institution meeting the criteria of an Eligible Assignee and otherwise reasonably satisfactory to the Agent (a "Replacement Bank") to replace the Commitment of the terminated Bank under this Loan Agreement on the terms and conditions set forth herein. Under subparagraph (c) above, if any Bank to be terminated has a Commitment which, together with the amount of any Commitment(s) concurrently therewith to be reduced, aggregates 20% or less of the aggregate Commitments, the Borrowers may elect either to replace such Bank with another Replacement Bank or to reduce the Commitment by the amount of the Commitment of such Bank. Under subparagraph (c) above, if any Bank to be terminated has a Commitment which, together with the amount of any Commitment or Commitments concurrently therewith to be reduced in accordance with this Section 3.11, aggregates in excess of 20% of the aggregate Commitments, the Borrowers may elect to terminate such Bank only if, together with its notice of termination, they provide to the Agent a Commitment from a Replacement Bank to replace the Commitment of the terminated Bank under this Loan Agreement on the terms and conditions set forth herein. The Borrowers' election to terminate a Bank under this Section 3.11 shall be set forth in a written notice from the Borrowers to the Agent (with a copy to such Bank), setting forth (i) the basis for termination of such Bank, (ii) that the Borrowers intends to replace such Bank with a Replacement Bank together with the name of such Replacement Bank, and (iii) the date (not later than 30 days after the date of such notice) when such termination shall become effective (the "Termination Effective Date"). On the Termination Effective Date, (x) the Replacement Bank shall pay the terminated Bank an amount equal to all principal, interest, fees and other amounts owed to such Bank (including, without limitation, any amounts owed under Sections 3.4, 3.5 or 3.7), through the date on which such termination becomes effective, and (y) there shall have been received by the Agent all documents and supporting materials necessary, in the reasonable judgment of the Agent to evidence the substitution of the Replacement Bank for such Bank. ARTICLE IV CONDITIONS PRECEDENT TO INITIAL LOANS ------------------------------------- The obligations of the Banks to make the initial Loan hereunder and the obligation of the Letter of Credit Bank to issue the initial Letter of Credit hereunder are subject, at the time of the making of such initial Loan or the issuance of such initial Letter of Credit to the satisfaction of the following conditions (in form and substance acceptable to the Agent): 4.1 Executed Loan Documents. Receipt by the Agent of executed copies of ----------------------- this Loan Agreement and the other Loan Documents and (in sufficient numbers to provide a fully executed original of each, except for the Notes, for each Bank). 4.2 No Default; Representations and Warranties. Receipt by the Agent of a ------------------------------------------ certificate from the chief financial officer of MCC on behalf of the Borrowers certifying that at both at the time of the making of such Loan or the issuance of such Letter of Credit and after giving effect thereto (i) there shall exist no Potential Default or Event of Default and (ii) all representations and warranties contained herein or in the other Loan Documents then in effect shall be true and correct in all material respects. 4.3 Opinion of Counsel. Receipt by the Agent of an opinion, or opinions, ------------------ in form and substance satisfactory to the Banks, addressed to the Banks and dated as of the Closing 35 Date from counsel to the Borrowers, which shall cover the matters contained in Exhibit 4.3 hereto (in sufficient numbers to provide a fully executed original - ----------- to each Bank). 4.4 Corporate Documents. Receipt by the Agent of the following: ------------------- (a) Charter Documents. Copies of the charter documents (as amended) ----------------- of each Borrower certified to be true and complete as of a recent date by the appropriate governmental authority of the state of its incorporation. (b) Resolutions. Copies of resolutions of the Board of Directors of ----------- each Borrower approving and adopting the Loan Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary as of the date of this Loan Agreement to be true and correct and in force and effect as of such date. (c) Bylaws. A copy of the bylaws of each Borrower certified by a ------ secretary or assistant secretary as of the date of this Loan Agreement to be true and correct and in force and effect as of such date. (d) Good Standing. Copies of certificates of good standing, ------------- existence or its equivalent with respect to each Borrower certified as of a recent date by the appropriate governmental authorities of the state of incorporation and each of the other material states where such Borrower is currently doing business. 4.5 Termination of Existing Agreements. Receipt by the Agent of evidence ---------------------------------- satisfactory to the Agent that the existing credit agreement and indenture by and among MCC, the banks party thereto and Deposit Guaranty National Bank, as trustee for such banks has been terminated as well as all existing credit facilities with NationsBank of Tennessee, N.A. (collectively, the "Existing Credit Agreements"). ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ The Borrowers hereby represent and warrant to the Agent and the Banks that: 5.1 Organization and Power; Qualification; Good Standing; Subsidiaries. ------------------------------------------- ---------------------- 5.1.1 Organization and Power. The Borrowers and each of their ---------------------- Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation and have all requisite corporate power and authority to own and operate their respective properties and to carry on their respective business as now conducted and proposed to be conducted. Each Borrower has all requisite corporate power and authority to enter into this Loan Agreement and to perform its obligations hereunder. 5.1.2 Qualification; Good Standing. Each Borrower is duly licensed or ---------------------------- qualified as a foreign corporation authorized to transact business and is in good standing in each jurisdiction in which the character of the properties owned by it or the nature of the business transacted by it makes such licensing or qualification necessary. 36 5.1.3 Subsidiaries. No Borrower has any Subsidiaries other than as ------------ identified in Exhibit 5.1.3 hereto. The capital stock of each Borrower's ------------- Subsidiary is duly authorized, validly issued and fully paid and nonassessable. Each Borrower's Subsidiary is validly existing and in good standing under the laws of its respective jurisdiction of incorporation and is duly licensed or qualified as a foreign corporation authorized to transact business and is in good standing in each jurisdiction in which the character of the properties owned by it or the nature of the business transacted by it makes such licensing or qualification necessary. Each Borrower's Subsidiary has full corporate power and authority to own its assets and properties, and to operate its business as presently owned and conducted. Exhibit 5.1.3 correctly sets forth the ownership ------------- interest of each Borrower in each of its Subsidiaries as of the Closing Date. 5.2 Authorization of Borrowing; No Conflicts; Binding Obligations; etc. ------------------------------------------------------------------ 5.2.1 Authorization of Borrowing. The execution, delivery and performance -------------------------- by the Borrowers of this Loan Agreement and the issuance, delivery and payment of the Notes have been duly authorized by all necessary corporate action by each Borrower. 5.2.2 No Conflicts. The execution, delivery and performance by each ------------ Borrower of this Loan Agreement and the issuance, delivery and payment of the Notes and any Letter(s) of Credit do not and will not (i) violate any provision of law applicable to any Borrower, the Charter (as amended) or Bylaws of any Borrower or the Charter or Certificate or Articles of Incorporation or Articles of Association or Bylaws or Memoranda of Association of any Subsidiary of any Borrower, or any order, judgment or decree of any court or other agencies of government binding on any Borrower or their Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of any Borrower or any of their Subsidiaries, (iii) result in or require the creation or imposition of any Lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of any Borrower or any of their Subsidiaries or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of any Borrower or any of their Subsidiaries. 5.2.3 Governmental Consents. The execution, delivery and performance by --------------------- the Borrowers of this Loan Agreement, and the issuance, delivery and performance of the Notes and any Letter(s) of Credit do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body or other Person. 5.2.4 Binding Obligation. This Loan Agreement is, and the Notes and any ------------------ Letter of Credit applications when executed and delivered hereunder will be, the legally valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors, rights generally and equitable remedies. 5.3 Financial Condition; No Changes. ------------------------------- 5.3.1 Financial Statements. MCC and its Subsidiaries have heretofore -------------------- delivered to the Banks the Financial Statements. Such Financial Statements were prepared in accordance with GAAP (subject, with respect to the unaudited Financial Statements, to the absence of notes 37 required by GAAP and to normal year-end audit adjustments) and fairly present in all material respects the consolidated financial position of MCC and its Subsidiaries as at the respective dates thereof and the consolidated results of operations and cash flows of MCC and its Subsidiaries. 5.3.2 Contingent Obligations. As of the Closing Date, except for the ---------------------- Farmland MissChem Project Contingent Obligations disclosed on Exhibit 5.3.2, no ------------- Borrower or any Subsidiary has any material Contingent Obligation which is not reflected in the Financial Statements delivered pursuant to Subsection 5.3.1 or in the notes thereto or otherwise permitted by Section 7.3. 5.3.3 No Material Adverse Change. During the period June 30, 1995 through -------------------------- the Closing Date, there has been no change in the business, operations, properties, prospects, assets or condition (financial or otherwise) of the Borrowers and their Subsidiaries which has been, either in any case or in the aggregate, materially adverse to the Borrowers and their Subsidiaries, taken as a whole. 5.3.4 Restricted Payments. During the period June 30, 1995 through and ------------------- including the Closing Date, the Borrowers have not directly or indirectly declared, ordered, paid or made or set apart any sum of money or any property for any Restricted Payment or agreed to do so, except as disclosed on Exhibit ------- 5.3.4. - ----- 5.4 Title to Properties; Liens. The Borrowers and their Subsidiaries -------------------------- have good and legal title to all properties and assets, real and personal, tangible and intangible, reflected in the consolidated balance sheet of MCC and its Subsidiaries as of June 30, 1995 referred to in Subsection 5.3.1 except for assets acquired or disposed of either in the ordinary course of business since the date of such consolidated balance sheet or as otherwise permitted by this Loan Agreement. All such properties and assets are free and clear of Liens, except as permitted under Section 7.1 or under Liens securing the Existing Credit Agreements which Liens shall be released in full by no later than ten (10) Business Days following the Closing Date hereof. 5.5 Litigation. Including the litigation described in Note 13 to the ---------- Financial Statements delivered pursuant to Subsection 5.3.1 and on Exhibit 5.5 ----------- hereto, there is no action, suit, proceeding or arbitration (whether or not purportedly on behalf of the Borrowers or any of their Subsidiaries) at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or to the knowledge of the Borrowers threatened against or affecting any Borrower or Subsidiary or any of their respective properties which would result in any material adverse change in the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries taken as a whole, or would materially adversely affect the ability of the Borrowers to perform their Obligations, and there is no basis known to the Borrowers for any such action, suit or proceeding. 5.6 Compliance with Law. Except as disclosed in Note 13 to the ------------------- Financial Statements delivered pursuant to Subsection 5.3.1 or in Section 5.5, none of the Borrowers or their Subsidiaries is (i) in violation of any applicable law which materially adversely affects or may materially adversely affect the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, or which would materially adversely affect the ability of 38 the Borrowers to perform their obligations or (ii) subject to or in default with respect to any final judgment, writ, injunction, decree, rule or regulation of any court or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would have a materially adverse effect on the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, or which would materially adversely affect the ability of the Borrowers to perform its obligations. 5.7 Payment of Taxes. As of the Closing Date, the Borrowers and their ---------------- Subsidiaries have filed all federal tax returns and all other tax returns that are required to be filed by any of them, and have paid all taxes, assessments, fees and other governmental charges upon the Borrowers and their Subsidiaries and upon their respective properties and assets (real and personal, tangible and intangible), income and franchises which are due and payable in accordance with such returns, except to the extent permitted by Section 6.3. As of the Closing Date, the charges, accruals and reserves on the books of the Borrowers and their Subsidiaries in respect of any taxes or governmental charges are, in the opinion of the Borrowers, adequate and the Borrowers do not know of any proposed tax assessment against them or any of their Subsidiaries that would be material to the condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole. 5.8 Contractual Obligations: Performance. ------------------------------------ 5.8.1 Contractual Obligations. Except as set forth in Exhibit 5.8.1 ----------------------- ------------- hereto, as of the Closing Date no Borrower or Subsidiary of any Borrower is a party to or is subject to any Contractual Obligation (other than Contractual Obligations entered into in the ordinary course of business of the Borrowers and their Subsidiaries or as otherwise permitted by this Loan Agreement) that is material to the Borrowers and their Subsidiaries, taken as a whole. None of such Contractual Obligations in existence as of the Closing Date will materially adversely affect the ability of the Borrowers to perform their obligations. 5.8.2 Performance. No Borrower or Subsidiary of any Borrower is in ----------- default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation of the Borrowers and any of their Subsidiaries and no condition exists which, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a material adverse effect on the business, properties and assets (real and personal, tangible and intangible) operations or condition (financial or otherwise), of the Borrowers and their Subsidiaries, taken as a whole, and which would not materially adversely affect the ability of the Borrowers to perform their Obligations. 5.9 Environmental Protection. As of the Closing Date, each Borrower and ------------------------ Subsidiary of any Borrower has obtained all material permits, licenses and other authorizations that are required with respect to the operation of their businesses under any Environmental Law; each Borrower and Subsidiary is in compliance with all terms and conditions of the required permits, licenses and authorizations, and is also in compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in the Environmental Laws, except to the extent that the failure to comply therewith would not result in any material adverse change in the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, or materially 39 adversely affect the ability of the Borrowers to perform their Obligations; including the matters set forth in Note 13 to the Financial Statements delivered pursuant to Subsection 5.3.1, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or threatened against the Borrowers or any of their Subsidiaries relating in any way to the Environmental Laws which would result in any material adverse change in the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, or which would materially adversely affect the ability of the Borrowers to perform their Obligations; and there are no past or present (or, to the best of each Borrower's knowledge, future) events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with the Environmental Laws, or which may give rise to any common law or other legal liability, including, without limitation, liability under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, or any similar state, local or foreign laws, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, notice of violation, study or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical or industrial, toxic or hazardous substance or waste, except to the extent that such non-compliance or liability would not result in any material adverse change in the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, or materially adversely affect the ability of the Borrowers to perform its obligations. 5.10 Employee Benefit Plans. The Borrowers and each of their ---------------------- Subsidiaries and each of their respective ERISA Affiliates are in compliance in all material respects with any applicable provisions of the Code and ERISA and the regulations and published interpretations thereunder with respect to all Pension Plans and Multiemployer Plans. As of the Closing Date, no Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan and neither the Borrowers, any of their Subsidiaries nor any of their respective ERISA Affiliates has incurred or reasonably expects to incur any withdrawal liability under ERISA to any Multiemployer Plan. 5.11 Certain Fees. No broker's or finder's fee or commission will be ------------ payable by or on behalf of the Borrowers with respect to this Loan Agreement or the transactions contemplated hereby, and the Borrowers hereby indemnify the Banks against and agrees that they will hold the Banks harmless from any claim, demand or liability for broker's or finder's fees alleged to have been incurred by the Borrowers in connection with this Loan Agreement or the transactions contemplated hereby. 5.12 Defaults. No Event of Default or Potential Default exists under -------- this Loan Agreement. 5.13 Disclosure. As of the Closing Date, there is no fact known to any ---------- Borrower which materially adversely affects the business, operations, properties and assets (real and personal, tangible and intangible) or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, which has not been disclosed herein or in such other documents, certificates and statements furnished to the Banks for use in connection with the transactions contemplated hereby. 40 5.14 Margin Stock. None of such Loans will be used for the purpose of ------------ purchasing or carrying any "margin stock" as defined in Regulations U, Regulation X or Regulation G, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry "margin stock" or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of Regulation U, Regulation X or Regulation G. 5.15 Investment Company Act; Public Utility Holding Company Act. No ---------------------------------------------------------- Borrower or Subsidiary is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. ARTICLE VI AFFIRMATIVE COVENANTS --------------------- The Borrowers hereby covenant and agree that so long as this Loan Agreement is in effect and until the Loans and the Letter of Credit Obligations, together with interest, fees and all other Obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated: 6.1 Financial Statements and Other Reports. The Borrowers will -------------------------------------- maintain, and cause each of their Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements of the Borrowers in conformity with GAAP. The Borrowers will deliver to each of the Banks: (a) as soon as practicable and in any event within 45 days after the end of each fiscal quarter in each of MCC's Fiscal Years, other than the fourth fiscal quarter, an unaudited consolidated balance sheet of MCC and its Subsidiaries as at the end of such period and the related unaudited consolidated statements of earnings and shareholders equity of the Borrowers and their Subsidiaries for such fiscal quarter and year to date periods setting forth in comparative form the consolidated figures for the corresponding periods of the previous Fiscal Year; (b) as soon as practicable and in any event within 90 days after the end of each Fiscal Year of the Borrowers, a consolidated balance sheet of MCC and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, of cash flows and of shareholders equity of MCC and its Subsidiaries for such Fiscal Year, setting forth in comparative form the consolidated figures for the previous Fiscal Year, all in reasonable detail and accompanied by an opinion thereon of a firm of independent public accountants of recognized national standing selected by the Borrowers, which opinion shall not be subject to a "going concern" or similar qualification, to the effect that such consolidated financial statements have been prepared in accordance with GAAP and present fairly the financial condition of the Borrowers reported on and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, includes such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; 41 (c) together with each delivery of financial statements of the Borrowers and their Subsidiaries pursuant to paragraph (a) and (b) above, a statement signed by MCC's Vice President-Finance and Chief Financial Officer, Treasurer or Controller to the effect that no Event of Default or Potential Default exists, and that such financial statements present fairly the financial position of MCC and its Subsidiaries and the results of their operations for the period covered thereby, and together with each delivery of financial statements of the Borrowers and their Subsidiaries pursuant to paragraphs (a) and (b) above, a Compliance Certificate demonstrating in reasonable detail compliance during and at the end of such accounting periods with the applicable margins, ratios and covenants contained in Sections 2.4, 7.3, 7.4, 7.5 and 7.10; (d) together with each delivery of financial statements of MCC and its Subsidiaries pursuant to paragraph (b) above, a certificate of the accountants addressed to the Agent and the Banks who rendered the opinion with respect to such financial statements, stating that they have read this Loan Agreement and stating further whether, in making their audit, such accountants have become aware of any Event of Default or Potential Default under any of the terms or provisions of Sections 7.4, 7.5 and 7.10 of this Loan Agreement insofar as any such terms or provisions pertain to or involve accounting matters or determinations, and if any such condition or event then exists, specifying the nature thereof; (e) promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available generally by any Borrower to its security holders or by any Subsidiary of a Borrower to its security holders other than such Borrower or another Subsidiary, of all regular and periodic reports and all registration statements and prospectuses, if any, filed by any Borrower or any of their Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental authority succeeding to any of its functions, and of all press releases and other statements made available generally by any Borrower or any Subsidiary to the public concerning material developments in the business of the Borrowers and their Subsidiaries; (f) promptly upon becoming aware (i) of any condition or event which constitutes an Event of Default or Potential Default, or that any Bank or Agent has given any notice or taken any other action with respect to a claimed Event of Default or Potential Default under this Loan Agreement, (ii) that any Person has given any notice to any Borrower or any Subsidiary of such Borrower or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 8.1.2, (iii) of the institution of any litigation involving an alleged liability of any Borrower or any Subsidiary equal to or greater than $10,000,000, individually or in the aggregate for all such litigation, or any adverse determination in any litigation involving a potential liability of the Borrowers or any of their Subsidiaries equal to or greater than $3,500,000, individually or in the aggregate for all related litigation, (iv) that any civil, criminal or administrative action, suit, demand, claim, hearing, notice of violation, investigation or proceeding is pending or threatened against the Borrowers or any of their Subsidiaries, including, without limitation, with respect to any Environmental Laws, involving potential liability, penalties or sanctions (including, without limitation, estimated cleanup costs), equal to or greater than $10,000,000, individually or in the aggregate, or any adverse determination in any of the foregoing involving potential liability of the Borrowers or any of their Subsidiaries equal to or greater than $3,500,000, individually 42 or in the aggregate, (v) of any condition or event which would be required to be disclosed in a current report filed by MCC with the Securities and Exchange Commission on Form 8-K if MCC were required to file such reports under the Securities Exchange Act of 1934, as amended from time to time, and any successor statute, or (vi) of a material adverse change in the business, operations, properties and assets (real and personal, tangible and intangible) condition or prospects (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole, an Officer's Certificate specifying the nature and period of existence of any such condition or event, or specifying the notice given or action taken by such Person and the nature of such claimed default, Event of Default, Potential Default, event or condition, and what action the Borrowers have taken, is taking and proposes to take with respect thereto; (g) promptly upon becoming aware of the occurrence of any (i) Termination Event, or (ii) nonexempt "prohibited transaction," as such term is defined in Section 4975 of the Code, in connection with any Pension Plan or any trust created thereunder, a written notice specifying the nature thereof, what action the Borrowers have taken, are taking or proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the United States Department of Labor or the Pension Benefit Guaranty Corporation with respect thereto; (h) with reasonable promptness, copies of (i) all notices received by the Borrowers or any of their ERISA Affiliates of the Pension Benefit Guaranty Corporation's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (ii) all notices received by the Borrowers or any of their ERISA Affiliates from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA; (iii) any application for the waiver or extension of the minimum funding requirements of the Code or ERISA; (iv) any notice of the failure of any Pension Plan to meet the minimum funding standards which is required under Section 101(d) of ERISA; and (v) any notice of the intent to terminate any Pension Plan which is required under Section 4041(2) of ERISA; (i) as soon as practicable and in any event within ninety (90) days after the beginning of each Fiscal Year, the consolidated proforma operating budget and capital expenditures budget included in the Borrowers' operating plan for such Fiscal Year, on a quarterly basis; and (j) with reasonable promptness, such other information and data with respect to the Borrowers or any of their Subsidiaries as from time to time may be reasonably requested by any Bank. 6.2 Corporate Existence, etc. Each Borrower will at all times preserve ------------------------ and keep in full force and effect its corporate existence and rights and franchises material to its business and, except as permitted under Section 7.6, those of each of their Subsidiaries; provided, that no Borrower shall be -------- required to preserve and keep in full force and effect the corporate existence of any Subsidiary that is not a Borrower hereunder or any right or franchise if such Borrower reasonably determines that the preservation thereof is no longer desirable in the conduct of the business of such Borrower and that the loss thereof is not disadvantageous in any material respect to the Banks. 43 6.3 Payment of Taxes and Claims. Each Borrower will, and will cause --------------------------- each of their Subsidiaries to, pay all taxes, assessments and other governmental charges imposed upon it or any of its properties or assets (real and personal, tangible and intangible) or in respect of any of its franchises, business, income or property, and all claims (including, without limitation, claims for labor, services materials and supplies) for sums which have become due and payable and which by law have or may become a Lien upon any of its properties or assets (real and personal, tangible and intangible); provided, that no such charge or claim need be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such reserves or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. 6.4 Maintenance of Properties; Insurance. Each Borrower will maintain ------------------------------------ or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or owned or leased in the business of such Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof unless disposed of in the ordinary course of business of such Borrowers and their Subsidiaries or as otherwise permitted by this Loan Agreement. Each Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its properties and business and the properties and business of their Subsidiaries against loss or damage of the kinds customarily insured against by business entities of established reputation engaged in the same or similar businesses and similarly situated, of such types and in such amounts as are customarily carried under similar circumstances by such other business entities; provided, that each Borrower may maintain reasonable self insurance (including reasonable deductibles or similar loss or retained risk thresholds). 6.5 Inspection. Each Borrower will permit any authorized ---------- representatives designated by any Bank to visit and inspect any of the properties of such Borrower or any of their Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at such reasonable times during normal business hours and as often as may be reasonably requested. Each Bank confirms to such Borrower that it is the policy and practice of such Bank to maintain in confidence all proprietary or confidential information received by it from its customers, and that it will use efforts to protect the confidentiality of such information commensurate with its efforts to maintain the confidentiality of its own proprietary or confidential information, subject to any obligation it may have to disclose such information to assignees or participants described in Section 10.3 hereof, and subject to any requirement that such information be disclosed in connection with any judicial, administrative or governmental proceeding or to any regulatory authority having jurisdiction over any of the Banks or their respective operations, or otherwise under lawful compulsion. 6.6 Security for Obligations. If any Borrower or any of their ------------------------ Subsidiaries shall create or assume any Lien upon any of its properties or assets (real and personal, tangible and intangible), whether now owned or hereafter acquired, other than Liens permitted by the provisions of Section 7.1, it shall, within 15 days after the creation of such Lien, make or cause to be made effective provision whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness thereby secured or entitled to be secured as long as any such other Indebtedness shall be so secured; provided, that this covenant shall not -------- 44 be construed as consent by the Banks to any violation by the Borrowers of the provisions of Section 7.1. 6.7 Compliance with Laws, etc. The Borrowers and their Subsidiaries ------------------------- shall comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, including, without limitation, all Environmental Laws, noncompliance with which would materially adversely affect the business, properties and assets (real and personal, tangible and intangible) operations or condition (financial or otherwise) of any Borrower or its Subsidiaries. 6.8 Pari Passu. All the payment Obligations of the Borrowers arising ---------- under or pursuant to the Loan Documents will at all times rank pari passu with all other unsecured and unsubordinated payment obligations and liabilities (including contingent obligations and liabilities) of each of the Borrowers (other than those which are mandatorily preferred by laws or regulations of general application). ARTICLE VII NEGATIVE COVENANTS ------------------ The Borrowers hereby covenant and agree that so long as this Loan Agreement is in effect and until the Loans and the Letter of Credit Obligations, together with interest, fees and all other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated: 7.1 Liens. The Borrowers will not, and will not permit any of their ----- Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any Borrower or any Subsidiary, whether now owned or hereafter acquired, or any income or profits therefrom, except: (a) Liens for taxes, assessments or governmental charges or claims the payment of which is not at the time required by Section 6.3; (b) Statutory Liens of landlords and Liens of carriers, warehouses, mechanics, materialmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserves or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, and deposits made to obtain the release of such Liens; (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection with worker's compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety, stay, appeal or customs bonds', bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (d) Any attachment or judgment Lien not constituting an Event of Default pursuant to Section 8.1.8 hereof; 45 (e) Liens of mortgages or pledges by Subsidiaries of a Borrower of all or part of their assets as security for Indebtedness owing by them to such Borrower or to another Subsidiary of such Borrower; (f) The pledge by a Borrower or any Subsidiary of such Borrower of documents representing merchandise being exported to any place outside the continental limits of the United States of America in connection with the discount or sale of foreign drafts or in connection with other similar methods of financing such export shipments; (g) Operating Leases, and all liens, rights of reverter and other possessory rights of the lessors thereunder; (h) Zoning restrictions, easements, rights-of-way or other restrictions on the use of real property, and minor irregularities in the title thereto; and any other Liens and encumbrances similar to those described in this paragraph (i) that were not incurred in connection with the borrowing of money or the obtaining of advances or credits; provided, -------- that all of the foregoing do not in the aggregate materially detract from the value of the property of any Borrower and its Subsidiaries or materially impair the use thereof in the operation of their respective businesses or the marketability thereof; (i) Capital Leases, conditional sales agreements, and purchase money security interests granted in connection with the acquisition of fixed assets, provided, that the acquisition thereof is permitted by -------- Subsection 7.5.5, such Liens attach only to the property acquired thereby, and such Capital Leases, security interests, conditional sales agreements and/or other title retention arrangements secure Indebtedness not in excess of an aggregate of $10,000,000.00; (j) The pledge by Farmland MissChem, Ltd. of all of its assets to the project lenders on the Farmland MissChem Project and the pledge by MCC of all of its stock in Farmland MissChem, Ltd. 7.2 Investments. The Borrowers will not, and will not permit any of ----------- their Subsidiaries to, directly or indirectly, make or own any Investment in any Person, except: (a) The Borrowers and their Subsidiaries may make and own Investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition thereof, (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's, (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating in one of the two highest rating categories of S&P or Moody's, (iv) certificates of deposit, bankers' acceptances or time deposits maturing within one year from the date of acquisition thereof issued by any of the Banks or any affiliate of any of the Banks, (v) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof or 46 time deposits maturing within 30 days from the date of acquisition thereof issued by other commercial banks organized under the laws of the United States of America or any state thereof or the District of Columbia, each having shareholders' equity of not less than $125,000,000, or other commercial banks organized under the laws of a foreign country, each having shareholders' equity of not less than $500,000,000, and (vi) repurchase agreements with commercial banks or with securities dealers, in any case fully secured as to principal and interest by obligations described in clauses (i) - (v) of this paragraph (a); (b) Each Borrower may make and own Investments consisting of advances, loans, extensions of credit to or purchases of Securities of, or other Investments in, any of their Subsidiaries except NSI, and any Borrower's Subsidiaries may make and own Investments consisting of advances, loans, extensions of credit or purchases of Securities of, or other investments in, any Borrower and Subsidiaries (other than NSI) of such Borrower; (c) The Borrowers may make Investments in or loans to Farmland MissChem, Ltd. in connection with financing the Farmland MissChem Project of up to One Hundred Million Dollars ($100,000,000.00) in the aggregate; (d) The Borrowers and their Subsidiaries may continue to own Investments reflected in the Financial Statements delivered pursuant to Subsection 5.3.1. hereof; and (e) The Borrowers and their Subsidiaries may make and own other Investments not to exceed in the aggregate at any time outstanding 10% of their Consolidated Tangible Net Worth; provided, no additional Investment may be made in NSI. The provisions of this Section 7.2 shall not restrict the applicability of Section 7.6. 7.3 Contingent Obligations. Each Borrower covenants that it will not ---------------------- and will not permit any of their Subsidiaries to, directly or indirectly, create or become or be liable with respect to any Contingent Obligation, including, without limitation Contingent Obligations of any Borrower or any Subsidiary of such Borrower with respect to any other Subsidiary of a Borrower, except: (a) A Borrower may become or remain liable with respect to guaranties of the obligations of a Subsidiary (other than NSI) with respect to Operating Leases, employment agreements, raw material and other supply contracts, and indebtedness for borrowed money incurred in compliance with Section 7.10; (b) The Borrowers and their Subsidiaries may become and remain liable with respect to Contingent Obligations arising out of assignments by a Borrower or a Subsidiary (other than NSI) of Capital Leases and Operating Leases; and (c) The Borrowers and their Subsidiaries may become and remain liable with respect to Contingent Obligations arising out of (i) the indemnification of directors, officers, employees and agents to the extent permissible under any applicable Business Corporation Act or the corporation law of the jurisdiction in which a Borrower is incorporated or organized, (ii) the indemnification of investment bankers, commercial 47 banks and other independent consultants or professional advisors pursuant to agreements relating to the underwriting of a Borrower's securities or the rendering of banking or professional services for such Borrower, and (iii) the indemnification of landlords, lessors, licensors, licensees and other parties pursuant to agreements entered into in the ordinary course of business by a Borrower or a Subsidiary; (d) The Borrowers may become liable with respect to the Farmland MissChem Project Contingent Obligations disclosed on Exhibit 5.3.2. ------------- 7.4 Restricted Payments. The Borrowers will not, and will not permit ------------------- any of their Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment; provided, that, so long as no -------- Event of Default or Potential Default has occurred and is continuing or would occur as a result of such action: (a) MCC may make Restricted Payments if the cumulative amount of all such Restricted Payments (including any Restricted Payment proposed to be made) after the Closing Date would not exceed the sum of (i) $15,000,000.00; plus (ii) 50%, if positive, or minus 100%, if negative, of ---- cumulative Consolidated Net Income after June 30, 1996 to the end of the accounting month immediately preceding the date of the action by the board of directors of MCC declaring or authorizing such Restricted Payment, taken as a single period; (b) The Borrowers may make Restricted Payments described in clause (ii)(C) of the definition of Restricted Payments at a price not to exceed $.01 per Shareholder Right or $1,000,000.00 in the aggregate for all such Shareholder Rights. 7.5 Financial Covenants. ------------------- 7.5.1 Consolidated Tangible Net Worth. The Borrowers will not permit ------------------------------- Consolidated Tangible Net Worth at the end of any quarterly or annual accounting period to be less than an amount equal to $190,000,000.00 during the Fiscal Year ending June 30, 1996, increasing on the first day of each Fiscal Year following the Fiscal Year ending June 30, 1996 and thereafter, on a cumulative basis, by an amount equal to fifty percent (50%) of positive Consolidated Net Income for the preceding Fiscal Year (but without reduction for any negative Consolidated Net Income) and increasing by one hundred percent (100%) of the amount of any new equity contributions made to the Consolidated Capital of MCC and its Subsidiaries, whether by sale of additional stock or otherwise, contemporaneously with the making of such additional equity contribution. 7.5.2 Consolidated Funded Indebtedness to Consolidated Capital. The -------------------------------------------------------- Borrowers will not permit the ratio of Consolidated Funded Indebtedness to Consolidated Capital at the end of any quarterly or annual accounting period to be greater than 0.40 to 1.00. 7.5.3 Consolidated Funded Indebtedness to Consolidated EBITDA. The ------------------------------------------------------- Borrowers will not permit the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA at the end of any quarterly or annual accounting period to be greater than 3.5 to 1.0, with Consolidated EBITDA being calculated for the purposes of this covenant only as the average Consolidated EBITDA for the last eight fiscal quarters (i.e., the sum of Consolidated EBITDA for each such quarter divided by eight) multiplied by the figure of four (4). 48 7.5.4 Consolidated EBIT to Consolidated Total Interest Expense. The -------------------------------------------------------- Borrowers will not permit the ratio of Consolidated EBIT to Consolidated Total Interest Expense at the end of any quarterly or annual accounting period to be less than 3.0 to 1.0; provided, for the purposes of this covenant only, Consolidated EBIT shall be calculated by taking the average of the Consolidated EBIT for the last eight fiscal quarters (i.e., the sum of Consolidated EBIT for each such quarter divided by eight) multiplied by the figure of four (4). 7.5.5 Capital Expenditures. The Borrowers will not, and will not permit -------------------- any of their Subsidiaries to, purchase or otherwise acquire, or commit to purchase or otherwise acquire, any fixed or capital asset or otherwise make or incur obligations for Capital Expenditures by the expenditure of cash or the incurrence of Indebtedness, unless the Capital Expenditure is in the Borrowers' Line of Business and, if made in connection with an Acquisition, is in compliance with Section 7.6. 7.6. Restrictions on Fundamental Changes; Acquisitions. No Borrower or ------------------------------------------------- any Subsidiary of a Borrower will (i) enter into any transaction of merger or consolidation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), (ii) make an Acquisition, or (iii) convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any portion of its business, properties or assets (real and personal, tangible and intangible) or any stock or other Securities of any of their Subsidiaries, whether now owned or hereafter acquired, constituting a substantial portion (10% or more) of the Consolidated Tangible Net Worth of MCC and its Subsidiaries; provided, that, so long as no Event of Default or -------- Potential Default has occurred and is continuing or would occur as a result thereof: (x) any Subsidiary of a Borrower may be merged or consolidated with or into such Borrower or any direct wholly-owned Subsidiary of such Borrower, or be liquidated, wound up or dissolved, or all or substantially all of its business, properties or assets (real and personal, tangible and intangible) may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to such Borrower or any direct wholly-owned Subsidiary of such Borrower; (y) MCC may sell its phosphate properties in the State of Florida; and (z) any Borrower or Subsidiary (other than NSI) may make an Acquisition of any Person in the Borrowers' Line of Business or merge or consolidate with a Person in the Borrowers' Line of Business, provided that such Borrower or Subsidiary is the corporation surviving in any merger or consolidation and that, in the case of an Acquisition that results in the creation of a new Subsidiary, the Person which is acquired and/or the new Subsidiary unconditionally guarantees the Obligations to the Banks pursuant to an enforceable agreement of guaranty and suretyship in form and substance, and with opinions of counsel, satisfactory to the Majority Banks; and provided further, that any such transaction would not cause an Event of Default or Potential Default under this Loan Agreement as demonstrated by the Borrowers to the Banks in a proforma Compliance Certificate showing compliance on a combined basis with the Person being acquired both before and after the transaction. 7.7 ERISA. The Borrowers will not, and will not permit any of their ----- ERISA Affiliates to: (a) engage in any transaction in connection with which a Borrower or any of its ERISA Affiliates could be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code in either case in an amount in any Fiscal Year greater than $500,000; 49 (b) fail to make full payment when due of all amounts which, under the provisions of any Pension Plan or applicable law, the Borrowers or any of their ERISA Affiliates is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency with respect to any Pension Plan with respect to any plan year; or (c) fail to make any payment to any Multiemployer Plan that the Borrowers or any of their ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto. As used in this Section 7.7, the term "accumulated funding deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of the Code. 7.8 Transactions with Shareholders and Affiliates. No Borrower or any --------------------------------------------- of its Subsidiaries will, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of 5% or more of the voting power of MCC's capital stock, or with any Affiliate of MCC or of any such holder, on terms that are materially less favorable to such Borrower or that Subsidiary, as the case may be, than those which would be obtained at the time from Persons who are not such a holder or an Affiliate; provided, that the foregoing restriction shall not apply to any transaction - -------- between a Borrower and another Borrower or any of their wholly-owned Subsidiaries or between any of their wholly-owned Subsidiaries. 7.9 Subsidiary Securities. Neither MCC nor any other Borrower will --------------------- directly or indirectly, sell, assign, pledge or otherwise encumber or dispose of any shares or other Securities of any of their Subsidiaries, or permit any of their Subsidiaries, directly or indirectly, to sell, assign, pledge or otherwise encumber or dispose of any shares or other Securities of a Subsidiary, except (i) to MCC or another Borrower, (ii) the issuance of promissory notes, drafts or other instruments or Securities by a Borrower or Subsidiary to evidence indebtedness otherwise permitted by Section 7.10 and (iii) to the extent otherwise permitted by Section 7.6. 7.10 Indebtedness. The Borrowers and their Subsidiaries will neither ------------ incur, create, assume, or permit to exist any Indebtedness except (i) the Obligations; (ii) Contingent Obligations permitted by Section 7.3 above; (iii) Indebtedness owed by any Subsidiary or Borrower to another Borrower, or by a Borrower to any other Borrower or Subsidiary (other than NSI); (iv) Indebtedness incurred in connection with the purchase of any real or personal property in the ordinary course of business, provided that the aggregate principal amount of indebtedness described in this Subparagraph (iv) shall not exceed Ten Million Dollars ($10,000,000.00) in the aggregate for all Borrowers and Subsidiaries at any time; (v) other unsecured Indebtedness for borrowed money (other than the Obligations and purchase money Indebtedness described in clause (iv) above) not exceeding Ten Million Dollars ($10,000,000.00) in the aggregate for all Borrowers at any time; and (vi) unsecured Subordinated Indebtedness not to exceed Ten Million Dollars ($10,000,000.00) if approved as to terms and conditions by the Majority Banks. 7.11 Subsidiary Formation; Restrictions on Subsidiary Dividends. Except ---------------------------------------------------------- for a Subsidiary formed directly in connection with an Acquisition as to which the provisions of Section 7.6 will apply, no Borrower or Subsidiary will form any other Subsidiary unless simultaneously therewith the newly formed Subsidiary delivers to the Banks an unconditional guaranty of the Obligations in form and substance satisfactory to the Majority Banks, together with an opinion of counsel with respect to the enforceability of same acceptable to the Majority Banks. Neither MCC nor any other Borrower will permit any Subsidiary (including any Borrower which is a Subsidiary) to enter into any agreement prohibiting or restricting the 50 declaration or payment of cash dividends or other payments by such Subsidiary in respect of Securities of such Subsidiaries to, or the making of loans, advances to, or other Investments by such Subsidiary in, MCC and the other Borrowers. 7.12 Independence of Covenants. All covenants hereunder shall be given ------------------------- independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Default if such action is taken or condition exists. ARTICLE VIII EVENTS OF DEFAULT ----------------- 8.1 Events of Default. If any of the following conditions or events ----------------- ("Events of Default") shall occur: 8.1.1 Failure to Make Payments When Due. Failure of the Borrowers to --------------------------------- make any payment or prepayment of principal when due hereunder, whether at stated maturity, by acceleration or otherwise; or failure of the Borrowers to pay any interest, fees or other amounts due under this Loan Agreement within five (5) days after the date when due hereunder; or 8.1.2 Default in Other Agreements. Failure of the Borrowers or any of --------------------------- their Subsidiaries to pay, or any default in the payment of any principal or interest on any Indebtedness (other than Indebtedness evidenced by the Notes) or in the payment of any Contingent Obligation, in either case where the aggregate Indebtedness or Contingent Obligation exceeds $1,000,000, beyond any period of grace provided; or any breach or default with respect to any evidence of any Indebtedness or Contingent Obligation (other than the Indebtedness evidenced by the Notes) or of any loan agreement, mortgage, indenture or other agreement relating thereto where the aggregate principal amount of such Indebtedness or Contingent Obligation then outstanding exceeds $1,000,000, beyond any period of grace provided, if the effect of such failure, default or breach is to cause, or to permit the holder or holders of that Indebtedness or Contingent Obligation (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or Contingent Obligation to become or be declared due prior to its stated maturity (upon the giving or receiving of notice, lapse of time, both, or otherwise); or 8.1.3 Breach of Certain Covenants. Failure of the Borrowers to perform --------------------------- or comply with any term or condition contained in Sections 6.2, 6.6, 7.1, 7.4, 7.5 or 7.6 of this Loan Agreement; or 8.1.4 Warranty. Any representations or warranties made herein by a -------- Borrower or in any statement or certificate at any time given by or on behalf of any Borrower in writing pursuant hereto or in connection herewith shall be false in any material respect on the date as of which made; or 8.1.5 Other Defaults under this Loan Agreement. Any Borrower shall ---------------------------------------- default in the performance of or compliance with any provision contained in this Loan Agreement other than those referred to above in Sections 8.1, 8.1.3 or 8.1.4 and such default shall not have been remedied or waived within fifteen (15) days after receipt of notice from the Agent or any Bank of such default, in the case of Sections 7.2-7.3 or 7.7-7.11, or within thirty (30) days after receipt 51 of notice from the Agent or any Bank of such default, in the case of any other provision contained in this Loan Agreement; or 8.1.6 Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A decree ---------------------------------------------------- or order for relief in respect of any Borrower or any Subsidiary shall have been entered in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not stayed; or (ii) an involuntary case is commenced against any Borrower or any Subsidiary under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over a Borrower or a Subsidiary, or over all or a substantial part of its property, shall have been entered; or the involuntary appointment of an interim receiver, trustee or other custodian of a Borrower or a Subsidiary for all or a substantial part of its property; or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of a Borrower or a Subsidiary, and the continuance of any such events described in this clause (ii) for 60 consecutive days unless dismissed, bonded or discharged; or 8.1.7 Voluntary Bankruptcy: Appointment of Receiver, etc. Any Borrower -------------------------------------------------- or Subsidiary shall have an order for relief entered with respect to it or commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion to an involuntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; the making by any Borrower or Subsidiary of any assignment for the benefit of creditors; or the inability or failure of any Borrower or a Subsidiary, or the admission by any Borrower or a Subsidiary in writing of its inability to pay its debts as such debts become due; or the Board of Directors of any Borrower or a Subsidiary (or any committee thereof) adopts any resolution or otherwise authorizes action to approve any of the foregoing; or 8.1.8 Judgments and Attachments. Any money judgment, writ or warrant of ------------------------- attachment or similar process involving in any case an amount in excess of $5,000,000 or any series of money judgments, writs or warrants of attachment or similar processes involving in the aggregate an amount in excess of $5,000,000 shall be entered or filed against any Borrower or Subsidiary or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale under any such judgment, writ or warrant of attachment or similar process; or 8.1.9 Change of Control. The occurrence of a Change of Control with ----------------- respect to MCC; or 8.1.10 Condemnations and Seizures. Any court, government or governmental -------------------------- agency shall condemn, seize or otherwise appropriate, or take custody or control of all or any portion of the property of a Borrower or Subsidiary constituting a substantial portion of the total assets of such Borrower or Subsidiary; or 8.1.11 Dissolution. Any order, judgment or decree shall be entered ----------- against any Borrower decreeing the dissolution or split up of such Borrower and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days; or 8.1.12 Unfunded ERISA Liabilities. (i) Any Pension Plan maintained by the -------------------------- Borrowers or any of their ERISA Affiliates shall be terminated within the meaning of Title IV of ERISA, (ii) 52 a trustee shall be appointed by an appropriate United States district court to administer any Pension Plan, (iii) the Pension Benefit Guaranty Corporation (or any successor thereto) shall institute proceedings to terminate any Pension Plan, or (iv) the Borrowers or any of their ERISA Affiliates shall withdraw (under Section 4063 of ERISA) from a Pension Plan, if, as of the date thereof or any subsequent date, the sum of each of the Borrower's and its ERISA Affiliates' various liabilities (such liabilities to include, without limitation, any liability to the Pension Benefit Guaranty Corporation (or any successor thereto) or to any other party under Sections 4062, 4063 or 4064 of ERISA or any other provision of law) resulting from or otherwise associated with such events listed in clauses (i) through (iv) above exceeds $5,000,000; then, in any such event, and at any time thereafter, the Agent, upon the written - ---- direction of the Majority Banks, shall, by written notice to the Borrowers take any of the following actions: (a) Termination of Commitments. Declare the Banks' obligations -------------------------- to make Loans and the Letter of Credit Bank's obligation to issue Letters of Credit to be terminated whereupon the Banks' Commitments shall be immediately terminated and any commissions or fees relating to the Commitments shall thereupon become immediately due and payable without further notice of any kind; (b) Default Rate. Charge the default rate of interest on all ------------ Loans and the default Letter of Credit fee on all Letters of Credit as specified in Section 3.1 hereof; (c) Acceleration of Loans. Declare the unpaid principal of and --------------------- any accrued interest in respect of all the Notes to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; (d) Enforcement of Rights. Enforce any and all rights and --------------------- interests created and existing under the Loan Documents and all rights of set-off; (e) Cash Collateral. Direct the Borrowers to pay (and the --------------- Borrowers agree that upon receipt of such notice, or upon the occurrence of an Event of Default under Section 8.1.6, 8.1.7 or 8.11), they will immediately without notice pay to the Agent an amount equal to the then outstanding Letter of Credit Obligations which at the option of the Borrowers will either be used to prepay such outstanding Letter of Credit Obligations or paid to the Agent to be held in a cash collateral account in the name of the Agent and under the dominion and control of the Agent as additional security for the reimbursement obligations which may thereafter arise on account of subsequent drawings or payments under Letters of Credit still outstanding. provided, however, that, notwithstanding the foregoing, if an Event of Default - -------- specified in Section 8.1.6, 8.1.7 or 8.1.9 shall occur, then the Banks' Commitments shall automatically terminate and the Notes, the Loans, and any Letter of Credit Obligations shall immediately become due and payable without the giving of any notice or other action by Agent or the Banks. 53 ARTICLE IX AGENCY PROVISIONS ----------------- 9.1 Appointment. Each Bank hereby irrevocably designates and appoints ----------- the Agent to act for it as specified herein and the other Loan Documents, and each such Bank hereby irrevocably authorizes the Agent, as the Agent for such Bank, to take such action on its behalf under the provisions of this Loan Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms hereof and of the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Loan Documents, the Agent shall not have any duties or responsibilities except those expressly set forth herein and therein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Loan Agreement or any of the other Loan Documents, or shall otherwise exist against the Agent. The provisions of this Article are solely for the benefit of the Agent and the Banks and the Borrowers shall not have any rights as a third party beneficiary of the provisions hereof. In performing its functions and duties under this Loan Agreement and the other Loan Documents, the Agent shall act solely as Agent of the Banks and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrowers. 9.2 Delegation of Duties. The Agent may execute any of its respective -------------------- duties hereunder or under the other Loan Documents by or through Agent or attorneys-in-fact and shall be entitled to advice of counsel concerning all legal matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care except to the extent otherwise required by Section 9.3. 9.3 Exculpatory Provisions. Neither the Agent nor any of its respective ---------------------- officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by them or such Person under or in connection herewith or in connection with any of the other Loan Documents (except for their or such Person's own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Borrowers contained herein or in any of the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection herewith or in connection with the other Loan Documents, or enforceability or sufficiency herefor of any of the other Loan Documents, or for any failure of any of the Borrowers to perform their obligations hereunder or thereunder. The Agent shall not be responsible to any Bank for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Loan Agreement or any of the other Loan Documents or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by or on behalf of any Borrower to the Agent or any Bank or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Potential Default or Event of Default or to inspect the properties, books or records of the Borrowers. 9.4 Reliance on Communications. The Agent shall be entitled to rely, -------------------------- and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or 54 other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by such Agent. The Agent may deem and treat the Banks as the owner of their respective interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with such Agent in accordance with this Loan Agreement. The Agent shall be fully justified in failing or refusing to take any action under this Loan Agreement or under any of the other Loan Documents unless it shall first receive such advice or concurrence of the Majority Banks as it deems appropriate or it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by them by reason of taking or continuing to take any such action. Except as expressly provided to the contrary herein, the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Loan Documents in accordance with a request of the Majority Banks (or to the extent specifically provided in Section 10.6, with a request of all the Banks) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks (including their successors and assigns). 9.5 No Default. The Agent shall not be deemed to have knowledge or ---------- notice of the occurrence of any Potential Default or Event of Default hereunder unless the Agent has received notice from a Bank or the Borrowers referring to the Loan Document, describing such Potential Default or Event of Default and stating that such notice is a "notice of default." In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Banks. The Agent shall take such action with respect to such Potential Default or Event of Default as shall be directed by the Majority Banks; provided that, unless and -------- until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Default or Event of Default as it shall deem advisable in the best interests of the Banks. 9.6 Non-Reliance on Agent and Other Banks. Each Bank expressly ------------------------------------- acknowledges that neither the Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to them and that no act by the Agent or any respective affiliate thereof hereinafter taken, including any review of the affairs of the Borrowers, shall be deemed to constitute any representation or warranty by the Agent to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrowers and made its own decision to make its Loans hereunder and enter into this Loan Agreement. Each Bank also represents that it will, independently and without reliance upon the 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 analysis, appraisals and decisions in taking or not taking action under this Loan Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrowers. Except for notices, reports and other documents expressly required to be furnished to the Banks by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrowers which may come into the possession of the Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates. 55 9.7 Indemnification. The Banks agree to indemnify the Agent in its --------------- capacity as such on a pro rata basis based upon the Commitment Percentages of the Banks from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Obligations) be imposed on, incurred by or asserted against the Agent in its capacity as such in any way relating to or arising out of this Loan Agreement or the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no -------- Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent paid by the Borrowers or to the extent resulting from the Agent's gross negligence or willful misconduct. If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section shall survive the payment of the Obligations and all other amounts payable hereunder and under the other Loan Documents. 9.8 Agent in its Individual Capacity. The Agent and its respective -------------------------------- affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though the Agent were not an Agent hereunder. With respect to the Loans made hereunder, the Agent shall have the same rights and powers under this Loan Agreement as any Bank and may exercise the same as though it were not an Agent, and the terms "Bank" and "Banks" shall include the Agent in its individual capacity. 9.9 Successor Agent. Agent may, at any time, resign as Agent hereunder --------------- upon 30 days written notice to the Banks, and be removed as an Agent hereunder with or without cause by the Majority Banks upon 30 days written notice to such Agent. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Agent with the consent of the Borrowers, so long as the Borrowers are not in default. If no successor Agent shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within 30 days after the notice of resigning Agent's resignation or the Majority Banks, notice of removal, then the retiring Agent shall select a successor Agent provided such successor Agent is a commercial bank organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $400,000,000. Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as Agent under this Loan Agreement and the other Loan Documents and the provisions of this Section shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Loan Agreement. ARTICLE X MISCELLANEOUS ------------- 10.1 Notices. Except as otherwise expressly provided herein, all notices ------- and other communications shall have been duly given and shall be effective (a) when delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set out below, (c) the day following the day on which the same has been delivered prepaid to a reputable national 56 overnight air courier service, or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address set forth opposite such party's name on the signature pages hereto, or at such other address as such party may specify by written notice to the other parties hereto. 10.2 Right of Set-Off. In addition to any rights now or hereafter ---------------- granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Bank is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set- off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Bank (including, without limitation, branches, agencies or Affiliates of such Bank wherever located) to or for the credit or the account of the Borrowers against obligations and liabilities of the Borrowers to such Bank hereunder, under the Notes, the other Loan Documents or otherwise, irrespective of whether such Bank shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Bank subsequent thereto. The Borrowers hereby agree that any Person purchasing a participation in the Loans and Commitments hereunder pursuant to Section 10.3(c) may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Bank hereunder. 10.3 Participations and Assignments. ------------------------------ (a) This Loan Agreement and the other Loan Documents shall be binding upon and inure to the benefit of Borrowers, Banks, and Agent and their respective successors and assigns; provided, however, that Borrowers may not -------- ------- assign, transfer or delegate any of its rights, duties or obligations under this Loan Agreement or the other Loan Documents without the prior written consent of Agent and Banks. Banks may assign, sell and transfer their interests, rights and obligations under this Loan Agreement and the other Loan Documents only in accordance with this Section 10.3. (b) With the prior written consent of the Agent and the Borrowers, any Bank may assign to one or more Eligible Assignees all, or a proportionate part of all, of its interests, rights and obligations under this Loan Agreement and the other Loan Documents; provided, however, that (i) each such assignment -------- ------- shall be of a constant, and not a varying, percentage of all of the assigning Bank's interests, rights and obligations under this Loan Agreement, (ii) the amount of each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment) shall not be less than the lesser of (A) the entire amount of such Bank's Commitments, Notes, Loans and Letter of Credit Interests, or (B) the principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) the assignment shall be of an equal percentage in such Bank's Three Year Commitment and Facility and its 364 Day Commitment and Facility, and (iv) the parties to each such assignment shall execute and/or deliver to Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with the Notes subject to such assignment, and a processing and recordation fee of $3,500 payable to Agent. Upon such execution, delivery, acceptance and recording, from and after the "Effective Date" specified in the Assignment and Acceptance, which "Effective Date," unless Agent otherwise agrees, shall be not earlier than five Business Days after the date of acceptance and recording by Agent (provided, however, -------- ------- that, as between the assigning Bank and the assignee thereunder only, the effective date shall be the effective date of execution and delivery as between such Persons as specified in the Assignment and Acceptance), (A) the assignee thereunder shall be a Bank under this Loan Agreement and, to 57 the extent provided in such Assignment and Acceptance, have the interests, rights and obligations of a Bank hereunder and (B) the assigning Bank thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its contractual obligations under this Loan Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of the assigning Bank's interests, rights and obligations under this Loan Agreement, such assigning Bank shall cease to be a Bank under this Loan Agreement). Each Bank shall, in a reasonably prompt fashion after it has engaged in any material discussions with an Eligible Assignee that may lead to an assignment referred to in this Section 10.3, notify Agent and Borrowers of the identity of such Eligible Assignee so that they will have sufficient time to determine if they are willing to consent. (c) By executing and delivering an Assignment and Acceptance, the assigning Bank thereunder and the Eligible Assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assignee is an Eligible Assignee; (ii) other than as provided in the Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any representations, warranties or other statements made in or in connection with this Loan Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Loan Agreement or any other Loan Document; (iii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or any Subsidiary or the performance or observance by Borrowers or any Subsidiary of any of its obligations under this Loan Agreement or any other Loan Document; (iv) such assignee confirms that it has received a copy of this Loan Agreement, together with copies of the most recent Financial Statements and such other agreements, documents, instruments, certificates and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon Agent, such assigning Bank or any other Bank and based on such agreements, documents, instruments, certificates and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Loan Agreement and the other Loan Documents; (vi) such assignee appoints and authorizes the Agent to take such action as such Agent on its behalf and to exercise such powers under this Loan Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Loan Agreement and the other Loan Documents are required to be performed by it as a Bank; and (viii) such assignee makes loans in the ordinary course of its business. (d) Agent shall maintain at its offices in Nashville, Tennessee a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitments of, and principal amount of the Loans owing to each Bank pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be -------- conclusive in the absence of manifest error and Borrowers, Subsidiaries, Agent and Banks may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Loan Agreement. The Register shall be available for inspection by Borrowers, Subsidiaries and Banks at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an Eligible Assignee and the required processing and recordation fee, Agent shall, if such Assignment and Acceptance is duly completed and is in the required form, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the 58 Register and (iii) give prompt notice thereof to Banks and Borrowers. Within five Business Days after its receipt of any such notice from Agent, Borrowers, at their own expense, shall execute and deliver to Agent, in exchange for the surrendered Note or Notes, a new Note or Notes payable to the order of such assignee in the appropriate principal amount(s) evidencing such assignee's assigned Loans and Commitments, and, if the assignor Bank has retained a portion of its Loans and Commitments, a new Note or Notes payable to the order of such assignor in the appropriate principal amount(s) evidencing such assignor's Loans and Commitments retained by it. Such new Note(s) shall be dated the date of the surrendered Note(s) which they replace and shall otherwise be in substantially the form of the surrendered Notes, as appropriate. (f) Each Bank may, with the prior written consent of Borrowers (not to be unreasonably withheld) and the Agent, sell participations to one or more banks in all or a portion of its interests, rights and obligations under this Loan Agreement (including all or a portion of its Loans or Commitments) held by it; provided, however, that (i) such Bank shall remain a Bank for all -------- ------- purposes of this Loan Agreement and the transferee of such participation shall not constitute a Bank under this Loan Agreement, (ii) such Bank's obligations under this Loan Agreement shall remain unchanged, (iii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) the participating banks or other entities shall be entitled to the benefit of the provisions contained in Sections 3.4 and 3.5 to the same extent as if they were Banks, except that no such participant shall be entitled to receive any greater benefit pursuant to such Sections than its assignor Bank would have been entitled to receive with respect to the rights participated, and (v) Borrowers, Subsidiaries, Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's interests, rights and obligations under this Loan Agreement, and such Bank shall retain the sole right to enforce the obligations of Borrowers and its Subsidiaries relating to the Loans and to approve any amendment, modification or waiver of any provision of this Loan Agreement, provided that such participation agreement may -------- ---- provide that such Bank will not agree to any amendment, modification or waiver of this Loan Agreement or the other Loan Documents, without the consent of such participant, that would (A) reduce the principal or the rate of interest payable by Borrowers on any Loan or reduce any fees payable by Borrowers, (B) postpone any date fixed for the payment of principal of or interest on the Loans or any fees payable by Borrowers, (C) increase any Commitment of any Bank or subject any Bank to any obligation to make Loans, or (D) amend Section 10.3 or any other provision of this Loan Agreement requiring the consent or other action of all Banks. (g) Any Bank may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 10.3, disclose to the assignee or participant or proposed assignee or participant any information relating to Borrowers or any Subsidiary on the Loan Documents furnished to such Bank by or on behalf of the Borrowers or any Subsidiary; provided, however, that, prior to any such disclosure, each such -------- ------- assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of any non-public information received from such Bank. (h) Notwithstanding anything to the contrary contained in this Section 10.3, any Bank may at any time or from time to time assign all or any portion of its rights under this Loan Agreement with respect to its Loans, Commitments and Notes to a Federal Reserve Bank. No such assignment shall release the assigning Bank from its obligations under this Loan Agreement. 59 10.4 No Waiver; Remedies Cumulative. No failure or delay on the part of ------------------------------ Agent or any Bank in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Borrowers and Agent or any Bank shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Agent or any Bank would otherwise have. No notice to or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Agent or the Banks to any other or further action in any circumstances without notice or demand. 10.5 Payment of Expenses, etc. Subject to the October 17, 1995 letter ------------------------ from NationsBanc Capital Markets, Inc. to MCC regarding closing costs, the Borrowers agree to: (a) pay all reasonable out-of-pocket costs and expenses of the Agent in connection with the syndication of this Loan Agreement, the due diligence associated with this transaction and the negotiation, preparation, execution and delivery and administration of this Loan Agreement and the other Loan Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and expenses of special counsel to the Agent) and any amendment, waiver or consent relating hereto and thereto, including, but not limited to, any such amendments, waivers or consents resulting from or related to any work-out, renegotiation or restructure relating to the performance by the Borrowers under this Loan Agreement and of the Banks in connection with enforcement of the Loan Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and disbursements of counsel for the Agent and each of the Banks); (b) pay and hold each of the Banks harmless from and against any and all present and future stamp, recording and other similar taxes with respect to the foregoing matters and save each of the Banks harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Bank) to pay such taxes; and (c) indemnify each Bank, its officers, directors, employees, representatives and Agent from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not any Bank is a party thereto) related to the entering into and/or performance of any Loan Document or the use of proceeds of any Loans hereunder or the consummation of any other transactions contemplated in any Loan Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence or willful misconduct on the part of the Person to be indemnified). 10.6 Amendments, Waivers and Consents. Neither this Loan Agreement nor -------------------------------- any other Loan Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing signed by the Majority Banks and the Borrowers, provided that no such amendment, change, waiver, discharge or -------- termination shall, without the consent of each Bank, (a) extend the scheduled maturities, including the final maturity (except as provided in the definition of Termination Dates for the 364 Day Facility and the Three Year Facility) and any mandatory prepayments, of any Loan or any portion thereof, or reduce the rate or extend the time of payment of interest thereon (other than additional interest payable under Section 3.1 during the continuance of any Event of Default) or fees hereunder or reduce the principal amount thereof, (b) increase the Commitment of any Bank over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute 60 such an increase), (c) amend, modify or waive any provision of this Section, (d) reduce any percentage specified in, or otherwise modify, the definition of Majority Banks, (e) consent to the assignment or transfer by the Borrowers of any of their rights and obligations under (or in respect of) this Loan Agreement or (f) modify the definition of "Termination Dates." No provision of Article IX may be amended without the consent of the Agent. 10.7 Counterparts. This Loan Agreement may be executed in any number of ------------ counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. it shall not be necessary in making proof of this Loan Agreement to produce or account for more than one such counterpart. 10.8 Headings. The headings of the sections and subsections hereof are -------- provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Loan Agreement. 10.9 Survival. All indemnities set forth herein, including, without -------- limitation, in Section 3.4, 10.5, and 10.16, shall survive the execution and delivery of this Loan Agreement, the making of the Loans, the repayment of the Loans and other obligations of the Borrowers hereunder and the termination of the Commitments hereunder. 10.10 Calculations; Computations. -------------------------- (a) The financial statements furnished to the Banks pursuant hereto shall be made and prepared in accordance with GAAP applied on a consistent basis for the periods involved. (b) All computations of interest and fees hereunder shall be made on the basis of actual number of days elapsed over a year of 360 days. (c) In the event any payment of principal, interest, fees or other amount is due on a day which is not a Business Day, the payment shall be extended to the next succeeding Business Day together with, in the case of a payment of principal, interest thereon to the date of payment (except that in the case of Eurodollar Loans, if the next succeeding Business Day is in a different calendar month, then on the next preceding Business Day). 10.11 Governing Law; Submission to Jurisdiction; Venue. ------------------------------------------------ (a) THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE. Any legal action or proceeding with respect to this Loan Agreement or any other Loan Document may be brought in the courts of the State of Tennessee in Davidson County, or of the United States for the Middle District of Tennessee, and, by execution and delivery of this Loan Agreement, the Borrowers hereby irrevocably accept for themselves and in respect of their property, generally and unconditionally, the jurisdiction of such courts. The Borrowers further irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to each Borrower at its address for notices set forth beneath its signature, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of the Banks to serve process in any 61 other manner permitted by law or to commence legal proceedings or to otherwise proceed against the Borrowers in any other jurisdiction. (b) The Borrowers hereby irrevocably waive any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Loan Agreement or any other Loan Document brought in the courts referred to in subsection (a) hereof and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) EACH BORROWER AND EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. 10.12 Severability. If any provision of any of the Loan Documents is ------------ determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 10.13 Entirety. This Loan Agreement together with the other Loan -------- Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Loan Documents or the transactions contemplated herein and therein. 10.14 Survival. All representations and warranties made by the Borrowers -------- herein shall survive delivery of the Notes and the making of the Loans hereunder. 10.15 Pro Rata, Sharing. Each Bank agrees that, if it should receive any ----------------- amount hereunder (whether voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents or otherwise) which is applicable to the payment of the principal of, or interest or fees on, the Loans, of a sum which with respect to the related sum or sums received by the other Banks is in a greater proportion than the total of such obligation than owned and due to such Bank bears to the total of such obligation prior to such receipt, then such Bank receiving such excess payment shall purchase for cash without recourse or warranty from the other Banks an interest in the obligations of the Borrowers to such Banks in such amount as will result in a proportional participation by all of the Banks in such amount, provided that if -------- all or any portion of such excess amount is thereafter recovered from such Bank, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 10.16 Indemnity. --------- (a) In addition to the payment of expenses pursuant to Section 10.5, the Borrowers agree to indemnify, pay and hold the Agent, the Banks and any permitted holder of the Notes, and the officers, directors, employees and agents of each of the foregoing (collectively called the "Indemnitees") harmless from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, 62 without limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitee shall be designated a party thereto), which may be imposed on, incurred by, or asserted against such Indemnitee by any Person, in any manner relating to or arising out of or pursuant to this Loan Agreement or by reason of any action taken by any of them in good faith in furtherance of the provisions of this Loan Agreement (the "Indemnified Liabilities"); provided, that the Borrowers -------- shall have no obligation hereunder with respect to Indemnified Liabilities arising from (i) the gross negligence or willful misconduct of any such Indemnitee; (ii) any action between a Borrower and one or more Indemnitees in which such Borrower is the prevailing party; or (iii) any action between any Bank and assignee or participant of that Bank with respect to the matters contemplated by Section 10.3 hereof. (b) Without limiting the generality of Section 10.16(a) hereof, the Borrowers unconditionally agree to forever indemnify, defend and hold harmless, and covenant not to sue for any claim for contribution against, the Banks and the Agent for any damages, costs, loss or expense, including without limitation, response, remedial or removal costs, arising out of any of the following: (i) any presence, release, threatened release or disposal of any hazardous or toxic substance or petroleum by any Borrower or otherwise occurring on or with respect to its property, (ii) the operation or violation of any environmental law, whether federal, state, or local, and any regulations promulgated thereunder, by any Borrower or otherwise occurring on or with respect to its property, (iii) any claim for personal injury or property damage in connection with any Borrower or otherwise occurring on or with respect to its property, and (iv) the inaccuracy or breach of any environmental representation, warranty or covenant by any Borrower made herein or in any loan agreement, promissory note, or any other instrument or document evidencing or securing any indebtedness, obligations or liabilities of any Borrower owing to the Banks or setting forth terms and conditions applicable thereto or otherwise relating thereto, except for damages arising from a Bank's willful misconduct or gross negligence. This indemnification shall survive the payment and satisfaction of all indebtedness, obligations and liabilities of the Borrowers owing to the Banks and the termination of this Loan Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim under this indemnification. This indemnification shall be binding upon the successors and assigns of each Borrower and shall inure to the benefit of Banks, the Agent, and their directors, officers, employees, agents, and collateral trustees, and their successors and assigns. (c) As soon as is practicable after receipt by an Indemnitee of notice of the making of any claim, the service of any complaint or the commencement of any action or proceeding (collectively, a "Claim") by any Person other than the Borrowers with respect to which indemnification is sought hereunder, the Indemnitees will notify the Borrowers in writing of such Claim, naming the counsel such Indemnitee proposes to use to defend against such Claim (but failure to so notify the Borrowers will not relieve the Borrowers from any liability which they may have hereunder or otherwise, except to the extent that such failure materially prejudices the Borrowers' rights). The Borrowers shall have the right to approve the counsel proposed to be used by such Indemnitee in the defense of such Claim, but such approval shall not be unreasonably delayed. Such counsel shall consist of a single firm for all Indemnitees unless counsel to any Indemnitee shall advise it in writing that a conflict of interest exists between it and one or more other Indemnitees in conducting the defense of such Claim that would make advisable or prudent the retaining of separate counsel for the defense of such Claim, in 63 which case an additional firm may be retained on behalf of each such Indemnitee so advised. The Borrowers shall also have the right to approve any proposed settlement of any such Claim, but such approval shall not be unreasonably withheld or delayed. 10.17 Change in Accounting Principles. If any change in accounting ------------------------------- principles from those used in the preparation of the Financial Statements referred to in Subsection 5.3.1 is hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants or the Securities and Exchange Commission (or successors thereto or agencies with similar functions) and results in a change in the method of calculation of financial covenants, standards or terms found in Articles I, VI and VII hereof, the parties hereto agree to enter into negotiations in order to amend such provisions so as equitably to reflect such changes with the desired result that the criteria for evaluating the Borrowers' financial condition shall be the same after such changes in accounting principles as if such changes in accounting principles had not been made. Until such negotiations are completed to the satisfaction of the Banks and the Borrowers and this Agreement amended to reflect the results of such negotiations, such changes in accounting principles shall not become effective for purposes of determining compliance with this Agreement. 64 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Loan Agreement to be duly executed and delivered as of the date first above written. MISSISSIPPI CHEMICAL CORPORATION By:_______________________________________ Title:_____________________________________ Address: P.O. Box 986 Highway 49 East Yazoo City, MS 39194 Attn: Timothy A. Dawson Telephone: 601/756-9158 Facsimile: 601/751-2978 MISSISSIPPI PHOSPHATES CORPORATION By:_______________________________________ Title:_____________________________________ Address: P.O. Box 986 Highway 49 East Yazoo City, MS 39194 Attn: Timothy A. Dawson Telephone: 601/756-9158 Facsimile: 601/751-2978 MISSISSIPPI POTASH, INC. By:_______________________________________ Title:_____________________________________ Address: P.O. Box 986 Highway 49 East Yazoo City, MS 39194 Attn: Timothy A. Dawson Telephone: 601/756-9158 Facsimile: 601/751-2978 65 MCC PIPELINE, INC. By:_______________________________________ Title:_____________________________________ Address: P.O. Box 986 Highway 49 East Yazoo City, MS 39194 Attn: Timothy A. Dawson Telephone: 601/756-9158 Facsimile: 601/751-2978 NATIONSBANK OF TENNESSEE, N.A., individually, as Swingline Bank, and as Agent Committed Amount: - ---------------- $20,000,000 By:_______________________________________ Three Year Commitment --------------------- $13,600,000 Title:_____________________________________ 364 Day Commitment ------------------ $6,400,000 Address: NationsBank of Tennessee, N.A. Initial Commitment Percentage: One NationsBank Plaza 16% M-2 Nashville, Tennessee 37219 Attn: Michael D. McKay Telephone: 615-749-4141 Facsimile: 615-749-4762 Address as Agent: NationsBank of Tennessee, N.A. One NationsBank Plaza M-2 Nashville, Tennessee 37219 Attn: Michael D. McKay Telephone: 615-749-4141 Facsimile: 615-749-4762 66 ABN AMRO BANK N.V. Committed Amount: - ---------------- $15,000,000 By:_______________________________________ Three Year Commitment --------------------- $10,200,000 Title:____________________________________ 364 Day Commitment ------------------ $4,800,000 Address: Suite 1200 Initial Commitment Percentage: One Ravinia Drive 12% Atlanta, Georgia 30346 Attn: Michiel H. van Cranenburgh Phone: 770/399-7378 Fax: 770/395-9188 THE BANK OF NOVA SCOTIA Committed Amount: - ---------------- $15,000,000 By:_______________________________________ Three Year Commitment --------------------- $10,200,000 Title:____________________________________ 364 Day Commitment ------------------ $4,800,000 Address: Suite 3000 Initial Commitment Percentage: 1100 Louisiana 12% Houston, TX 77002 Attn: Michael Nepveux Phone: 713/759-3439 Fax: 713/752-2425 CIBC INC. Committed Amount: - ---------------- $15,000,000 By:_______________________________________ Three Year Commitment --------------------- $10,200,000 Title:____________________________________ 364 Day Commitment ------------------ $4,800,000 Address: Two Paces West Initial Commitment Percentage: Suite 1200 12% 2727 Paces Ferry Road Atlanta, Georgia 30339 Attn: William C. Humphries Phone: 770/319-4906 Fax: 770/319-4900 67 CAISSE NATIONALE DE CREDIT AGRICOLE Committed Amount: - ---------------- $15,000,000 By:_______________________________________ Three Year Commitment --------------------- $10,200,000 Title:____________________________________ 364 Day Commitment ------------------ $4,800,000 Address: 47th Floor Initial Commitment Percentage: 55th East Monroe 12% Chicago, IL 60603-5702 Attn: Ted Tice Phone: 312/917-7463 Fax: 312/372-3455 SUNTRUST BANK, ATLANTA Committed Amount: - ---------------- $15,000,000 By:_______________________________________ Three Year Commitment --------------------- $10,200,000 Title:____________________________________ 364 Day Commitment ------------------ $4,800,000 By:_______________________________________ Initial Commitment Percentage: 12% Title:____________________________________ Address: 25 Park Place 25th Floor (MC176) Atlanta, Georgia 30302 Attn: Greg Cannon Phone: 404/827-6887 Fax: 404/230-5305 HARRIS TRUST AND SAVINGS BANK Committed Amount: - ---------------- $17,500,000 By:_______________________________________ Three Year Commitment --------------------- $11,900,000 Title:____________________________________ 364 Day Commitment ------------------ $5,600,000 Address: Agri Business Division - 111/18W Initial Commitment Percentage: 111 W. Monroe 14% Chicago, IL 60690 Attn: Carl Blackham Phone: 312/461-3795 Fax: 312/765-8095 68 RABOBANK NEDERLAND Committed Amount: - ---------------- $12,500,000 By:_______________________________________ Three Year Commitment --------------------- $8,500,000 Title:____________________________________ 364 Day Commitment ------------------ $4,000,000 Address: One Atlantic Center, Suite 3450 Initial Commitment Percentage: 1201 West Peachtree Street 10% Atlanta, Georgia 30309-3400 Attn: Garry C. Weiss Phone: 404/877-9101 Fax: 404/877-9150 69 -----END PRIVACY-ENHANCED MESSAGE-----