Securities and Exchange Commission, Washington, D.C. 20549
Annual Report on Form 10-K for the year ended December 31, 1994.
Filed pursuant to Section 13 of the Securities Exchange Act of 1934.
Commission file number 1-1463
Union Carbide Corporation
1994 10-K
Union Carbide Corporation Tel. (203) 794-2000
39 Old Ridgebury Road State of incorporation: New York
Danbury, Connecticut 06817-0001 IRS identification number: 13-1421730
Securities registered pursuant to Section 12(b) of the Act:
Class of security: Registered on:
Common Stock ($1 par value) New York Stock Exchange
Chicago Stock Exchange, Incorporated
The Pacific Stock Exchange Incorporated
Share Purchase Rights Plan New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
At February 28, 1995, 137,261,112 shares of common stock were outstanding.
Non-affiliates held 136,509,114 of those shares, of which the aggregate market
value was $3.908 billion.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 ("the Act") during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
Documents incorporated by reference:
Annual report to stockholders for the year ended December 31, 1994 (Parts I
and II)
Proxy statement for the annual meeting of stockholders to be held on April 26,
1995 (Part III)
Table of Contents
Part I
Item 1: Business 1
Item 2: Properties 3
Item 3: Legal Proceedings 5
Item 4: Submission of Matters to a Vote of Security Holders 5
Part II
Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters 6
Item 6: Selected Financial Data 6
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
Item 8: Financial Statements and Supplementary Data 6
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 6
Part III
Item 10: Directors and Executive Officers of the Registrant 7
Item 11: Executive Compensation 9
Item 12: Security Ownership of Certain Beneficial Owners and Management 9
Item 13: Certain Relationships and Related Transactions 9
Part IV
Item 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K 10
Signatures 13
Exhibit Index 14
DEFINITION OF TERMS
See the inside back cover page of the annual report to stockholders. Terms
defined there are used herein.
Part I
Item 1. Business
General-See inside front cover and pages 8 and 9 of the 1994 annual report to
stockholders for information about Union Carbide's business.
On April 27, 1994, stockholders voted to approve the merger of Union Carbide
Corporation (UCC) into Union Carbide Chemicals and Plastics Company Inc.
(UCC&P). The merger was effective May 1, 1994. Immediately after the merger,
UCC&P had the same consolidated assets, liabilities and stockholders' equity
as UCC. UCC&P has changed its name to Union Carbide Corporation. All
references to Union Carbide Corporation, the corporation or UCC after the
periods starting May 1, 1994, are a reference to the merged company.
Union Carbide is engaged in the chemicals and plastics business. The chemicals
and plastics industry, especially the commodity sector, is highly cyclical.
Union Carbide is a major producer of certain commodity chemicals, principally
ethylene glycol and polyethylene. Consequently, Union Carbide's results are
subject to the swings of the cycle in those basic chemicals. See pages 4
through 7 of the 1994 annual report to stockholders for a further discussion.
Union Carbide does not produce against a backlog of firm orders; production is
geared primarily to the level of incoming orders and to projections of future
demand. Inventories of finished products, work in process and raw materials
are maintained to meet delivery requirements of customers and Union Carbide's
production schedules.
At year-end 1994, 12,004 people were employed worldwide in approximately 40
plants, factories and laboratories around the world.
Raw Materials, Products and Markets-See information herein and in the 1994
annual report to stockholders on pages 8 and 9. Unless otherwise indicated,
the products of Union Carbide are sold principally by its own sales force,
directly to customers.
Union Carbide believes it has contracts or commitments for, or readily
available sources of, hydrocarbon feedstocks and fuel supplies to meet its
anticipated needs in all major product areas. The corporation's operations are
dependent upon the availability of hydrocarbon feedstocks and fuels which are
purchased from diverse domestic and international sources, including
independent oil and gas producers as well as integrated oil companies.
The availability and price of hydrocarbon feedstocks, energy and finished
products are subject to plant interruptions and outages and to market and
political conditions in the U.S. and elsewhere. Operations and products at
times may be adversely affected by legislation, government regulations,
shortages, or international or domestic events.
Union Carbide is not dependent to a significant extent upon a single customer
or a few customers.
Patents; Trademarks; Research and Development-Union Carbide owns a large
number of United States and foreign patents that relate to a wide variety of
products and processes, has pending a substantial number of patent
applications throughout the world, and is licensed under a number of patents.
These patents expire at various times over the next 20 years. Such patents and
patent applications in the aggregate are material to Union Carbide's
competitive position. No one patent is considered to be material; however, the
patent portfolio relating to the UNIPOL polyethylene process technology is, in
the aggregate, considered to be material. Union Carbide also has a large
number of trademarks. The UNION CARBIDE, UCAR and UNIPOL trademarks are
material; no other single trademark is material.
Essentially all of Union Carbide's research and development activities are
company-sponsored. The principal research and development facilities of Union
Carbide are indicated in the discussion of Properties (Item 2) of this Form
10-K report. In addition to the facilities specifically indicated there,
product development and process technology laboratories are maintained at some
plants. Union Carbide spent $136 million in 1994, $139 million in 1993 and
$155 million in 1992 on company-sponsored research activities to develop new
products, processes, or services, or to improve existing ones.
Environment-See Costs Relating to Protection of the Environment on pages 14
and 15 of the 1994 annual report to stockholders and Note 16 on pages 35 and
36 thereof.
Insurance-Union Carbide's policy is to obtain public liability insurance
coverage at terms and conditions and a price that management considers fair
and reasonable. Union Carbide's management believes Union Carbide has public
liability insurance in an amount sufficient to meet its current needs in light
of pending, threatened, and future litigation and claims. There is no
assurance, however, that Union Carbide will not incur losses beyond the
limits, or outside the coverage, of its insurance. Such insurance is subject
to substantial deductibles.
Competition-Each of the major products and services areas in which Union
Carbide participates is highly competitive. In some instances competition
comes from manufacturers of the same products as those produced by Union
Carbide and in other cases from manufacturers of different products which may
serve the same markets as those served by Union Carbide's products. Some of
Union Carbide's competitors, such as companies principally engaged in
petroleum operations, have more direct access to hydrocarbon feedstocks, and
some have greater financial resources than Union Carbide.
There are a number of competitors in each of the products and services areas
in which Union Carbide is active. In some of the individual areas in which
Union Carbide participates there are many competitors; in others there are
few. Competition is primarily on price, on product performance and on service
to customers.
- - Many producers have important industry positions in polyethylene, and Union
Carbide is one of the world's largest producers. Other significant
producers are Dow Chemical Company, Chevron Corporation, Exxon Corporation,
Mobil Corporation, Novacor Chemicals Ltd, Quantum Chemicals Corporation,
Occidental Petroleum Corporation, Phillips Petroleum Company, Saudi Basic
Industries Corporation and The British Petroleum Company p.l.c.
- - Union Carbide is the world's largest producer of ethylene oxide/glycol and
derivatives. Other significant producers include Shell Oil Company, Dow
Chemical Company, BASF Aktiengesellschaft, The British Petroleum Company
p.l.c., Huntsman Corporation, ICI p.l.c., Occidental Petroleum Corporation,
Hoechst Celanese Corporation, and Saudi Basic Industries Corporation.
- - In solvents and intermediates and emulsion systems, Union Carbide has a
significant position in many product areas. Other significant producers
include Air Products and Chemicals, Inc., Hoechst Celanese Corporation,
Rohm & Haas Company, Eastman Chemical Company, Shell Oil Company, Exxon
Corporation, BASF Aktiengesellschaft and Quantum Chemicals Corporation.
- - Union Carbide participates in a wide range of specialty chemical
product/market areas. The competitive position varies widely from one
product/market area to another. Competitors include a number of domestic
and foreign companies, both diversified and specialized.
Union Carbide is a major marketer of petrochemical products throughout the
world. Products that the corporation markets are largely produced in the
United States, while competitive products are produced throughout the world.
In addition, the corporation plans to make significant investments in joint
ventures in 1995. See pages 4 through 7 of the 1994 annual report to
stockholders for a further discussion.
Union Carbide's international operations face competition from local producers
and global competitors and a number of other risks inherent in carrying on
business outside the United States, including risks of nationalization,
expropriation, restrictive action by local governments and changes in currency
exchange rates.
Item 2. Properties
In management's opinion, current facilities, together with planned expansions,
will provide adequate production capacity to meet Union Carbide's planned
business activities. Capital expenditures are discussed on pages 17 and 19 of
the 1994 annual report to stockholders.
Listed below are the principal manufacturing facilities operated by Union
Carbide worldwide. Research and engineering facilities are noted. Most of the
domestic properties are owned in fee. Union Carbide maintains numerous
domestic sales offices and warehouses, substantially all of which are leased
premises under relatively short-term leases. All principal international
operations manufacturing properties are owned or held under long-term leases.
International operations administrative offices, technical service
laboratories, sales offices and warehouses are owned in some instances and
held under relatively short-term leases in other instances. The corporation's
headquarters are located in Danbury, Connecticut, and are leased.
Principal domestic operations manufacturing facilities and the principal
products manufactured there are as follows:
Location City Principal Product(s)
California Torrance Latexes
Georgia Tucker Latexes
Illinois Alsip Latexes
Kentucky Henderson Dielectric fluid
Louisiana Greensburg Hydroxyethyl cellulose derivatives
Louisiana Taft Acrolein and derivatives, acrylic
monomers, caprolacetone, uv-curing,
cycloaliphatic epoxides, ethylene
oxide and glycol, glycol ethers,
olefins, ethyleneamines
Louisiana Taft (Star Plant) Polyethylene
New Jersey Bound Brook Coatings resins, polyethylene
compounding, recycled plastics
New Jersey Edison Lanolin derivatives
New Jersey Somerset Latexes
New York Mamaroneck Lanolin derivatives
Puerto Rico Bayamon Latexes
Texas Garland Latexes
Texas Seadrift Ethanolamines, ethylene oxide and
glycol, glycol ethers, olefins,
polyethylene, polypropylene,
TERGITOL surfactants
Texas Texas City Olefins, organic acids and esters,
alcohols, TERGITOL surfactants,
vinyl acetate, coatings resins
Washington Washougal Crystal products
West Virginia Institute Caprolacetone derivatives, CARBOWAX
polyethylene glycol, hydroxyethyl
cellulose, POLYOX polyethylene
oxide, ketones, TRITON and TERGITOL
surfactants, ethylidene norbornene
West Virginia South Charleston Alkyl alkanolamines, brake fluids,
miscellaneous specialty products,
UCON fluids, TRITON surfactants
Research and development are carried on at technical centers in Bound Brook,
Edison and Somerset, New Jersey; Tarrytown, New York; Cary, North Carolina;
Washougal, Washington; and South Charleston, West Virginia. Process and design
engineering is conducted at the technical center in South Charleston, West
Virginia, in support of domestic and foreign projects.
Principal international operations manufacturing facilities and the principal
products manufactured there are as follows:
Country City Principal Product(s)
Belgium Antwerp Hydroxyethyl cellulose
Belgium Vilvoorde Lanolin derivatives
Brazil Aratu Hydroxyethyl cellulose
Brazil Cubatao Polyethylene
Canada Boucherville Molded polyethylene
products
Canada Prentiss Ethylene glycol
Dubai, UAE Jebel Ali Free Trade Zone Latex
Ecuador Guayaquil Latex, coatings resins
Indonesia Jakarta Latex
Malaysia Seremban Latex
People's Republic of China Guangdong Province Latex
Philippines Batangas Latex
Sri Lanka Ekala Latex
Thailand Nonthaburi Latex
Research and development are carried on at international operations facilities
in Antwerp, Belgium; Montreal East, Canada; Cubatao, Brazil; Versoix,
Switzerland; and Jurong, Singapore.
Item 3. Legal Proceedings
See Note 16 of Notes to Financial Statements on pages 35 and 36 of the 1994
annual report to stockholders.
On September 28, 1993, the U.S. Environmental Protection Agency (EPA)
announced the service of an administrative complaint on Rhone-Poulenc Ag
Company (R-P) alleging violations of the Resource Conservation and Recovery
Act with respect to operation of the hazardous waste boiler at Institute, West
Virginia. The complaint seeks to assess a civil penalty of $915,125 against R-
P. If the complaint is sustained, under an agreement between R-P and the
corporation, the corporation may be required to indemnify R-P for a portion of
any penalty ultimately paid by R-P.
On February 23, 1994, the EPA issued a complaint and compliance order to the
corporation alleging violations of Federal Hazardous Waste Regulations at the
South Charleston, West Virginia, plant. The complaint seeks a civil penalty of
$320,300. The corporation is contesting the alleged violations and proposed
penalty.
On March 31, 1994, the EPA issued an administrative Complaint, Compliance
Order and Notice of Opportunity for Hearing to the corporation alleging
violations of the Resource Conservation and Recovery Act, as amended, and the
Texas Solid Waste Disposal Act at the corporation's Texas City, Texas, plant.
EPA proposes to assess a civil penalty of $139,000. The corporation has
requested a hearing and is contesting the alleged violations and proposed
penalty.
On February 14, 1995, the EPA issued a complaint to the corporation alleging
violations of the Federal Insecticide, Fungicide, and Rodenticide Act with a
proposed civil penalty of $400,000. This matter concerns a discontinued
medical instrument sterilant. The corporation voluntarily requested
cancellation of its pesticide registration.
As reported in the corporation's Form 10-K for the period ended December 31,
1993, the EPA issued an administrative complaint to the corporation on
November 19, 1993, alleging violations of the Federal Clean Air Act at the
Texas City, Texas, plant. The complaint sought a civil penalty of $194,550. On
October 13, 1994, the corporation and EPA reached a settlement of this matter
pursuant to which the corporation agreed to pay a penalty of $57,500.
Item 4. Submission of Matters to a Vote of Security Holders
The corporation did not submit any matters to a stockholder vote during the
last quarter of 1994.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Market and dividend information for the corporation's common stock is
contained on pages 18 and 19 of the 1994 annual report to stockholders. The
stock exchanges where the stock is traded are listed on page 38 of the 1994
annual report to stockholders. The declaration of dividends is a business
decision made from time to time by the Board of Directors based on the
corporation's earnings and financial condition and other factors the Board
considers relevant.
The number of stockholders of record of the corporation's common stock is
contained on page 1 of the 1994 annual report to stockholders.
Item 6. Selected Financial Data
Information pertaining to consolidated operations is included under the
captions "From the Income Statement," and "From the Balance Sheet (At Year-
End)", and dividend information is included under the caption "Other Data" in
the Selected Financial Data on page 19 of the 1994 annual report to
stockholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
See the information covered in the 1994 annual report to stockholders on pages
11 through 17.
Item 8. Financial Statements and Supplementary Data
The consolidated balance sheet of Union Carbide Corporation and subsidiaries
at December 31, 1994 and 1993, and the consolidated statements of income,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1994, together with the report thereon of KPMG Peat
Marwick LLP dated January 19, 1995, are contained on pages 20 through 37 of
the 1994 annual report to stockholders.
Quarterly income statement data is contained on page 18 of the 1994 annual
report to stockholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Union Carbide has not had any disagreements covered by this item with KPMG
Peat Marwick LLP, its independent auditors.
Part III
Item 10. Directors and Executive Officers of the Registrant
For background information on the Directors of Union Carbide Corporation whose
terms are expected to continue after the annual meeting of stockholders and
persons nominated to become Directors, see pages 9 through 13 of the proxy
statement for the annual meeting of stockholders to be held on April 26, 1995.
C. Peter McColough, age 72, who has been a director of the corporation since
1979, will not stand for reelection at the annual meeting of stockholders and
will cease to be a director at that time.
The principal executive officers of the corporation are as follows. Data is as
of March 9, 1995.
Name Age Position Year
First
Elected
Robert D. Kennedy 62 Chairman of the Board and
Chief Executive Officer 1986
William H. Joyce 59 President and Chief Operating Officer 1993
Joseph S. Byck 53 Vice-President 1991
James F. Flynn 52 Vice-President 1993
Joseph E. Geoghan 57 Vice-President, General Counsel and
Secretary 1987
Thomas D. Jones 60 Vice-President and Treasurer 1993
Malcolm A. Kessinger 51 Vice-President 1991
Lee P. McMaster 52 Vice-President 1993
Gilbert E. Playford 47 Vice-President and Principal Financial
Officer 1991
Joseph C. Soviero 56 Vice-President 1993
Roger B. Staub 60 Vice-President 1993
Ronald Van Mynen 57 Vice-President, Health, Safety and
Environment 1992
Philip T. Wright 63 Vice-President 1995
John K. Wulff 46 Vice-President, Controller and Principal
Accounting Officer 1988
There are no family relationships between any officers or directors of the
corporation. There is no arrangement or understanding between any officer and
any other person pursuant to which the officer was elected an officer. An
officer is elected by the Board of Directors to serve until the next annual
meeting of stockholders and until his successor is elected and qualified.
The table on the next page gives a summary of the positions held during at
least the past five years by each officer. Each of the officers has been
employed by the corporation or a subsidiary of the corporation for the past
five years.
Name Position Years Held
Robert D. Kennedy Chairman of the Board and Chief
Executive Officer 1990 to present
Chairman of the Board, President and
Chief Executive Officer 1986 to 1990
William H. Joyce President and Chief Operating Officer 1993 to present
Executive Vice-President 1991 to 1993
President, Union Carbide Chemicals
and Plastics Company Inc. 1993 to 1994
Executive Vice-President, Union Carbide
Chemicals and Plastics Company Inc. 1990 to 1993
Vice-President 1990 to 1991
Vice-President, Union Carbide Chemicals
and Plastics Company Inc. 1989 to 1990
President, Polyolefins Division 1985 to 1990
Joseph S. Byck Vice-President 1991 to present
Vice-President, Union Carbide Chemicals
and Plastics Company Inc. 1991 to 1994
Vice-President, Business Development and
Planning, Union Carbide Chemicals and
Plastics Company Inc. 1989 to 1991
James F. Flynn Vice-President 1993 to present
Vice-President, General Manager
Solvents & Coatings Materials Division 1989 to 1993
Joseph E. Geoghan Vice-President, General Counsel and
Secretary 1990 to present
Vice-President and General Counsel 1987 to 1990
Thomas D. Jones Vice-President and Treasurer 1993 to present
Vice-President, Treasurer and Principal
Financial Officer, Union Carbide
Chemicals and Plastics Company Inc. 1992 to 1994
Associate Treasurer 1992 to 1993
Assistant Treasurer 1987 to 1992
Malcolm A. Kessinger Vice-President 1991 to present
Vice-President, Human Resources,
Union Carbide Chemicals and Plastics
Company Inc. 1990 to 1994
Corporate Director of Human Resources 1986 to 1990
Lee P. McMaster Vice-President 1993 to present
President, Industrial Chemicals Division 1992 to 1993
Vice-President, General Manager,
Polyolefins Division 1989 to 1992
Gilbert E. Playford Vice-President and Principal Financial
Officer 1993 to present
Vice-President, Treasurer and Principal
Financial Officer 1992 to 1993
Vice-President 1991 to 1992
Vice-President, Corporate Holdings 1991
Vice-President 1989 to 1991
Joseph C. Soviero Vice-President 1993 to present
President, Specialty Chemicals Division 1983 to 1993
Roger B. Staub Vice-President 1993 to present
President, Polyolefins Division 1990 to 1993
Vice-President, General Manager,
Polyolefins Division 1988 to 1990
Ronald Van Mynen Vice-President, Health, Safety and
Environment 1992 to present
Vice-President, Health, Safety and
Environmental Affairs, Union Carbide
Chemicals and Plastics Company Inc. 1985 to 1994
Philip T. Wright Vice-President 1995 to present
Group Vice-President, Union Carbide
Chemicals and Plastics Company Inc. 1990 to 1994
Vice-President, Union Carbide Chemicals
and Plastics Company Inc. 1989 to 1990
John K. Wulff Vice-President, Controller and
Principal Accounting Officer 1989 to present
Item 11. Executive Compensation
See pages 22 through 24 of the proxy statement for the annual meeting of
stockholders to be held on April 26, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
See pages 25 and 26 of the proxy statement for the annual meeting of
stockholders to be held on April 26, 1995.
Item 13. Certain Relationships and Related Transactions
No reportable transactions in 1994.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
UNION CARBIDE CORPORATION
(a) The following documents are filed as part of this report:
1. The consolidated financial statements set forth on pages 20 through
36 and the Independent Auditors' Report set forth on page 37 of the
1994 annual report to stockholders are incorporated by reference in
this Form 10-K Annual Report.
2. The Report on Schedule of KPMG Peat Marwick LLP appears on page 11 of
this Form 10-K Annual Report.
3. The following schedule should be read in conjunction with the
consolidated financial statements incorporated by reference in Item 8
of this Form 10-K Annual Report. Schedules other than those listed
have been omitted because they are not applicable.
Page in this
Form 10-K Report
Valuation and Qualifying Accounts (Schedule VIII),
three years ended December 31, 1994 12
(b) The corporation's Form 8-K dated November 16, 1994 reported the joint
announcement by the corporation and Mitsubishi Corporation of Japan of an
agreement for the sale of common stock representing 75 percent of UCAR
International Inc.'s outstanding shares to a new company formed by
Blackstone Capital Partners II Merchant Banking Fund L.P.
(c) Exhibits-See Exhibit Index on pages 14 through 17 for exhibits filed with
this Annual Report on Form 10-K.
UOP
(d) Audited financial statements of UOP, with Report of Independent
Accountants thereon, appearing on pages 17 through 39 of the
Corporation's 1993 Form 10-K, have been filed pursuant to Regulation S-X,
Rule 3.09 and are incorporated by reference herein. UOP is a general
partnership between EM Sector Holdings Inc. and Catalysts, Adsorbents and
Process Systems, Inc., wholly owned subsidiaries of AlliedSignal Inc. and
the corporation, respectively.
Report of Independent Auditors
The Board of Directors
Union Carbide Corporation
Under date of January 19, 1995, we reported on the consolidated balance
sheets of Union Carbide Corporation and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the three-
year period ended December 31, 1994, as contained on pages 20 through 36
in the 1994 annual report to stockholders. These consolidated financial
statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1994. In connection with our
audits of the aforementioned consolidated financial statements, we also
have audited the related financial statement schedule as listed in Item
14(a)3. This financial statement schedule is the responsibility of the
company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
As discussed in Note 1 to the consolidated financial statements, in 1993
the company changed its method of accounting for postemployment benefits
and in 1992 its methods of accounting for postretirement benefits other
than pensions and income taxes.
KPMG Peat Marwick LLP
Stamford, Conn.
January 19, 1995
<TABLE>
Schedule VIII-Valuation and Qualifying Accounts
Union Carbide Corporation and Consolidated Subsidiaries
<CAPTION>
Deductions
Items determined
to be uncollectible,
Additions less recovery
Balance at Charged to of amounts Balance at
beginning costs and previously end of
of period expenses written off period
Millions of dollars, year ended December 31, 1994
<S> <C> <C> <C> <C>
Allowance for doubtful accounts $12 $2 $3 $11
Millions of dollars, year ended December 31, 1993
Allowance for doubtful accounts $ 9 $5 $2 $12
Millions of dollars, year ended December 31, 1992
Allowance for doubtful accounts $10 $2 $3 $ 9
</TABLE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the corporation has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Union Carbide Corporation
March 9, 1995
by: John K. Wulff
Vice-President, Controller and
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
corporation and in the capacities indicated on March 9, 1995.
Robert D. Kennedy John J. Creedon Ronald L. Kuehn, Jr.
Director, Chairman of the Board Director Director
and Chief Executive Officer
William H. Joyce C. Fred Fetterolf C. Peter McColough
Director, President and Director Director
Chief Operating Officer
Joseph E. Geoghan Rainer E. Gut Rozanne L. Ridgway
Director, Vice-President, Director Director
General Counsel and
Secretary
Gilbert E. Playford James M. Hester William S. Sneath
Vice-President Director Director
and Principal Financial Officer
John K. Wulff Vernon E. Jordan, Jr.
Vice-President, Controller and Director
Principal Accounting Officer
Exhibit Index
Exhibit No.
3.1 Restated Certificate of Incorporation as filed May 2, 1994.
3.2 By-Laws of the Corporation as adopted April 26, 1994.
4.1 Indenture dated as of August 1, 1992, among UCC&P, the Corporation
and Chemical Bank, Trustee, for debt securities issued and that may
be issued (See Exhibit 4.1.1 of the Corporation's Form S-3 filed on
December 9, 1992, File No. 33-55560).
4.2 The Corporation will furnish to the Commission upon request any other
debt instrument referred to in item 601(b)(4)(iii)(A) of Regulation
S-K.
4.3 Rights Agreement, dated as of July 26, 1989, as amended and restated
as of May 27, 1992, between the Corporation and Chemical Bank
(successor to Manufacturers Hanover Trust Company), as Rights Agent
(See Exhibit 4(a) of the Corporation's Form 8 filed June 1, 1992).
7 Opinion of Kelley Drye & Warren regarding liquidation preference,
dated February 11, 1993 (See Exhibit 7 of the Corporation's 1992
10-K).
10.1.1 Credit Agreement ($1,000,000,000) dated as of November 4, 1994, among
the Corporation, the banks listed therein, the co-agents listed
therein, Morgan Guaranty Trust Company of New York, as documentation
agent, and Chemical Bank, as administrative agent and auction agent.
10.1.2 Credit Agreement ($200,000,000) dated as of November 4, 1994, among
the Corporation, the banks listed therein, the co-agents listed
therein, Morgan Guaranty Trust Company of New York, as documentation
agent, and Chemical Bank, as administrative agent and auction agent.
10.2 Indemnity Agreement dated as of July 25, 1986, between the
Corporation and Robert D. Kennedy. The Indemnity Agreement filed with
the Commission is substantially identical in all material respects,
except as to the parties thereto and dates thereof, with Indemnity
Agreements between the Corporation and each other person who is a
director or officer of the Corporation (See Exhibit 10.2 of the
Corporation's 1992 Form 10-K).
10.3 Agreement, dated as of October 2, 1986, among UCC&P, GAF Corporation,
GAF Chemicals Corporation, Jay & Company, Inc., Mayfair Investments,
Inc. and Samuel J. Heyman (See Exhibit 10.3 of the Corporation's 1992
Form 10-K).
10.4 Transfer Agreement dated as of January 1, 1989, between UCC&P and
Praxair, Inc. ("Praxair") (formerly named "Union Carbide Industrial
Gases Inc."), as amended (See Exhibits 10.06, 10.07, 10.08 and 10.09
of Praxair's Form 10 dated March 10, 1992, as amended by Form 8s
dated May 22, 1992, June 9, 1992 and June 12, 1992 ("Praxair Form
10")).
10.5 Transfer Agreement dated as of January 1, 1989, between UCC&P and
Union Carbide Coatings Service Corporation ("UCCS"), as amended (See
Exhibits 10.14, 10.15 and 10.16 of Praxair Form 10).
10.6 Amended and Restated Realignment Indemnification Agreement dated as
of June 4, 1992, among the Corporation, UCC&P, Praxair, UCAR Carbon
Company Inc. ("UCAR") and UCCS (See Exhibit 10.23 of Praxair
Form 10).
10.7 Environmental Management, Services and Liabilities Allocation
Agreement dated as of January 1, 1990, among the Corporation, UCC&P,
UCAR, Praxair, and UCCS, as amended (See Exhibits 10.13 and 10.22 of
Praxair Form 10).
10.8.1 Danbury Lease Agreements dated as of January 1, 1989, between UCC&P
and Praxair, as amended (See Exhibit 10.26 of Praxair Form 10).
10.8.2 Fourth Amendment to Carbide Center Lease between UCC&P and Praxair
dated July 1, 1992 (See Exhibit 10.14b of Praxair's 1993 Form 10-K).
10.8.3 Fifth Amendment to Carbide Center Lease between the Corporation and
Praxair dated June 30, 1994.
10.8.4 Second Amendment to Linde Data Center Lease between UCC&P and Praxair
dated July 2, 1992 (See Exhibit 10.14a of Praxair's 1993 Form 10K).
10.8.5 Third Amendment to Linde Data Center Lease between the Corporation
and Praxair dated June 30, 1994.
10.9.1 Tax Disaffiliation Agreement dated as of June 4, 1992, between the
Corporation and Praxair (See Exhibit 10.20 of Praxair Form 10).
10.9.2 Tax Settlement Agreement dated as of May 31, 1994, between the
Corporation and Praxair.
10.10.1 Employee Benefits Agreement dated as of June 4, 1992, between the
Corporation and Praxair (See Exhibit 10.25 of Praxair Form 10).
10.10.2 First Amendatory Agreement to the Employee Benefits Agreement dated
May 31, 1994.
10.11.1 Danbury Lease-Related Services Agreement dated as of June 4, 1992,
among the Corporation, UCC&P and Praxair (See Exhibit 10.24 of
Praxair Form 10).
10.11.2 First Amendment to Danbury Lease Related Services Agreement dated
June 30, 1994.
10.12 Additional Provisions Agreement dated as of June 4, 1992, between the
Corporation, UCC&P, Praxair and UCCS (See Exhibit 10.21 of Praxair
Form 10).
10.13.1* 1984 Union Carbide Stock Option Plan (See Exhibit 10.7.1 of the
Corporation's 1991 Form 10-K).
10.13.2* Resolutions adopted by the Board of Directors of the Corporation on
January 22, 1986, with respect to the 1984 Union Carbide Stock Option
Plan (See Exhibit 10.7.2 of the Corporation's 1991 Form 10-K).
10.13.3* Resolutions adopted by the Board of Directors of the Corporation on
April 17, 1986, with respect to the 1984 Union Carbide Stock Option
Plan (See Exhibit 10.7.3 of the Corporation's 1991 Form 10-K).
10.13.4* Amendment to the 1984 Union Carbide Stock Option Plan effective
June 1, 1989.
10.14.1* 1988 Union Carbide Long-Term Incentive Plan (See Exhibit 10.14.1 of
the Corporation's 1993 Form 10-K).
10.14.2* Amendment to the 1988 Union Carbide Long-Term Incentive Plan
effective June 1, 1989.
10.14.3 Amendment to the 1988 Union Carbide Long-Term Incentive Plan
effective August 1, 1989.
10.14.4 Resolutions adopted by the Board of Directors of the Corporation on
February 26, 1992, with respect to stock options granted under the
1984 Union Carbide Stock Option Plan and the 1988 Union Carbide Long-
Term Incentive Plan (See Exhibit 10.14.4 of the Corporation's 1992
Form 10-K).
10.14.5 Resolutions adopted by the Compensation and Management Development
Committee of the Board of Directors of the Corporation on June 30,
1992, with respect to stock options granted under the 1984 Union
Carbide Stock Option Plan and the 1988 Union Carbide Long-Term
Incentive Plan (See Exhibit 10.14.5 of the Corporation's 1992
Form 10-K).
10.15.1* 1983 Union Carbide Bonus Deferral Program (See Exhibit 10.8.1 of the
Corporation's 1991 Form 10-K).
10.15.2 Amendment to the 1983 Union Carbide Bonus Deferral Program effective
January 1, 1992 (See Exhibit 10.15.2 of the Corporation's 1992
Form 10-K).
10.16.1* 1984 Union Carbide Cash Bonus Deferral Program (See Exhibit 10.9.1 of
the Corporation's 1991 Form 10-K).
10.16.2* Amendment to the 1984 Union Carbide Cash Bonus Deferral Program
effective January 1, 1986 (See Exhibit 10.9.2 of the Corporation's
1991 Form 10-K).
10.16.3 Amendment to the 1984 Union Carbide Cash Bonus Deferral Program
effective January 1, 1992 (See Exhibit 10.16.3 of the Corporation's
1992 Form 10-K).
10.17.1* Grantor Trust Agreement for the Equalization Benefit Plan for
Participants of the Retirement Program Plan for Employees of Union
Carbide Corporation and its Participating Subsidiary Companies and
the Supplemental Retirement Income Plan (See Exhibit 10.10.1 of the
Corporation's 1991 Form 10-K).
10.17.2* Amendment to Grantor Trust Agreement for the Equalization Benefit
Plan for Participants of the Retirement Program Plan for Employees of
Union Carbide Corporation and its Participating Subsidiary Companies
and the Supplemental Retirement Income Plan (See Exhibit 10.17.2 of
the Corporation's 1993 Form 10-K).
10.18.1* Equalization Benefit Plan for Participants of the Retirement Program
Plan for Employees of Union Carbide Corporation and its Participating
Subsidiary Companies (See Exhibit 10.11 of the Corporation's 1991
Form 10-K).
10.18.2 Amendment to the Equalization Benefit Plan effective January 1, 1994.
10.19.1* Supplemental Retirement Income Plan (See Exhibit 10.12.1 of the
Corporation's 1991 Form 10-K).
10.19.2* Amendment to Supplemental Retirement Income Plan effective January 1,
1989 (See Exhibit 10.19.2 of the Corporation's 1993 Form 10-K).
10.19.3 Amendment to the Supplemental Retirement Income Plan effective
January 1, 1994.
10.20.1 1992 Stock Compensation Plan for Non-Employee Directors of Union
Carbide Corporation (See Appendix A of the Corporation's proxy
statement for the annual meeting of the stockholders held on
April 22, 1992).
10.20.2 Resolution adopted by the Board of Directors of the Corporation on
June 30, 1992, with respect to the 1992 Stock Compensation Plan for
Non-Employee Directors of Union Carbide Corporation (See Exhibit
10.20.2 of the Corporation's 1992 Form 10-K).
10.21.1 Severance Compensation Agreement, dated July 21, 1992, between the
Corporation and Ronald Van Mynen. The Severance Compensation
Agreement filed with the Commission is substantially identical in all
material aspects, except as to the parties thereto and dates thereof,
with Agreements between the Corporation and other officers and
employees of the Corporation.
10.21.2 Amendment of Severance Compensation Agreement, dated September 24,
1993, between the Corporation and Ronald Van Mynen. Identical
amendments, except as to the parties thereto, were entered into
between the Corporation and other officers and employees of the
Corporation.
10.22* Resolution adopted by the Board of Directors of the Corporation on
November 30, 1988, with respect to an executive life insurance
program for officers and certain other employees (See Exhibit 10.22
of the Corporation's 1993 Form 10-K).
10.23.1* 1989 Union Carbide Variable Compensation Plan (See Exhibit 10.17 of
the Corporation's 1991 Form 10-K).
10.23.2 1994 Union Carbide Variable Compensation Plan (See Exhibit 10.23.2 of
the Corporation's 1993 Form 10-K).
10.24.1 Union Carbide Corporation Benefits Protection Trust.
10.24.2 Amendment to the Union Carbide Corporation Benefits Protection Trust
effective October 23, 1991 (See Exhibit 10.18.2 of the Corporation's
1991 Form 10-K).
10.24.3 Amendment to the Union Carbide Corporation Benefits Protection Trust
effective January 1, 1994.
10.25* Resolutions adopted by the Board of Directors of the Corporation on
February 24, 1988, with respect to the purchase of annuities to cover
liabilities of the Corporation under the Equalization Benefit Plan
for Participants of the Retirement Program Plan for Employees of
Union Carbide Corporation and its Participating Subsidiary Companies
and the Supplemental Retirement Income Plan.
10.26* Resolutions adopted by the Board of Directors of the Corporation on
June 28, 1989, with respect to the purchase of annuities to cover
liabilities of the Corporation under the Supplemental Retirement
Income Plan.
10.27 Union Carbide Corporation Non-Employee Directors' Retirement Plan.
10.28 1994 Union Carbide Long-Term Incentive Plan.
10.29 Compensation Deferral Program effective January 1, 1995.
10.30 Excess Long Term Disability Plan effective January 1, 1994.
10.31 Recapitalization and Stock Purchase and Sale Agreement dated as of
November 14, 1994 among Union Carbide Corporation, Mitsubishi
Corporation, UCAR International Inc. and UCAR International
Acquisition Inc.
11 Computation of Earnings per Share For The Five Years Ended
December 31, 1994.
13 The Corporation's 1994 annual report to stockholders (such report,
except for those portions which are expressly referred to in this
Form 10-K, is furnished for the information of the Commission and is
not deemed "filed'' as part of the Form 10-K).
21 Subsidiaries of the Corporation.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Price Waterhouse LLP.
27 Financial Data Schedule
99 1993 audited financial statements of UOP, with Report of Independent
Accountants thereon (See pages 17 through 39 of the Corporation's
1993 Form 10-K).
* The obligations of UCC&P hereunder were assumed by Union Carbide
Corporation as of July 1, 1989.
On May 1, 1994, Union Carbide Corporation was merged into UCC&P and UCC&P
changed its name to "Union Carbide Corporation."
Wherever an exhibit listed above refers to another exhibit or document (e.g.,
"See Exhibit 6 of...."), that exhibit or document is incorporated herein by
such reference.
A copy of any exhibit listed above may be obtained on written request to the
Secretary's Department, Union Carbide Corporation, Section E-4, 39 Old
Ridgebury Road, Danbury, CT 06817-0001. The charge for furnishing any exhibit
is 25 cents per page plus mailing costs.
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
UNION CARBIDE CORPORATION
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
The undersigned William H. Joyce and John Macdonald, being respectively
the President and Assistant Secretary of Union Carbide Corporation, hereby
certify as follows:
1. The name of the Corporation is Union Carbide Corporation. The
name under which the Corporation was formed was Union Carbide and Carbon
Corporation.
2. The certificate of incorporation was filed in the Office of the
Secretary of State of the State of New York on November 1, 1917.
3. This restatement of the certificate of incorporation of the
Corporation was authorized by unanimous written consent of the Board of
Directors of the Corporation.
4. The certificate of incorporation, as heretofore amended and
changed to date, is hereby restated, without further amendment or change, to
read in its entirety as follows:
CERTIFICATE OF INCORPORATION
OF
UNION CARBIDE CORPORATION
UNDER SECTION 402 OF THE BUSINESS CORPORATION LAW
l. The name of the Corporation is Union Carbide Corporation.
2. The Corporation may engage in any lawful act or activity for which
corporations may be organized under the Business Corporation Law provided that
the Corporation is not formed to engage in any act or activity which requires
the consent or approval of any state official, department, board, agency or
other body, without such consent or approval first being obtained.
3. The total number of shares that the Corporation may issue is
525,000,000, of which 500,000,000 shall be shares of Common Stock, par value
$1.00 each, and 25,000,000 shall be shares of Preferred Stock, par value $1.00
each.
(a) The holders of the Common Stock shall be entitled to one
vote per share on all matters upon which stockholders are entitled
to vote and shall not be entitled to any preference in the
distribution of dividends or assets.
(b) The Preferred Stock may be issued from time to time in
series. Each share of a series shall be equal to every other
share of the same series. The Board of Directors is authorized to
establish and designate series and to fix the number of shares and
the relative rights, preferences and limitations as between
series, subject to such limitations as may be prescribed by law.
In particular, the Board of Directors may establish, designate and
fix the following with respect to each series of Preferred Stock:
(1) The distinctive serial designation of the shares of
the series which shall distinguish those shares from the shares of
all other series;
(2) The number of shares included in the series, which may
be increased or decreased from time to time unless otherwise
provided by the Board of Directors in creating the series;
(3) The annual dividend rate for the shares of the series
and the date or dates upon which such dividends shall be payable;
(4) Whether dividends on the shares of the series shall be
cumulative and, on the shares of any series having cumulative
dividend rights, the date or dates or method of determining the
date or dates from which dividends on the shares of the series
shall be cumulative;
(5) The amount or amounts which shall be paid out of the
assets of the Corporation to the holders of the shares of the
series upon the involuntary liquidation, dissolution or winding up
of the Corporation and upon the voluntary liquidation, dissolution
or winding up of the Corporation;
(6) The price or prices at which, the period or periods
within which and the terms and conditions upon which the shares of
the series may be redeemed in whole or in part, at the option of
the Corporation;
(7) The obligation, if any, of the Corporation to purchase
or redeem shares of the series pursuant to a sinking fund and the
price or prices at which, the period or periods within which and
the terms and conditions upon which the shares of the series shall
be redeemed, in whole or in part, pursuant to such sinking fund;
(8) The period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or
rates of conversion and the terms and conditions of any
adjustments thereof, upon which the shares of the series shall be
convertible at the option of the holder into shares of any class
of stock or into shares of any other series of Preferred Stock,
except into a class of shares having rights or preferences as to
dividends or distributions of assets upon liquidation which are
prior or superior in rank to those of the shares being converted;
(9) The voting rights, if any, of the shares of the series
in addition to those required by law, including the number of
votes per share and the transaction of any business or of any
specified item of business in connection with which the shares of
the series shall vote as a class; and
(10) Any other relative rights, preferences, or limitations
of the shares of the series not inconsistent herewith or with
applicable law.
(c) ESOP CONVERTIBLE PREFERRED STOCK
Section 1. Definitions, Designation and Issuance.
1.01 Definitions. For purposes of this subparagraph (c):
"BCL" means the Business Corporation Law of the State of New York, as
amended from time to time.
"Board" means the Board of Directors of the Corporation or any
authorized committee of the Board.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Common Stock" means the shares of common stock, par value $1.00 each,
authorized by paragraph 3 of the Certificate of Incorporation of the
Corporation.
"Conversion Price" means $8.981 per share, as such may be adjusted from
time to time as provided herein.
"Dividend Payment Date" means the Quarterly Payment Date or such other
dates as the Board may designate for payment of Preferred Dividends in
conjunction with an election to cause Preferred Dividends to become payable on
an annual or semi-annual basis.
"Dividend Redemption" means a redemption of ESOP Shares, at the election
of the Holder, in connection with any Preferred Dividend.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ESOP Preferred Stock" or "ESOP Shares" means the ESOP Convertible
Preferred Stock as designated in Subsection 1.02.
"Holder" means the Trustee holding ESOP Shares.
"Junior Stock" means the Common Stock and any series of stock ranking
junior to the ESOP Preferred Stock as to dividends or upon dissolution.
"Liquidation Price" means $8.981 per share as such may be subject to
adjustment from time to time as provided herein.
"Parity Stock" means any series of stock ranking on a parity with the
ESOP Preferred Stock as to dividends.
"Plan" means the Union Carbide Corporation Employee Stock Ownership Plan
which forms a part of the Union Carbide Corporation Savings Program.
"Preferred Dividend Rate" means the amount per year specified in
Subsection 2.01, as such amount may be adjusted from time to time pursuant to
the terms hereof.
"Preferred Dividends" means cash dividends, when as and if declared by
the Board out of funds legally available therefor, with respect to ESOP
Preferred Stock.
"Quarterly Payment Date" means, at any time that Preferred Dividends are
paid on a quarterly basis, the dates determined from time to time by the Board
pursuant to Subsection 2.01 for payment of Preferred Dividends.
"Rights" means rights to purchase Common Stock (or other securities in
lieu thereof) pursuant to the Rights Agreement between the Corporation and
Chemical Bank, Rights Agent, as such agreement may be amended from time to
time, or any rights issued to holders of Common Stock in addition thereto or
in replacement therefor.
"Special Redemption Price" means, in connection with a redemption
pursuant to Subsection 7.01, a redemption price equal to the higher of (a) the
Liquidation Price per share of ESOP Preferred Stock on the date fixed for
redemption and (b) the Fair Market Value (as defined in Subsection 9.01) of
the number of shares of Common Stock into which each ESOP Share is convertible
at the time the notice of such redemption is given, plus in either case an
amount equal to accrued (whether or not accumulated) and unpaid dividends
thereon to the date fixed for redemption.
"Transfer" means any sale, transfer or other disposition of ESOP Shares
other than to the Corporation.
"Trustee" means a trustee or trustees acting on behalf of the trust
established in connection with the Plan.
1.02 Designation. Of the 25,000,000 authorized shares of Preferred
Stock, par value $1.00 each, 16,668,893 shares shall be designated ESOP
CONVERTIBLE PREFERRED STOCK. The Board may from time to time, by resolution,
fix such number of shares to an increased or decreased number. However, no
such decrease shall reduce the number of ESOP Shares to a number less than
that number of ESOP Shares then outstanding. If the Corporation redeems or
purchases any ESOP Shares, such ESOP Shares (a) shall remain issued and
outstanding for all purposes (except that as long as such shares are held by
the Corporation, no dividends shall be paid on such shares and they shall
neither be entitled to vote nor counted for quorum purposes) and (b) may
thereafter be transferred by the Corporation from time to time to the Trustee,
and upon such transfer the voting and dividend rights of such shares shall be
restored. However, the Corporation may, at the time of or at any time after
such redemption or purchase, retire any such shares then held by the
Corporation, and such shares shall then be restored to the status of
authorized but unissued shares of Preferred Stock of the Corporation.
1.03 Issuance. ESOP Shares shall be issued only to the Trustee. In
the event of any Transfer to any person (including, without limitation, any
participant in the Plan) other than (a) any Trustee or (b) any pledgee (other
than the Corporation or any subsidiary of the Corporation) of such ESOP Shares
acquiring such ESOP Shares as security for any loan or loans made to the Plan
or to any Trustee, the ESOP Shares so Transferred shall, upon such Transfer
and without any further action by the Corporation or the Holder, be
automatically converted into shares of Common Stock at the Conversion Price
and on the terms otherwise provided for conversions pursuant to Section 5. No
such transferee shall have any of the voting powers, preferences and relative,
participating, optional or special rights ascribed to the ESOP Shares
hereunder, but, shall have only the powers and rights pertaining to the Common
Stock into which such ESOP Shares shall be so converted. However, in the
event of a foreclosure or other realization upon the ESOP Shares pledged as
security for any loan or loans made to the Plan or to the Trustee (other than
by the Corporation or any subsidiary of the Corporation), the pledged ESOP
Shares so foreclosed or otherwise realized upon shall be converted
automatically into shares of Common Stock at the Conversion Price and on the
terms otherwise provided for conversions pursuant to Section 5. In the event
of such a conversion, the transferee shall be treated for all purposes as the
record holder of the shares of Common Stock into which the ESOP Shares shall
have been converted as of the date of such conversion. Certificates
representing ESOP Shares shall be legended to reflect the restrictions on
transfer set forth above. Notwithstanding the foregoing provisions of this
Subsection 1.03, ESOP Shares (x) may be converted into shares of Common Stock
as provided by Section 5 and the shares of Common Stock issued upon such
conversion may be transferred by the holder thereof as permitted by law and
(y) shall be redeemable by the Corporation upon the terms and conditions
provided by Sections 6, 7 and 8.
Section 2. Dividends and Distributions.
2.01 Dividends. The Holder shall, subject to the provisions for
adjustment hereinafter set forth, be entitled to receive Preferred Dividends
payable in an amount initially equal to $0.794 per share per year, and no
more, on a quarterly basis, on the last business day of each calendar quarter
(or such later date not more than five business days thereafter as the Board
may from time to time elect in its absolute discretion), beginning on the
second Quarterly Payment Date occurring in 1994. However, the Board may in
its absolute discretion elect to cause Preferred Dividends to become payable
on an annual or semi-annual basis if such election is made effective during
the period beginning on January 5 and ending on March 30 in each year. The
Corporation shall give prompt notice to the Holder of (a) any election to
cause Preferred Dividends to become payable on an annual or semi-annual basis
and (b) the Dividend Payment Date from time to time determined by the Board.
Preferred Dividends shall be made to the Holder at the opening of business on
each applicable Dividend Payment Date.
2.02 Cumulation. Dividends in respect of ESOP Shares shall begin to
accrue from April 1, 1994, except that with respect to any ESOP Shares
redeemed or purchased by the Corporation and then reissued, dividends shall
accrue on such shares from their date of reissuance. Dividends shall accrue
on a daily basis, whether or not the Corporation shall then have earnings or
surplus (computed on the basis of a 360-day year of 30-day months in case of
any period less than one year), based on the Preferred Dividend Rate then in
effect. However, if the Board elects to cause Preferred Dividends to be
payable on an annual or semi-annual basis, payments in respect of dividends on
ESOP Preferred Stock made after the effective date of such election shall be
computed using the Preferred Dividend Rate in effect on the Dividend Payment
Date as determined by the Board. Accrued but unpaid Preferred Dividends shall
cumulate as of the Dividend Payment Date on which they first become payable.
No interest shall accrue on accumulated but unpaid Preferred Dividends.
2.03 Distributions. So long as any ESOP Preferred Stock shall be
outstanding, no dividend shall be declared or paid or set apart for payment on
any Parity Stock unless there shall also be or have been declared and paid or
set apart for payment on the ESOP Preferred Stock, like dividends for all
dividend payment periods of the ESOP Preferred Stock ending on or before the
dividend payment date of the Parity Stock, ratably in proportion to the
respective amounts of dividends (a) accumulated and unpaid or payable on the
Parity Stock, and (b) accumulated and unpaid through the dividend payment
period or periods of the ESOP Preferred Stock next preceding such dividend
payment date. The Corporation shall not declare or pay or set apart for
payment any dividends or make any other distributions on, or make any payment
on account of the purchase, redemption or other retirement of any Junior Stock
until full cumulative dividends on the ESOP Preferred Stock shall have been
declared and paid or set apart for payment when due. However, the foregoing
sentence shall not apply to (x) any dividend or distribution payable solely in
any shares of, or options, warrants or rights to subscribe for or purchase
shares of, any Junior Stock or (y) the acquisition of shares of any Junior
Stock in exchange solely for or by conversion solely into shares of any other
Junior Stock or (z) any payment on account of the redemption of the Rights.
Any Preferred Dividend shall first be credited against the earliest
accumulated but unpaid dividend due with respect to ESOP Preferred Stock.
Section 3. Liquidation Preference.
3.01 Liquidation Price. In the event of any dissolution or liquidation
of the Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus)
shall be made to or set apart for the holders of any series or class or
classes of stock of the Corporation ranking junior to ESOP Preferred Stock
upon dissolution or liquidation, the Holder shall be entitled to receive the
Liquidation Price per share in effect at the time of dissolution or
liquidation plus an amount equal to all dividends accrued (whether or not
accumulated) and unpaid to the date of final distribution to such Holder, and
such Holder shall not be entitled to receive any further payments. If, upon
any dissolution or liquidation of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable to the Holder shall be
insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other series ranking, as to dissolution or liquidation, on a
parity with ESOP Preferred Stock, then such assets, or the proceeds thereof,
shall be distributed to the Holder and any other such shares ratably in
accordance with the respective amounts that would be payable on the ESOP
Preferred Stock and any other such shares if all amounts payable thereon were
paid in full. For the purposes of this Section 3, neither (a) the
consolidation or merger of the Corporation with or into one or more
corporations, (b) the sale, transfer, lease or exchange (for cash, shares of
equity stock, securities or other consideration) of all or substantially all
of the assets of the Corporation, nor (c) the distribution to the shareholders
of the Corporation of all or substantially all of the consideration for such
sale shall be deemed to be a dissolution or liquidation (voluntarily or
involuntarily), unless such consideration (apart from assumption of
liabilities) or the net proceeds thereof consists substantially entirely of
cash. After payment shall have been made in full to the Holder as provided in
this Subsection 3.01 the Holder shall not be entitled to share in the
remaining assets of the Corporation.
Section 4. Ranking and Voting of Shares.
4.01 Ranking. Unless otherwise provided in this Certificate of
Incorporation, as the same may be amended, relating to any subsequent series
of Preferred Stock, the ESOP Preferred Stock shall rank on a parity with all
series of Preferred Stock as to dividends and as to the distribution of assets
upon dissolution or liquidation.
4.02 Voting Rights. The Holder shall have the following voting rights:
(i) The Holder shall be entitled to vote on all matters
submitted to a vote of the shareholders of the Corporation, voting
together with the holders of Common Stock as one class. The
Holder shall be entitled to a number of votes equal to the number
of shares of Common Stock into which the ESOP Shares could be
converted on the record date for determining the shareholders
entitled to vote. Whenever the Conversion Price is adjusted as
provided in Section 9, the number of votes of the ESOP Shares
shall also be correspondingly adjusted.
(ii) Except as otherwise required by law or set forth
herein, the Holder shall have no special voting rights and the
consent of the Holder shall not be required (except to the extent
the Holder is entitled to vote with holders of Common Stock as set
forth herein) for the taking of any corporate action, including
the issuance of any Preferred Stock now or hereafter authorized;
provided, however, that the vote of at least a majority of the
outstanding ESOP Shares, voting separately as a series, shall be
necessary to authorize the amendment of the Certificate of
Incorporation if the proposed amendment relates to any of the
matters enumerated in Section 804 of the BCL.
Section 5. Conversion into Common Stock.
5.01 Conversion Price. The Holder shall be entitled to cause any or
all of the ESOP Shares to be converted into shares of Common Stock at any time
prior to the close of business on the date fixed for redemption of such shares
pursuant to Sections 6, 7 or 8. The number of shares of Common Stock into
which each ESOP Share may be converted shall be determined by dividing the
Liquidation Price in effect at the time of conversion by the Conversion Price
in effect at the time of conversion. The initial conversion rate is
equivalent to one share of Common Stock for each ESOP Share, and is subject to
adjustment as hereinafter provided.
5.02 Surrender of Certificates. The Holder shall convert ESOP Shares
into shares of Common Stock by surrender, if certificated, of the certificate
or certificates representing the ESOP Shares being converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed
stock powers relating thereto), or if uncertificated, a duly executed stock
power relating thereto. Such conversion shall be effected at the principal
executive office of the Corporation. The certificate or certificates shall be
accompanied by a notice of conversion which shall specify (a) the number of
ESOP Shares to be converted, (b) the name or names in which the Common Stock
and any ESOP Shares not to be so converted are to be issued, and (c) the
address to which delivery is to be made of a confirmation of such conversion,
if uncertificated, or any new certificates which may be issued upon such
conversion, if certificated.
5.03 Delivery of Common Stock Upon Conversion. The Corporation shall,
upon receipt of a certificate representing the ESOP Shares for conversion, or
if uncertificated, of a duly executed stock power relating thereto, issue and
send by hand delivery (with receipt to be acknowledged) or by first class
mail, to the Holder, at the address designated by the Holder, a certificate or
certificates for, or if uncertificated, confirmation of, the number of shares
of Common Stock to which the Holder shall be entitled upon conversion. If
only part of the ESOP Shares surrendered are to be converted, the Corporation
shall issue and deliver to the Holder a new certificate or certificates
representing the number of ESOP Shares that shall not have been converted, or
if uncertificated, confirmation of the number of ESOP Shares that shall not
have been converted.
5.04 Effective Date of Issuance of Common Stock. The issuance of
shares of Common Stock upon conversion of ESOP Shares shall be effective as of
the earlier of (a) the delivery to the Holder of the certificates representing
the shares of Common Stock issued upon conversion thereof, if certificated, or
confirmation, if uncertificated, and (b) the commencement of business on the
second business day after the surrender of the certificate or certificates, if
certificated, or a duly executed stock power, if uncertificated, for the ESOP
Shares to be converted. The person or persons entitled to receive Common
Stock issuable upon such conversion shall, on and after the effective date of
conversion, be treated for all purposes as the record holder or holders of
such shares of Common Stock, and no allowance or adjustment shall be made in
respect of dividends payable to holders of Common Stock of record on any date
prior to such effective date. The Corporation shall not be obligated to pay
to the Holder any dividend that may have accrued or that may have been
declared if the Dividend Payment Date for such dividend is on or subsequent to
the effective date of conversion.
5.05 No Fractional Shares. The Corporation shall not be obligated to
deliver any fractional share of Common Stock issuable upon any conversion of
ESOP Shares, but in lieu thereof may make a cash payment in respect thereof in
any manner permitted by law.
5.06 Common Stock Reserved. The Corporation shall at all times reserve
and keep available out of its authorized and unissued Common Stock or treasury
Common Stock, solely for issuance upon the conversion of ESOP Shares as herein
provided, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all of the ESOP Shares then outstanding.
5.07 Issuance of Rights. Whenever the Corporation shall issue shares
of Common Stock upon conversion of ESOP Shares as contemplated by this Section
5, the Corporation shall issue together with each such share of Common Stock
one Right, whether or not the Rights shall be exercisable at such time, but
only if the Rights are issued and outstanding and held by other holders of
Common Stock at such time and have not expired.
Section 6. Redemption at the Option of the Corporation.
6.01 Redemption After December 31, 1998. At the option of the
Corporation, ESOP Preferred Stock shall be redeemable, in whole or in part, at
any time after December 3l, 1998, out of funds legally available therefor, at
a redemption price per share equal to the following percentages of the
Liquidation Price in effect on the date fixed for redemption:
During the Twelve-
Month Period Percentage of
Beginning January 1, Liquidation Price
1999 101.7750
2000 100.8875
and thereafter at l00%, plus, in each case, an amount equal to all accrued
(whether or not accumulated) and unpaid dividends thereon to the date fixed
for redemption.
6.02 Notice of Redemption. The Corporation shall deliver a notice of
redemption to the Holder, by first class mail, mailed not less than 20 days
nor more than 60 days prior to the redemption date. Each notice shall state:
(a) the redemption date; (b) the total number of ESOP Shares to be redeemed;
(c) the redemption price; (d) that the shares are to be surrendered at the
principal office of the Corporation for payment of the redemption price; (e)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date; (f) whether such redemption price will be paid in cash or in
shares of Common Stock; and (g) the conversion rights of the shares to be
redeemed, the period within which conversion rights may be exercised, and the
Conversion Price and number of shares of Common Stock issuable upon conversion
of an ESOP Share at such time.
6.03 Redemption if Change in Tax Law or Plan Does Not Qualify. In the
event that:
(i) there shall be a change in the federal tax law or
regulations of the United States of America or of an
interpretation or application of such law or regulations or of a
determination by a court of competent jurisdiction that in any
case has the effect of precluding the Corporation from claiming
(other than for purposes of calculating any alternative minimum
tax) any of the tax deductions for dividends paid on the ESOP
Preferred Stock when such dividends are used as provided under
Section 404(k)(2) of the Code, as in effect on the date the ESOP
Preferred Stock is initially issued, or
(ii) the Corporation shall certify to the Holder that the
Corporation has determined in good faith that the Plan either is
not qualified as a "stock bonus plan" within the meaning of
Section 401(a) of the Code or is not an "employee stock ownership
plan" within the meaning of 4975(e)(7) of the Code,
then, notwithstanding anything to the contrary in Subsection 6.01, the
Corporation may, in its sole discretion, at any time within one year after
either of the foregoing events, elect either to:
(a) redeem, out of funds legally available therefor, any or all
of the ESOP Preferred Stock at a redemption price equal to the
Liquidation Price per share on the date fixed for redemption, plus an
amount equal to accrued (whether or not accumulated) and unpaid
dividends thereon to the date fixed for redemption, or
(b) exchange for any or all of such ESOP Shares, securities of at
least equal value (as determined by an independent appraiser) that
constitute "qualifying employer securities" with respect to the Holder
within the meaning of Section 409(1) of the Code and Section 407(d)(5)
of ERISA, or any successor provisions of law.
If the Corporation elects to redeem any or all of the ESOP Preferred Stock
pursuant to clause (a) above, a notice of redemption shall be given as
required in Subsection 6.02. If the Corporation elects to exchange securities
for ESOP Preferred Stock pursuant to clause (b) above, it shall cause notice
of such election to be sent to the Holder by first class mail, mailed not less
than 20 days nor more than 60 days prior to the date of exchange. Each notice
of election shall state: (i) the exchange date; (ii) the total number of ESOP
Shares to be exchanged; (iii) the exchange rate; (iv) that the shares are to
be surrendered for exchange at the principal office of the Corporation; and
(v) that dividends on the shares to be exchanged will cease to accrue on such
exchange date.
6.04 Redemption upon Termination of Plan. The Corporation may, in its
sole discretion and notwithstanding anything to the contrary in Subsection
6.01, call for redemption any or all of the then outstanding ESOP Preferred
Stock in the event that the Plan is, or contributions thereto are, terminated.
Any such redemption shall be effected upon notice as required in Subsection
6.02. The redemption shall be made out of funds legally available therefor at
a redemption price per share equal to the following percentages of the
Liquidation Price in effect on the date fixed for redemption:
During the Twelve-
Month Period Percentage of
Beginning January 1, Liquidation Price
1994 106.2125
1995 105.3250
1996 104.4375
1997 103.5500
1998 102.6625
1999 101.7750
2000 100.8875
and thereafter at l00%, plus, in each case, an amount equal to all accrued
(whether or not accumulated) and unpaid dividends thereon to the date fixed
for redemption.
6.05 Payment of Redemption Price. The Corporation, at its option, may
make payment of the redemption price required upon redemption of ESOP Shares
pursuant to this Section 6 in cash or in shares of Common Stock, or in a
combination of such shares and cash. Any shares of Common Stock shall be
valued for such purpose at their Fair Market Value (as defined in Subsection
9.01); provided, however, that in calculating their Fair Market Value, the
Adjustment Period (as defined in Subsection 9.01) shall be deemed to be the
five consecutive trading days preceding the date of redemption.
6.06 Effect of Redemption. Upon surrender of the certificates, if
certificated, for any shares called for redemption, or upon the date fixed for
redemption, if uncertificated, the Corporation shall, unless such shares have
previously been converted, redeem such shares as of the close of business on
the date fixed for redemption and at the redemption price set forth in
Subsection 6.01, 6.03 or 6.04 as the case may be. From and after the date
fixed for redemption, dividends on ESOP Shares called for redemption will
cease to accrue and all rights of the Holder in respect of such shares shall
cease, except the right to receive the redemption price. Upon payment of the
redemption price, such shares shall be deemed to have been transferred to the
Corporation, to be held as provided in Subsection 1.02.
Section 7. Redemption at the Option of the Holder.
7.01 Redemption to Provide for Plan Distributions. The Corporation
shall, unless otherwise provided by law, redeem ESOP Shares at the option of
the Holder when and to the extent necessary for the Holder to provide for
distributions required to be made under, or to satisfy an investment election
provided to participants in accordance with, the Plan or any successor plan or
in connection with a Dividend Redemption. The Holder may exercise such
option, at any time and from time to time, by delivering notice to the
Corporation not less than five business days prior to the date fixed for
redemption by the Holder in such notice. The redemption shall be made at a
redemption price equal to the Special Redemption Price, in shares of Common
Stock legally available therefor or, at the election of the Corporation, may
be made out of funds legally available therefor in cash or a combination of
Common Stock and cash. Shares of Common Stock shall be valued for purposes of
redemption pursuant to this Subsection 7.01 as provided by Subsection 6.05.
In the case of any Dividend Redemption, the Holder shall give the notice
specified above on the tenth business day after the related Dividend Payment
Date and such redemption shall be effective as to such number of ESOP Shares
as shall equal (a) the aggregate amount of such Preferred Dividends paid with
respect to ESOP Shares allocated or credited to the accounts of participants
in the Plan or any successor plan that are used to repay any loan associated
with such allocated or credited shares divided by (b) the Special Redemption
Price specified above in this Subsection 7.01.
7.02 Redemption to Satisfy Plan Obligations or if Plan Does Not Qualify
Under Certain Circumstances. The Corporation shall, unless otherwise provided
by law, redeem ESOP Shares upon certification by the Holder to the Corporation
of the following events:
(i) when and to the extent necessary for the Holder to make
any payments of principal, interest or premium due and payable
(whether voluntary, scheduled, upon acceleration or otherwise)
upon any obligations of the trust established under the Plan in
connection with the acquisition of ESOP Preferred Stock or any
indebtedness, expenses or costs incurred by the Holder for the
benefit of the Plan, or
(ii) when and if it shall be established to the satisfaction
of the Holder that the Plan has not initially been determined by
the Internal Revenue Service to be qualified as a "stock bonus
plan" and an "employee stock ownership plan" within the meaning of
Section 401(a) or 4975(e) (7) of the Code, respectively.
The Holder may exercise such option at any time and from time to time upon
notice to the Corporation given not less than five business days prior to the
date fixed for redemption by the Holder in such notice. A redemption pursuant
to Subsection 7.02 shall be made in shares of Common Stock legally available
therefor, at a redemption price equal to the Liquidation Price plus an amount
equal to accrued and unpaid dividends thereon to the date fixed for
redemption. At the election of the Corporation, such redemption may instead
be made out of funds legally available therefor in cash or a combination of
Common Stock and cash. Any shares of Common Stock shall be valued for the
purposes of redemption pursuant to this Subsection 7.02 as provided by
Subsection 6.05.
Section 8. Consolidation, Merger, etc.
8.01 Exchange for Qualifying Employer Securities. If the Corporation
shall consummate any consolidation or merger or similar transaction, however
named, pursuant to which the outstanding shares of Common Stock are by
operation of law exchanged solely for, or changed, reclassified or converted
solely into, securities of any successor or resulting company (including the
Corporation) that constitute "qualifying employer securities" with respect to
the Holder within the meanings of Section 409(l) of the Code and Section
407(d) (5) of ERISA, or any successor provision of law, and, if applicable,
for a cash payment in lieu of fractional shares, if any, then, in such event,
(i) the terms of such consolidation or merger or similar
transaction shall provide that the ESOP Shares shall be converted
into or exchanged for and shall become preferred securities of
such successor or resulting company, having in respect of such
company insofar as possible (taking into account, without
limitation, any requirements relating to the listing of such
preferred securities on any national securities exchange or the
qualification of such preferred securities for trading in any
over-the-counter market) the same powers, preferences and
relative, participating, optional or other special rights
(including the redemption rights provided by Sections 6, 7 and 8),
and the qualifications, limitations or restrictions thereon, that
the ESOP Preferred Stock had immediately prior to such
transaction,
(ii) after such transaction each security into which the ESOP
Shares are so converted or for which they are exchanged shall be
convertible, pursuant to the terms and conditions provided by
Subsection 5.01, into the number and kind of qualifying employer
securities receivable by the Holder equivalent to the number of
shares of Common Stock into which the ESOP Shares could have been
converted pursuant to Subsection 5.01 immediately prior to such
transaction,
(iii) if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be received in
such transaction, which election cannot practicably be made by the
Holder, then such election shall be deemed to be solely for
"qualifying employer securities" (together, if applicable, with a
cash payment in lieu of fractional shares) with the effect
provided in clauses (i) and (ii) above on the basis of the number
and kind of qualifying employer securities receivable by the
Holder of the number of shares of Common Stock into which the ESOP
Shares could have been converted pursuant to Subsection 5.01
immediately prior to such transaction (it being understood that if
the kind or amount of qualifying employer securities receivable in
respect of each share of Common Stock upon such transaction is not
the same for each such share, then the kind and amount of
qualifying employer securities deemed to be receivable in respect
of each share of Common Stock for purposes of this clause (iii)
shall be the kind and amount so receivable per share of Common
Stock by a plurality of such shares), and
(iv) the rights of the ESOP Preferred Stock as preferred
equity of such successor or resulting company shall successively
be subject to adjustments pursuant to Section 9 after any such
transaction as nearly equivalent as practicable to the adjustments
provided for by Section 9 prior to such transaction.
The Corporation shall not consummate any such merger, consolidation or
similar transaction unless all the terms of this Subsection 8.01 are complied
with.
8.02. Exchange for Non-Qualifying Employer Securities. If the
Corporation shall consummate any consolidation or merger or similar
transaction, however named, pursuant to which the outstanding shares of Common
Stock are by operation of law exchanged for, or changed, reclassified or
converted into, other shares or securities or cash or any other property, or
any combination thereof, other than any such consideration which is
constituted solely of qualifying employer securities that are common stock or
common equity (as referred to in Subsection 8.01) and cash payments, if
applicable, in lieu of fractional shares or other interests, the outstanding
ESOP Shares shall, without any action on the part of the Corporation or the
Holder thereof (but subject to Subsection 8.03), be automatically converted
immediately prior to the consummation of such merger, consolidation or similar
transaction into shares of Common Stock at the Conversion Price then in
effect.
8.03. Redemption Alternative. If the Corporation shall enter into any
agreement providing for any consolidation or merger or similar transaction
described in Subsection 8.02, then the Corporation shall as soon as
practicable thereafter (and in any event at least ten business days before
consummation of such transaction) give notice of such agreement and the
material terms thereof to the Holder. The Holder may elect, by notice of
redemption to the Corporation, to receive, upon consummation of such
transaction, in lieu of any cash or other securities which such holder would
otherwise be entitled to receive under Subsection 8.02, a cash payment equal
to a redemption price per share determined pursuant to Subsection 6.04, plus
an amount equal to accrued (whether or not accumulated) and unpaid dividends
thereon to the date fixed for such transaction. The cash payment shall be
paid out of funds legally available therefor, by the Corporation or the
successor of the Corporation, in redemption of the ESOP Preferred Stock. No
such notice of redemption shall be effective unless delivered to the
Corporation prior to the close of business of the fifth business day prior to
consummation of such transaction, unless the Corporation or the successor of
the Corporation shall waive such prior notice. The Holder may withdraw the
notice of redemption by delivery of a notice of withdrawal to the Corporation
at any time prior to the close of business on the fifth business day prior to
consummation of such transaction.
Section 9. Anti-dilution Adjustments.
9.01 Definitions. For purposes of this Section 9, the following
definitions shall apply:
"Adjustment Period" means the period of five consecutive trading days,
selected by the Corporation, during the 20 trading days preceding, and
including, the date as of which the Fair Market Value of a security is to be
determined.
"Current Market Price" means with respect to publicly traded shares of
Common Stock or any other class of capital stock or other security of the
Corporation or any other issuer, for a day, the last reported sales price,
regular way, or, in case no sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in either case as reported
on the New York Stock Exchange Composite Tape or, if such security is not
listed on the New York Stock Exchange, on the principal national securities
exchange on which such security is listed, if not listed on any national
securities exchange, on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market System or, if such
security is not quoted on such National Market System, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices for such day as furnished by any New York Stock Exchange member firm
regularly making a market in such security selected for such purpose by the
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Extraordinary Distribution" means any dividend or other distribution to
holders of Common Stock (effected while any of the ESOP Shares are
outstanding) of (i) any shares of capital stock of the Corporation (other than
shares of Common Stock), other securities of the Corporation (other than
securities of the type referred to in Subsection 9.03), evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of any subsidiary of the Corporation), or (ii) cash, or any
combination of the foregoing, where the aggregate amount of such cash dividend
or other distribution together with the amount of all cash dividends and other
distributions made during the preceding period of twelve months, when combined
with the aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro Rata
Repurchase that is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the applicable expiration date (including all
extensions thereof) of any tender offer or exchange offer that is a Pro Rata
Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase that is not a tender offer or exchange offer) made during such
period, exceeds 12.5% of the aggregate Fair Market Value of all shares of
Common Stock outstanding on the day before the ex-dividend date with respect
to such Extraordinary Distribution that is paid in cash and on the
distribution date with respect to an Extraordinary Distribution that is paid
other than in cash.
The Fair Market Value of an Extraordinary Distribution for purposes of
Subsection 9.05 shall be the sum of the Fair Market Value of such
Extraordinary Distribution plus the aggregate amount of any cash dividends or
other distributions that are not Extraordinary Distributions made during such
twelve month period and not previously included in the calculation of an
adjustment pursuant to Subsection 9.05, but shall exclude the aggregate amount
of regular quarterly dividends declared by the Board and paid by the
Corporation in such twelve month period.
"Fair Market Value" means,
(i) as to shares of Common Stock or any other class of
capital stock or securities of the Corporation or any other issuer
that are publicly traded, the average of the Current Market Price
of such shares or securities for each day of the Adjustment
Period, and
(ii) as to any security that is not publicly traded or of any
other property means the fair value thereof as determined by an
independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good
faith by the Corporation, or, if no such investment banking or
appraisal firm is in the good faith judgment of the Corporation
available to make such determination, as determined in good faith
by the Corporation.
"Non-Dilutive Amount" means, in respect of an issuance, sale or exchange
by the Corporation of any right or warrant to purchase or acquire shares of
Common Stock (including any security convertible into or exchangeable for
shares of Common Stock), the difference between (a) the product of the Fair
Market Value of a share of Common Stock on the day preceding the first public
announcement of such issuance, sale or exchange multiplied by the maximum
number of shares of Common Stock that could be acquired on such date upon the
exercise in full of such rights or warrants (including upon the conversion or
exchange of all such convertible or exchangeable securities), whether or not
exercisable (or convertible or exchangeable) at such date, and (b) the
aggregate amount payable pursuant to such right or warrant to purchase or
acquire such maximum number of shares of Common Stock including the amount
paid to acquire such right or warrant: provided, however, that in no event
shall the Non-Dilutive Amount be less than zero. For purposes of the
foregoing, in the case of a security convertible into or exchangeable for
shares of Common Stock, the amount payable pursuant to a right or warrant to
purchase or acquire shares of Common Stock shall be the Fair Market Value of
such security on the date of the issuance, sale or exchange of such security
by the Corporation.
"Pro Rata Repurchase" means any purchase of shares of Common Stock by
the Corporation or any subsidiary thereof, whether for cash, shares of capital
stock or other securities of the Corporation, evidences of indebtedness of the
Corporation or any other person or any other property (including shares of a
subsidiary of the Corporation), or any combination thereof, effected while any
of the ESOP Shares are outstanding, pursuant to any tender offer or exchange
offer subject to Section 13(e) of the Exchange Act, or any successor provision
of law, or pursuant to any other offer available to substantially all holders
of Common Stock. However, no purchase of shares by the Corporation or any
subsidiary thereof made in open market transactions shall be deemed a Pro Rata
Repurchase. For purposes of this Subsection 9.01, shares shall be deemed to
have been purchased by the Corporation or any subsidiary thereof "in open
market transactions" if they have been purchased (a) substantially in
accordance with the requirements of Rule 10b-18 as in effect under the
Exchange Act on the date the ESOP Shares are initially issued by the
Corporation or (b) on such other terms and conditions as the Corporation shall
have determined are reasonably designed to prevent such purchases from having
a material effect on the trading market for the Common Stock.
"Special Dividend" means a dividend in respect of ESOP Preferred Stock
in shares of ESOP Preferred Stock.
9.02 Stock Dividend/Stock Split/Recapitalization.
(i) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at any time or from time to
time while any of the ESOP Shares are outstanding, (a) pay a
dividend or make a distribution in respect of the Common Stock in
shares of Common Stock or (b) subdivide the outstanding shares of
Common Stock into a greater number of shares, in each case whether
by reclassification of shares, recapitalization of the Corporation
(excluding a recapitalization or reclassification effected by a
merger or consolidation to which Section 8 applies) or otherwise,
then, in such event, the Board shall, to the extent legally
permissible, declare a Special Dividend in such a manner that the
Holder will become a holder of that number of ESOP Shares equal to
the product of the number of shares held prior to such event
multiplied by a fraction (the "Section 9.02 Fraction") as follows:
NA
____
NB
Where:
NA = Number of shares of Common Stock outstanding immediately
after such event.
NB = Number of shares of Common Stock outstanding immediately
before such event.
A Special Dividend declared pursuant to this Subsection 9.02 shall be
effective, upon payment of such dividend or distribution in respect of the
Common Stock, as of the record date for the determination of shareholders
entitled to receive such dividend or distribution (on a retroactive basis),
and in the case of a subdivision shall become effective immediately as of the
effective date thereof. Concurrently with the declaration of the Special
Dividend pursuant to this Subsection 9.02, the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate of all ESOP Shares shall be
adjusted by dividing the Conversion Price, the Liquidation Price and the
Preferred Dividend Rate, respectively, in effect immediately before such event
by the Section 9.02 Fraction.
(ii) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at any time or from time to
time while any of the ESOP Shares are outstanding, combine the
outstanding shares of Common Stock into a lesser number of shares,
whether by reclassification of shares, recapitalization of the
Corporation (excluding a recapitalization or reclassification
effected by a merger, consolidation or other transaction to which
Section 8 applies) or otherwise, then, in such event and effective
immediately as of the effective date of such combination, the
Holder will become a holder of that number of ESOP Shares equal to
the number of ESOP Shares held prior to such event multiplied by
the Section 9.02 Fraction. Concurrently, the Conversion Price, the
Liquidation Price and the Preferred Dividend Rate of all ESOP
Shares shall automatically be adjusted by dividing the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate,
respectively, in effect immediately before such event by the
Section 9.02 Fraction.
9.03 Rights or Warrants to Purchase Common Stock. Subject to the
provisions of Subsections 9.06 and 9.07, in the event the Corporation shall,
at any time or from time to time while any of the ESOP Shares are outstanding,
issue to holders of shares of Common Stock as a dividend or distribution,
including by way of a reclassification of shares or a recapitalization of the
Corporation, any right or warrant to purchase shares of Common Stock (but not
including as a right or warrant for this purpose any security convertible into
or exchangeable for shares of Common Stock) for a consideration having a Fair
Market Value per share less than the Fair Market Value of a share of Common
Stock on the date of issuance of such right or warrant (other than pursuant to
any employee or director incentive, compensation or benefit plan of the
Corporation or any subsidiary of the Corporation heretofore or hereafter
adopted), then, in such event, the Board shall, to the extent legally
permissible, declare a Special Dividend in such a manner that the Holder will
become a holder of that number of ESOP Shares equal to the product of the
number of shares held prior to such event multiplied by a fraction (the
"Section 9.03 Fraction") as follows:
NB + M
______
NB + F
Where:
NB = Number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants.
M = Maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights and
warrants.
F = Number of shares of Common Stock that could be purchased at
the Fair Market Value of a share of Common Stock at the time
of such issuance for the maximum aggregate consideration
payable upon exercise in full of all rights and warrants.
A Special Dividend declared pursuant to this Section 9.03 shall be effective
upon such issuance of rights or warrants. Concurrently with the declaration
of the Special Dividend pursuant to this Section 9.03, the Conversion Price,
the Liquidation Price and the Preferred Dividend Rate of all ESOP Shares shall
be adjusted by dividing the Conversion Price, the Liquidation Price and the
Preferred Dividend Rate, respectively, in effect immediately before such event
by the Section 9.03 Fraction.
9.04 Sale of Common Stock for less than Fair Market Value.
(i) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at any time or from time to
time while any of the ESOP Shares are outstanding, issue, sell or
exchange shares of Common Stock (other than pursuant to (a) any
right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible
into or exchangeable for shares of Common Stock) or (b) any
employee or director incentive, compensation or benefit plan or
arrangement of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted) for a consideration
per share less than the Fair Market Value of a share of Common
Stock on the date of such issuance, sale or exchange, then, in
such event, the Board shall, to the extent legally permissible,
declare a Special Dividend in such a manner that the Holder will
become a holder of that number of ESOP Shares equal to the product
of the number of shares held prior to such event multiplied by a
fraction (the "Section 9.04(i) Fraction") as follows:
NB + I
______
NB + F
Where:
NB = Number of shares of Common Stock outstanding immediately
before such issuance, sale or exchange.
I = Number of shares of Common Stock so issued, sold or
exchanged.
F = Number of shares of Common Stock that could be purchased at
Fair Market Value of a share of Common Stock at the time of
such issuance, sale or exchange for the maximum aggregate
consideration paid therefor.
(ii) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at any time or from time to
time while any of the ESOP Shares are outstanding, issue, sell or
exchange any right or warrant to purchase or acquire shares of
Common Stock (including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) other
than pursuant to (a) any employee or director incentive,
compensation or benefit plan or arrangement of the Corporation or
any subsidiary of the Corporation heretofore or hereafter adopted
or (b) any dividend or distribution on shares of Common Stock
contemplated in Subsection 9.02 for a consideration having a Fair
Market Value, on the date of such issuance, sale or exchange, less
than the Non-Dilutive Amount, then, in such event, the Board
shall, to the extent legally permissible, declare a Special
Dividend in such manner that the Holder will become a holder of
that number of ESOP Shares equal to the product of the number of
shares held prior to such event times a fraction (the "Section
9.04 (ii) Fraction") as follows:
NB + M
______
NB + N
Where:
NB = Number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants.
M = Maximum number of shares of Common Stock that could be
acquired upon exercise in full of all such rights and
warrants.
N = Number of shares of Common Stock that could be purchased at
the Fair Market Value of a share of Common Stock at the time
of such issuance for the total of (x) the maximum aggregate
consideration payable at the time of the issuance, sale or
exchange of such right or warrant and (y) the maximum
aggregate consideration payable upon exercise in full of all
such rights or warrants.
A Special Dividend declared pursuant to this Subsection 9.04 shall be
effective upon the effective date of such issuance, sale or exchange.
Concurrently with the declaration of the Special Dividend pursuant to this
Subsection 9.04, the Conversion Price, the Liquidation Price and the Preferred
Dividend Rate of all ESOP Shares shall be adjusted by dividing the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate, respectively, in
effect immediately before such event by the Section 9.04(i) Fraction or
Section 9.04(ii) Fraction, as the case may be.
9.05 Extraordinary Distribution/Pro Rata Repurchase.
(i) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at any time or from time to
time while any of the ESOP Shares are outstanding, make an
Extraordinary Distribution in respect of the Common Stocks,
whether by dividend, distribution, reclassification of shares or
recapitalization of the Corporation (including capitalization or
reclassification effected by a merger or consolidation to which
Section 8 does not apply), then, in such event, the Board shall,
to the extent legally permissible, declare a Special Dividend in
such a manner that the Holder will become a holder of that number
of ESOP Shares equal to the product of the number of such shares
held prior to such event times a fraction (the "Section 9.05(i)
Fraction") as follows:
NB x F
________________
(NB x F) - D
Where:
NB = Number of shares of Common Stock outstanding immediately
before such Extraordinary Distribution.
F = The Fair Market Value of a share of Common Stock on the day
before the ex-dividend date with respect to an Extraordinary
Distribution that is paid in cash and on the distribution
date with respect to an Extraordinary Distribution that is
paid in other than cash.
D = The Fair Market Value of the Extraordinary Distribution.
(ii) Subject to the provisions of Subsections 9.06 and 9.07,
in the event the Corporation shall, at a any time or from time to
time while any of the ESOP Shares are outstanding, effect a Pro
Rata Repurchase of Common Stock, then in such event, the Board
shall, to the extent legally permissible, declare a Special
Dividend in such a manner that the Holder will become the holder
of the number of ESOP Shares equal to the product of the number of
such shares held prior to such event times a fraction (the Section
9.05(ii) Fraction") as follows:
(NB - R) x F
________________
(NB x F) - A
Where:
NB = Number of shares of Common Stock outstanding immediately
before such Pro Rata Repurchase.
R = Number of shares of Common Stock repurchased by the
Corporation.
F = The Fair Market Value of a share of Common Stock on the
applicable expiration date (including all extensions
thereof) of any tender offer that is a Pro Rata Repurchase
or on the date of purchase with respect to any Pro Rata
Repurchase that is not a tender offer.
A = The Fair Market Value of the aggregate purchase price of
the Pro Rata Repurchase.
The Corporation shall deliver to the Holder (a) notice of its intent to make
any Extraordinary Distribution and (b) notice of any offer by the Corporation
to make a Pro Rata Repurchase, in each case at the same time as, or as soon as
practicable after, such offer is first communicated to holders of Common Stock
or, in the case of an Extraordinary Distribution, the announcement of a record
date in accordance with the rules of any stock exchange on which the Common
Stock is listed or admitted to trading. Such notice shall set forth the
intended record date and the amount and nature of such dividend or
distribution, or, if a Pro Rata Repurchase, (x) the number of shares subject
to such offer, (y) the purchase price payable by the Corporation pursuant to
such offer, and (z) the Conversion Price and the number of shares of Common
Stock into which an ESOP Share may be converted at such time. Concurrently
with a Special Dividend paid pursuant to this Subsection 9.05, the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate of all ESOP
Shares shall be adjusted by dividing the Conversion Price, the Liquidation
Price and the Preferred Dividend Rate, respectively, in effect immediately
before such Extraordinary Distribution or Pro Rata Repurchase by the Section
9.05(i) Fraction or Section 9.05(ii) Fraction, as the case may be.
9.06 Adjustment Alternatives. Notwithstanding any other provision of
this Section 9, the Corporation shall not be required to make (a) any Special
Dividend, combination of shares or any adjustment of the Conversion Price, the
Liquidation Price or the Preferred Dividend Rate unless such Special Dividend,
combination of shares or adjustment would require an increase or decrease of
at least one percent in the number of ESOP Shares outstanding, or, (b) if no
additional ESOP Shares are issued, any adjustment of the Conversion Price
unless such adjustment would require an increase or decrease of at least one
percent in the Conversion Price. Any lesser Special Dividend, combination of
shares or adjustment shall be carried forward and shall be made no later than
the time of, and together with, the next subsequent Special Dividend,
combination of shares or adjustment which, together with any Special Dividend
or Dividends, adjustment or adjustments so carried forward, shall amount to an
increase or decrease of at least one percent of the number of ESOP Shares
outstanding or, if no additional ESOP Shares are being issued, an increase or
decrease of at least one percent of the Conversion Price, whichever the case
may be.
9.07 Alternative to Special Dividend. The Corporation and the Board
shall each use their best efforts to take all necessary steps or to take all
actions as are reasonably necessary or appropriate for declaration of any
Special Dividend or combination of shares provided in this Section 9, but
shall not be required to call a special meeting of shareholders in order to
implement the provisions thereof. If for any reason the Board is precluded
from giving full effect to the Special Dividend provided in this Section 9,
then no such Special Dividend shall be declared, but instead the Conversion
Price shall automatically be adjusted by dividing the Conversion Price in
effect immediately before the relevant event by the applicable Section 9.02,
Section 9.03, Section 9.04(i), Section 9.04(ii), Section 9.05(i) or Section
9.05(ii) Fraction, and the Liquidation Price and the Preferred Dividend Rate
will not be adjusted. An adjustment to the Conversion Price made pursuant to
this Subsection 9.07 shall be given effect, (a) in the case of a payment of a
dividend or distribution under Subsection 9.02(i), upon payment thereof as of
the record date for the determination of holders entitled to receive such
dividend or distribution (on a retroactive basis), and, in the case of a
subdivision under Subsection 9.02(ii), immediately as of the effective date
thereof, (b) in the case of Subsection 9.03, upon such issuance of rights or
warrants,(c) in the case of Subsection 9.04, upon the effective date of a such
issuance, sale or exchange, (d) in the case of an Extraordinary Distribution
under Subsection 9.05(i), as of the record date for the determination of
holders entitled to receive such Extraordinary Distribution (on a retroactive
basis) and (e) in the case of a Pro Rata Repurchase under Subsection 9.05(ii),
upon the expiration date thereof (if such Pro Rata Repurchase is a tender
offer) or the effective date thereof (if such Pro Rata Repurchase is not a
tender offer). If subsequently the Board is able to give full effect to the
Special Dividend as provided in Subsections 9.02, 9.03, 9.04 or 9.05, then
such Special Dividend will be declared and other adjustments will be made in
accordance with the provisions of the applicable Subsection and the adjustment
in the Conversion Price as provided in this Subsection 9.07 will automatically
be reversed and nullified prospectively.
9.08 Equitable Adjustments. If (a) the Corporation shall make any
dividend or distribution on the Common Stock or issue any Common Stock, other
capital stock or other security of the Corporation or any rights or warrants
to purchase or acquire any such security or effect any other similar corporate
change, or (b) the Corporation shall otherwise be recapitalized, reorganized
or restructured, and in either case the transaction (x) does not result in an
adjustment pursuant to the foregoing provisions of this Section 9 or (y) does
result in an adjustment pursuant to such provisions but the Board, in its sole
discretion, determines that under the circumstances the adjustment is
inadequate, then in either case the Board may, in its sole discretion,
determine whether an equitable adjustment should be made or an additional
equitable adjustment should be made in respect of such transaction. If in
such case the Board determines that some type of adjustment should be made, an
adjustment shall be made effective as of such date as determined by the Board.
The Corporation shall be entitled, but not required, to make such
additional adjustments, in addition to the foregoing provisions of this
Section 9, as shall be necessary in order that any dividend or distribution in
shares of capital stock of the Corporation, subdivision, reclassification or
combination of shares of the Corporation or any recapitalization of the
Corporation shall not be taxable to the holders of the Common Stock.
A determination of the Board made pursuant to this Subsection 9.08 shall
be final and binding on the Corporation and all shareholders of the
Corporation.
If the Corporation shall be required to (a) declare a Special Dividend
or combination of shares and effect concurrent adjustments or (b) effect any
adjustments in lieu of a Special Dividend, in each case pursuant to this
Section 9, the Board may, in its sole discretion, modify the amount of the
Special Dividend or combination of shares or any required adjustment for the
benefit of the Holder to such extent as the Board deems equitable.
9.09 Documentation of Adjustments. Whenever an adjustment increasing
the number of ESOP Shares outstanding is required pursuant hereto, the Board
shall take action as is necessary so that a sufficient number of ESOP Shares
are designated with respect to such increase resulting from such adjustment.
Whenever an adjustment to the Conversion Price, the Liquidation Price or the
Preferred Dividend Rate of the ESOP Preferred Stock is required pursuant
hereto, the Corporation shall forthwith place on file with the transfer agent
for the Common Stock and with the Treasurer of the Corporation a statement
signed by the Treasurer or any Assistant Treasurer of the Corporation stating
the adjusted Conversion Price, Liquidation Price and Preferred Dividend Rate
determined as provided herein. Such statement shall set forth in reasonable
detail such facts as shall be necessary to show the reason and the manner of
computing such adjustment, including any determination of Fair Market Value
involved in such computation. Promptly after each adjustment to the number of
ESOP Shares outstanding, the Conversion Price, the Liquidation Price or the
Preferred Dividend Rate, the Corporation shall mail a notice to the Holder
stating the then prevailing number of ESOP Shares outstanding, the Conversion
Price, the Liquidation Price and the Preferred Dividend Rate.
Section 10. Miscellaneous.
10.01 Notices. All notices referred to herein shall be in writing.
All notices hereunder shall be deemed to have been given upon the earlier of
receipt thereof or three business days after the mailing thereof. Notices
shall be addressed: (a) if to the Corporation, to its office at 39 Old
Ridgebury Road, Danbury, Connecticut 06817-0001 (Attention: Secretary), (b)
if to the Holder, at the address of the Holder as listed in the stock record
books of the Corporation (which may include the records of any transfer agent
for Common Stock) or (c) to such other address as the Corporation or the
Holder, as the case may be, shall have designated by notice similarly given.
10.02 Stamp Taxes. The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in respect of any
issuance or delivery of ESOP Shares or shares of Common Stock or other
securities issued on account of ESOP Shares pursuant thereto or certificates
representing such shares or securities. The Corporation shall not, however,
be required to pay any such tax which may be payable in respect of any
transfer involved in the issuance or delivery of ESOP Shares or Common Stock
or other securities in a name other than that in which the ESOP Shares with
respect to which such shares or other securities are issued or delivered were
registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment to the registered holder
thereof, and shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has
been paid or is not payable.
10.03 Failure to Designate Recipient. In the event that the Holder
shall not, by notice, designate the name in which shares of Common Stock to be
issued upon conversion or exchange should be registered, or to whom payment
upon redemption of ESOP Shares should be made or the address to which the
certificate or certificates representing such shares, or such payment, should
be sent, the Corporation shall be entitled to register such shares, and make
such payment, in the name of the Holder and to send the certificate or
certificates or other documentation representing such shares, or such payment,
to the address of the Holder.
4. The holders of shares of stock of the Corporation shall have no
preemptive rights to purchase any shares of stock or any other securities of
the Corporation.
5. The number of directors of the Corporation shall be fixed and may
from time to time be increased or decreased by resolution or other action of
the Board of Directors, but in no event shall the number of directors be less
than three or more than 19.
6. The office of the Corporation is to be located in the City of New
York, County of New York. The Secretary of State of the State of New York is
designated as the agent of the Corporation upon whom process in any action or
proceeding against it may be served, and the address without the State to
which the Secretary of State shall mail a copy of process in any action or
proceeding against the Corporation which may be served upon him is:
Secretary
Union Carbide Corporation
39 Old Ridgebury Road
Danbury, Connecticut 06817-0001
7. The By-laws may be adopted, amended or repealed by the
stockholders, or by the Board of Directors by a vote of a majority of the
entire Board.
8. A person who is or was a director of the Corporation shall not be
liable to the Corporation or its stockholders for damages for any breach of
duty in such capacity, except to the extent such liability may not be
eliminated or limited by applicable law from time to time in effect.
IN WITNESS WHEREOF, the undersigned have signed this Restated
Certificate of Incorporation this 2nd day of May, 1994 and affirm the
statements contained herein as true under the penalties of perjury.
______________________________
William H. Joyce
President
______________________________
John Macdonald
Assistant Secretary
EXHIBIT 3.2
___________________________________
BY-LAWS
OF
UNION CARBIDE CORPORATION
____________________________________
TABLE OF CONTENTS
ARTICLE I STOCKHOLDERS Page
Section 1 - Annual Meetings.................... 1
2 - Special Meetings................... 1
3 - Time and Place of Meetings......... 1
4 - Notice of Meetings................. 1
5 - Quorum............................. 1
6 - Required Vote...................... 2
7 - Record Date........................ 2
8 - Organization....................... 2
9 - Procedure.......................... 2
10 - Adjournments....................... 3
ARTICLE II BOARD OF DIRECTORS
Section 1 - General Powers..................... 3
2 - Number of Directors................ 3
3 - Term of Office..................... 3
4 - Vacancies.......................... 3
5 - Regular Meetings................... 3
6 - Special Meetings................... 4
7 - Notice of Meetings................. 4
8 - Quorum and Manner..................
of Acting 4
9 - Action by Communications...........
Equipment 4
10 - Action by Consent.................. 5
11 - Organization....................... 5
12 - Compensation....................... 5
TABLE OF CONTENTS
ARTICLE III COMMITTEES Page
Section 1 - Executive Committee................ 5
2 - Other Committees................... 6
3 - Quorum and Manner..................
of Acting 6
4 - Procedure.......................... 6
5 - Changes in Committees.............. 6
ARTICLE IV OFFICERS
Section 1 - Number............................. 7
2 - Election and Term of...............
Office 7
3 - Removal and Vacancies.............. 7
4 - Subordinate and Assistant..........
Officers 7
5 - Duties............................. 8
ARTICLE V INDEMNIFICATION................................... 8
ARTICLE VI MISCELLANEOUS PROVISIONS
Section 1 - Transfer of Shares................. 10
2 - Regulations as to Stock............
Certificates 10
3 - Stockholder Inspection.............
Rights 10
4 - Corporate Seal..................... 10
5 - Definitions........................ 10
ARTICLE VII AMENDMENTS........................................ 11
BY-LAWS
of
UNION CARBIDE CORPORATION
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of stockholders
for the election of directors and other purposes shall be held at such
place, date and hour as shall designated in the notice of meeting
approved by the Board.
Section 2. Special Meetings. A special meeting of stockholders
may be called at any time by the Board, the Chairman, a President or a
Vice-Chairman.
Section 3. Time And Place Of Meetings. Each meeting of
stockholders shall be held at such time and in such place within or
without the State of New York as the Board may determine.
Section 4. Notice Of Meetings. Not less than 10 or more than 50
days before the date of each meeting of stockholders, notice of the
meeting shall be given in the manner prescribed by law to each
stockholder entitled to vote thereat.
Section 5. Quorum. Except as otherwise required by law, at each
meeting of stockholders, holders of at least a majority of the
outstanding shares of stock entitled to vote at the meeting shall be
present in person or by proxy to constitute a quorum for the transaction
of business.
Section 6. Required Vote. At each meeting of stockholders for the
election of directors at which a quorum is present, the candidates, up
to the number of directors to be elected, shall be elected who receive a
plurality of the votes cast at the meeting by the holders of shares
entitled to vote in the election.
Except as otherwise required by law, at each meeting of
stockholders at which a quorum is present, all other matters shall be
decided by a majority of the votes cast at the meeting by the holders of
shares entitled to vote thereon.
Section 7. Record Date. The Board may prescribe a day and hour
not more than 50 or less than 10 days before the date of a meeting of
stockholders for the purpose of determining the stockholders entitled to
notice of or to vote at such meeting or any adjournment thereof.
Section 8. Organization. At each meeting of stockholders, one of
the following shall act as chairman of the meeting and shall preside
thereat, in the following order of precedence:
(a) the Chairman;
(b) any President;
(c) any Vice-Chairman or Vice-President designated by the
Board; or
(d) any person designated by a majority vote of the
stockholders present in person or by proxy.
Section 9. Procedure. At each meeting of stockholders, the
chairman of the meeting shall determine the order of business and all
other matters of procedure. He may establish rules to maintain order
and for the conduct of the meeting.
The Board in advance of every meeting of stockholders shall appoint
one or more inspectors of election to act at the meeting.
Section 10. Adjournments. A meeting of stockholders may be
adjourned from time to time and place to place until a quorum is present
or until its business is completed.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. The business of the Corporation shall
be managed under the direction of the Board.
Section 2. Number Of Directors. The number of directors shall be
fixed and may from time to time be increased or decreased by vote of a
majority of the entire Board, but in no event shall the number of
directors be less than three or more than 19. Each director shall be a
stockholder.
Section 3. Term Of Office. Each director shall hold office until
the next annual meeting of stockholders and until his successor has been
elected and qualified.
Section 4. Vacancies. Except as otherwise required by law, any
vacancy occurring in the Board, and any newly created directorship
resulting from an increase in the number of directors, may be filled by
the Board.
Section 5. Regular Meetings. Regular meetings of the Board shall
be held at such times and places within or without the State of New York
as the Board may determine.
Section 6. Special Meetings. A special meeting of the Board may
be called at any time by the Chairman, a President, a Vice-Chairman or
any three directors and shall be held at such time and place as shall be
designated in the notice of meeting or waiver thereof.
Section 7. Notice Of Meetings. A notice shall be effective if (i)
it is mailed to each director at least three days before the date of the
meeting, (ii) it is sent by telegraph, cable or other form of recorded
communications or delivered personally or by telephone on such shorter
notice, not less than six hours before the meeting, as the person or
persons calling the meeting deem appropriate in the circumstances or
(iii) in the case of a meeting held in accordance with Article II,
Section 9, the notice is sent by telegraph, cable or other form of
recorded communications or delivered personally or by telephone on such
shorter notice, not less than three hours before the meeting, as the
person or persons calling the meeting deem appropriate in the
circumstances. Notices shall be given to each director at the address
which he has furnished to the Secretary as the address for such notices.
Notice of a regular meeting of the Board need not be given if the
Board has previously fixed the time and place of such meeting.
Section 8. Quorum And Manner Of Acting. Except as otherwise
provided by law or in these By-laws, one-third of the entire Board shall
be present to constitute a quorum for the transaction of business, and
the vote of a majority of the directors present at the time of the vote,
if a quorum is present at such time, shall be the act of the Board.
Section 9. Action By Communications Equipment. Any one or more
members of the Board or any committee thereof may participate in a
meeting of the Board or committee by means of a conference telephone or
similar communications equipment allowing all persons participating in
the meeting to hear each other at the same time. Participation by such
means shall constitute presence in person at a meeting.
Section 10. Action By Consent. Any action required or permitted
to be taken by the Board or any committee thereof may be taken without a
meeting if all members of the Board or committee consent in writing to
the adoption of a resolution authorizing the action.
Section 11. Organization. At each meeting of the Board, one of
the following shall act as chairman of the meeting and shall preside
thereat, in the following order of precedence:
(a) the Chairman;
(b) any President;
(c) any Vice-Chairman; or
(d) any other director chosen by a majority of the
directors present.
Section 12. Compensation. For services as a member of the Board
and any committee thereof, every director shall receive such
compensation, attendance fees and other allowances as the Board may
determine.
ARTICLE III
COMMITTEES
Section 1. Executive Committee. The Board, by resolution adopted
by a majority of the entire Board, shall designate an Executive
Committee, consisting of the Chairman and four or more other directors.
The chief executive officer shall serve as chairman of the Executive
Committee.
Subject to any limitations prescribed by law or by the Board, the
Executive Committee shall have and may exercise, when the Board is not
in session, all the powers of the Board.
Section 2. Other Committees. The Board, by resolution adopted by a
majority of the entire Board, may designate from among its members other
committees, each consisting of three or more directors. Subject to any
limitations prescribed by law, each committee shall have such authority
as the Board may determine.
Section 3. Quorum And Manner Of Acting. Unless the Board
otherwise provides, a majority of a committee of the Board shall be
present to constitute a quorum for the transaction of business, and the
vote of a majority of the members of the committee present at the time
of the vote, if a quorum is present at such time, shall be the act of
such committee.
Section 4. Procedure. Unless the Board otherwise provides, each
committee of the Board may adopt such rules as it may see fit with
respect to the calling of its meetings, the procedures to be followed
thereat, and its functioning generally. Each committee shall report its
actions to the Board.
Section 5. Changes In Committees. Except as otherwise provided in
these By-laws, the Board at any time may, by resolution adopted by a
majority of the entire Board, with or without cause, change or remove
the members of, fill vacancies in, and discharge any committee of the
Board.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
Chairman, one or more Presidents and Vice-Presidents, a Treasurer, a
Secretary, and a Controller and may include one or more Vice-Chairmen.
A chief executive officer shall be designated by the Board from among
the officers.
Section 2. Election And Term Of Office. Each officer shall be
elected by the Board and shall hold office until the meeting of the
Board following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier
retirement, resignation or removal. The Chairman, and any President or
Vice-Chairman shall be chosen from among the directors.
Section 3. Removal And Vacancies. Any officer may be removed at
any time with or without cause by the Board. A vacancy in any office
may be filled for the unexpired portion of the term in the same manner
as provided for election or appointment to such office.
Section 4. Subordinate And Assistant Officers. The Corporation
may have such subordinate and assistant officers as the Board may
appoint. Each such officer shall hold office at the pleasure of, and
may be removed at any time with or without cause by, the Board. Such
officers may include one or more Regional Vice-Presidents, Assistant
Vice-Presidents, Assistant Treasurers, Assistant Secretaries, and
Assistant Controllers.
Section 5. Duties. Each officer shall have such authority and
shall perform such duties as may be assigned by the Board, the Chairman
a President or a Vice-Chairman or as shall be conferred or required by
law or these By-laws or as shall be incidental to the office.
ARTICLE V
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by law,
indemnify each of its past, present and future directors, officers and
employees and their heirs, executors and administrators (collectively,
the "indemnitees") for any and all costs and expenses resulting from or
relating to any suit or claim arising out of, or alleged to arise out
of, past or future service to the Corporation or to another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise at the Corporation's request.
Without limiting the generality of the foregoing, (i) the costs and
expenses for which each indemnitee shall, as a matter of right, be
entitled to indemnification shall include all costs and expenses
incurred by the indemnitee in the defense or settlement of, or in the
satisfaction of any order or judgment entered in, any suit or claim
(including any suit or claim brought or alleged to be brought in the
right of the Corporation to procure a judgment in its favor) arising out
of, or alleged to arise out of, any act or failure to act by the
indemnitee as a director, officer or employee of, or in any service to,
the Corporation or to another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise at the Corporation's
request, (ii) the stockholders or the Board of the Corporation are
authorized to, by a resolution of the stockholders or the Board, as the
case may be, indemnify the indemnitees for costs and expenses, and (iii)
the Corporation may, to the extent authorized by resolution of the Board
or the stockholders, enter into agreements with indemnitees to indemnify
them for costs and expenses; provided, however, that no indemnification
may be made to or on behalf of any director, officer, employee or other
indemnitee if a judgment or other final adjudication adverse to the
director, officer, employee or other indemnitee establishes that his
acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled, and provided
further that the foregoing proviso shall prohibit such indemnification
only to the extent that such indemnification is prohibited by Sec. 721
of the New York Business Corporation Law.
As used in this Article V,
(a) "costs and expenses" means any and all costs, expenses and
liabilities incurred by an indemnitee, including but not limited to (i)
attorney's fees, (ii) amounts paid in settlement of, or in the
satisfaction of any order or judgment in, any suit or claim and (iii)
fines, penalties and assessments asserted or adjudged in any suit or
claim.
(b) "suit or claim" means any and all suits, claims, actions,
investigations or proceedings, and threats thereof, whether civil,
criminal or administrative, heretofore or hereafter instituted or
asserted.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 1. Transfer Of Shares. Shares of stock of the Corporation
shall be transferred only on the books of the Corporation by the record
holder thereof, in person or by his attorney or legal representative
thereunto duly authorized in writing, upon surrender of certificates for
a like number of shares, except as otherwise required by law.
Section 2. Regulations As To Stock Certificates. The Board, the
Chairman, a President, a Vice-Chairman or the Secretary may make all
such rules and regulations as it or such officer may deem advisable
concerning the issue, transfer, registration or replacement of
certificates for shares of stock of the Corporation.
Section 3. Stockholder Inspection Rights. A stockholder shall
have the right to inspect any book, record or document of the
Corporation to the extent that such right is conferred by provisions of
the New York Business Corporation Law or is authorized by the Board or
the Chairman.
Section 4. Corporate Seal. The Corporation shall have a suitable
seal, containing the name of the Corporation. The Secretary shall have
custody of the seal, but he may authorize others to keep and use a
duplicate seal.
Section 5. Definitions. As used herein, the following terms have
the following meanings:
"Board" means the Board of Directors of the Corporation.
"Chairman" means the Chairman of the Board of Directors.
"Corporation" means Union Carbide Corporation, a New York
corporation.
"Entire Board" means the total number of directors the
Corporation would have if there were no vacancies. It does
not mean the maximum number of directors authorized by these
By-laws unless the Board has fixed the number of directors
at 19.
"Vice-Chairman" means a Vice-Chairman of the Board of Directors.
"Vice-President" includes any Executive Vice-President, any
Senior Vice-President, and any other officer of the Corporation
who is a Vice-President however designated.
ARTICLE VII
AMENDMENTS
The By-laws may be adopted, amended or repealed by the
stockholders, or by the Board by a vote of a majority of the entire
Board.
EXHIBIT 10.1.1
$1,000,000,000
CREDIT AGREEMENT
dated as of
November 4, 1994
among
Union Carbide Corporation,
The Banks Party Hereto,
The Co-Agents Party Hereto,
Morgan Guaranty Trust Company of New York,
as Documentation Agent
and
Chemical Bank,
as Administrative Agent and Auction Agent
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions .............................. 1
SECTION 1.02. Accounting Terms and
Determinations ......................... 18
SECTION 1.03. Types of Borrowings ...................... 19
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend ...................... 19
SECTION 2.02. Notice of Committed
Borrowings ............................. 19
SECTION 2.03. Money Market Borrowings .................. 20
SECTION 2.04. Notice to Banks; Funding of
Loans .................................. 25
SECTION 2.05. Notes .................................... 27
SECTION 2.06. Maturity of Loans ........................ 27
SECTION 2.07. Interest Rates ........................... 28
SECTION 2.08. Fees ..................................... 31
SECTION 2.09. Optional Termination or
Reduction of Commitments ............... 32
SECTION 2.10. Prepayments .............................. 32
SECTION 2.11. General Provisions as to
Payments ............................... 33
SECTION 2.12. Funding Losses ........................... 34
SECTION 2.13. Computation of Interest and
Fees ................................... 34
SECTION 2.14. Withholding Tax Exemption ................ 35
SECTION 2.15. Regulation D Compensation ................ 35
SECTION 2.16. Alternative Currency
Advances ............................... 36
___________
* The Table of Contents is not a part of this Agreement.
Page
SECTION 2.17. Judgment Currency ........................ 38
SECTION 2.18. Replacement of this Credit
Facility ............................... 39
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness ............................ 39
SECTION 3.02. Borrowings ............................... 41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and
Power .................................. 42
SECTION 4.02. Corporate and Governmental
Authorization; No
Contravention .......................... 43
SECTION 4.03. Binding Effect ........................... 43
SECTION 4.04. Financial Information .................... 43
SECTION 4.05. Litigation ............................... 44
SECTION 4.06. Compliance with ERISA .................... 44
SECTION 4.07. Environmental Matters .................... 45
SECTION 4.08. Restricted Subsidiaries .................. 45
SECTION 4.09. Not an Investment Company ................ 45
SECTION 4.10. Disclosure ............................... 45
ARTICLE V
COVENANTS
SECTION 5.01. Information .............................. 46
SECTION 5.02. Maintenance of Property;
Insurance .............................. 49
SECTION 5.03. Restricted Subsidiaries .................. 49
SECTION 5.04. Negative Pledge .......................... 50
SECTION 5.05. Limitation on Debt of
Subsidiaries ........................... 52
SECTION 5.06. Consolidations, Mergers and
Sales of Assets ........................ 53
SECTION 5.07. Minimum Consolidated
Tangible Net Worth ..................... 53
SECTION 5.08. Leverage Ratio ........................... 54
Page
SECTION 5.09. Interest Coverage Ratio .................. 54
SECTION 5.10. Use of Proceeds .......................... 54
SECTION 5.11. Payments from Domestic
Restricted Subsidiaries ................ 54
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default ........................ 54
SECTION 6.02. Notice of Default ........................ 57
ARTICLE VII
THE AGENTS AND CO-AGENTS
SECTION 7.01. Appointment and
Authorization .......................... 58
SECTION 7.02. Agents and Affiliates .................... 58
SECTION 7.03. Action by Agents ......................... 58
SECTION 7.04. Consultation with Experts ................ 58
SECTION 7.05. Liability of Agents ...................... 58
SECTION 7.06. Indemnification .......................... 59
SECTION 7.07. Credit Decision .......................... 59
SECTION 7.08. Successor Agents ......................... 59
SECTION 7.09. Distribution of Information .............. 60
SECTION 7.10. Co-Agents ................................ 60
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining
Interest Rate Inadequate
or Unfair .............................. 60
SECTION 8.02. Illegality ............................... 61
SECTION 8.03. Increased Cost and Reduced Return......... 62
SECTION 8.04. Base Rate Loans Substituted
for Affected Fixed Rate
Loans .................................. 64
Page
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices .................................. 65
SECTION 9.02. No Waivers ............................... 65
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification ........................ 65
SECTION 9.04. Sharing of Set-Offs ...................... 66
SECTION 9.05. Amendments and Waivers ................... 67
SECTION 9.06. Successors and Assigns ................... 67
SECTION 9.07. Collateral ............................... 70
SECTION 9.08. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF
JURY TRIAL ............................. 70
SECTION 9.09. Counterparts; Integration ................ 71
SECTION 9.10. Confidentiality .......................... 71
SECTION 9.11. Severability ............................. 72
Pricing Schedule
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the
Agents
Exhibit G - Administrative Questionnaire
Exhibit H - Assignment and Assumption Agreement
CREDIT AGREEMENT
AGREEMENT dated as of November 4, 1994 among UNION
CARBIDE CORPORATION, the BANKS party hereto, the CO-AGENTS
party hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent, and CHEMICAL BANK, as Administrative
Agent and Auction Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as
used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute Rates
pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Adjusted Consolidated Debt" means at any date the
consolidated Debt of the Borrower and its Consolidated
Subsidiaries determined as of such date, excluding
(i) Debt of any Consolidated Kuwait Joint
Venture(including its obligation under any Guarantee
by it of Debt of any other Kuwait Joint Venture) so
long as such Debt (including any such obligation under
a Guarantee) is not Guaranteed by the Borrower or any
other Consolidated Subsidiary (except a Consolidated
Kuwait Joint Venture),
(ii) the Borrower's Kuwait Completion Guarantees
and the Debt of the Kuwait Joint Ventures Guaranteed
pursuant thereto, but only to the extent that the
aggregate amount of Debt Guaranteed by the Borrower's
Kuwait Completion Guarantees does not exceed
$650,000,000 and
(iii) Excluded Working Capital Financings.
"Administrative Agent" means Chemical Bank in its
capacity as Administrative Agent for the Banks hereunder, and
its successors in such capacity.
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in substantially
the form of Exhibit G hereto submitted to the Administrative
Agent (which shall promptly following receipt thereof give a
copy to the Borrower and the Documentation Agent) duly
completed by such Bank.
"Affiliate" means, with respect to any Person,
(i) any other Person that directly, or indirectly
through one or more intermediaries, controls such
Person (a "Controlling Person"), or
(ii) any other Person which is controlled by or
under common control with a Controlling Person.
As used in this definition, the term "control" means, with
respect to any Person, possession, directly or indirectly, of
the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agents" means the Administrative Agent, the Auction
Agent and the Documentation Agent, and "Agent" means any of
the foregoing.
"Alternative Currency" means any currency other than
Dollars which is freely transferable and convertible into
Dollars.
"Alternative Currency Advance" means an advance made
by a Bank to the Borrower in an Alternative Currency and
designated by the Borrower pursuant to Section 2.16(b) as an
Alternative Currency Advance for purposes of this Agreement.
"Alternative Currency Advance Report" has the
meaning set forth in Section 2.16(b).
"Alternative Currency Outstanding" means at any time
an amount equal to:
(i) for any Alternative Currency Advance with a
Dollar Equivalent of less than $5,000,000, $0 and
(ii) for any Alternative Currency Advance with a
Dollar Equivalent equal to at least $5,000,000, the
amount obtained by rounding to the greatest multiple of
$1,000,000 that is not larger than such Dollar
Equivalent.
"Applicable Alternative Currency Outstandings" means
at any time an amount equal to the lesser of:
(i) the aggregate amount of all Alternative
Currency Outstandings and
(ii) 30% of the aggregate amount of the
Commitments at such time.
"Applicable Lending Office" means, with respect to
any Bank,
(i) in the case of its Domestic Loans, its
Domestic Lending Office,
(ii) in the case of its Euro-Dollar Loans, its
Euro-Dollar Lending Office and
(iii) in the case of its Money Market Loans, its
Money Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Auction Agent" means Chemical Bank in its capacity
as Auction Agent for the Banks hereunder, and its successors
in such capacity.
"Bank" means each lender listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Bank Parties" has the meaning set forth in Section
9.10.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Reference Rate for such day or
(ii) the sum of 1/2 of 1% plus the Effective Federal Funds
Rate for such day.
"Base Rate Loan" means a Committed Loan made or to
be made by a Bank as a Base Rate Loan in accordance with the
applicable Notice of Committed Borrowing or pursuant to
Article VIII.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which
is not a Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.
"Borrower" means Union Carbide Corporation, a New
York corporation, and its successors.
"Borrower's Kuwait Completion Guarantees" means
completion guarantees by the Borrower with respect to the
Kuwait Project.
"Borrowing" has the meaning set forth in Section
1.03.
"CD Base Rate" has the meaning set forth in Section
2.07(b).
"CD Loan" means a Committed Loan made or to be made
by a Bank as a CD Loan in accordance with the applicable
Notice of Committed Borrowing.
"CD Margin" has the meaning set forth in Section
2.07(b).
"CD Reference Banks" means Chemical Bank, Credit
Suisse and Morgan Guaranty Trust Company of New York and each
such other Bank as may be appointed pursuant to Section
9.06(g).
"Co-Agents" means ABN AMRO Bank N.V., Bank of
America Illinois, The Bank of New York, The Bank of Nova
Scotia, Banque Nationale de Paris, CIBC Inc., Credit Suisse
and NationsBank of North Carolina, N.A., each in its capacity
as one of the co-agents for the Banks hereunder.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof (or, in the case of an Assignee, the
portion of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 9.06(c)), in each case as such
amount may be reduced from time to time pursuant to Section
2.09 or changed as a result of an assignment pursuant to
Section 9.06(c).
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Kuwait Joint Venture" means at any
date any Kuwait Joint Venture that is a Consolidated
Subsidiary at such date.
"Consolidated Net Income" for any period means the
consolidated net income of the Borrower and its Consolidated
Subsidiaries for such period.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any date
the consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries minus consolidated Intangible
Assets, all determined as of such date. For purposes of this
definition "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated stockholders'
equity) of
(i) all write-ups (other than write-ups resulting
from foreign currency translations and write-ups of
assets of a going concern business made within twelve
months after the acquisition of such business)
subsequent to June 30, 1994 in the book value of any
asset owned by the Borrower or a Consolidated
Subsidiary,
(ii) all investments of the Borrower and its
Consolidated Subsidiaries in unconsolidated
Subsidiaries, and
(iii) all goodwill, patents, trademarks, service
marks, trade names, copyrights, organization or
developmental expenses and other intangible assets.
"Debt" of any Person means at any date, without
duplication, to the extent required in accordance with
generally accepted accounting principles to be included in the
financial statements of such Person or the footnotes thereto,
(i) all obligations of such Person for borrowed
money,
(ii) all obligations of such Person evidenced by
bonds, debentures, notes or other substantially similar
instruments containing an unconditional promise to pay
a sum certain,
(iii) all obligations of such Person for
installment purchase transactions involving the
purchase of property or services over $5,000,000 for
any particular transaction, except trade accounts
payable and expense accruals arising in the ordinary
course of business,
(iv) all obligations of such Person as lessee
which are capitalized in accordance with generally
accepted accounting principles,
(v) all non-contingent obligations of such Person
to reimburse any bank or other Person in respect of
amounts paid or to be paid under a letter of credit,
and
(vi) all obligations of others of the types
described in clauses (i) through (v) above that are
Guaranteed by such Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default; provided that an event or
condition covered by clause (f) of Section 6.01 (and not
covered by any other clause of said Section) shall not
constitute a Default unless and until the Required Banks shall
have made the determination specified in such clause (f) and
the Administrative Agent shall have given the Borrower written
notice of such determination.
"Designated Subsidiary" has the meaning set forth in
Section 5.03(c).
"Documentation Agent" means Morgan Guaranty Trust
Company of New York, in its capacity as documentation agent
for the Banks hereunder, and its successors in such capacity.
"Dollar Equivalent" means in respect of any
Alternative Currency Advance the amount of Dollars obtained by
converting the outstanding amount of currency of such
Alternative Currency Advance, as specified in the then most
recent Alternative Currency Advance Report or in the report
provided pursuant to Section 2.16(b)(ii) in respect of such
Alternative Currency Advance, into Dollars at the spot rate
for the purchase of Dollars with such currency as quoted by
the Administrative Agent at its principal foreign exchange
trading operations office in New York City promptly upon
receipt of such Alternative Currency Advance Report or such
report provided pursuant to Section 2.16(b)(ii), as the case
may be.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
"Domestic Consolidated Subsidiary" means a
Consolidated Subsidiary organized and existing under the laws
of the United States of America, any State thereof or the
District of Columbia.
"Domestic Lending Office" means, as to each Bank,
its office identified in its Administrative Questionnaire as
its Domestic Lending Office or such other office of such Bank
as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Administrative Agent;
provided that any Bank may so designate separate Domestic
Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the
context may require.
"Domestic Loans" means CD Loans or Base Rate Loans
or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Effective Federal Funds Rate" means the weighted
average of the rates on overnight federal funds transactions
between members of the Federal Reserve System arranged by
federal funds brokers as published daily (or, if such day is
not a Domestic Business Day, for the immediately preceding
Domestic Business Day) by the Federal Reserve Bank of New York
in the Composite Closing Quotations for U.S. Government
Securities (or any successor quotations).
"Environmental Laws" means all applicable federal,
state, local and foreign laws, ordinances, codes, regulations,
orders and requirements relating to the protection of, or
discharge of materials into, the environment, including,
without limitation, the Resource Conservation and Recovery Act
of 1976, as amended; the Comprehensive Environmental Response,
Compensation and Liability Act; the Toxic Substance Control
Act; the Clean Water Act; the Clean Air Act; and the Safe
Drinking Water Act.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Restricted
Subsidiary and all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower or any Restricted Subsidiary, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Eurocurrency Reserve Ratio" has the meaning set
forth in Section 2.15.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in Dollar deposits)
in London.
"Euro-Dollar Lending Office" means, as to each Bank,
its office or branch located at its address identified in its
Administrative Questionnaire as its Euro-Dollar Lending Office
or such other office or branch of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Administrative Agent.
"Euro-Dollar Loan" means a Committed Loan made or to
be made by a Bank as a Euro-Dollar Loan in accordance with the
applicable Notice of Committed Borrowing.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(c).
"Euro-Dollar Reference Banks" means the principal
London offices of Chemical Bank, Credit Suisse and Morgan
Guaranty Trust Company of New York, and each such other Bank
as may be appointed pursuant to Section 9.06(g).
"Event of Default" has the meaning set forth in
Section 6.01.
"Excluded Working Capital Financings" means
obligations of the Borrower or any of its Consolidated
Subsidiaries (other than a Consolidated Kuwait Joint Venture),
up to an aggregate outstanding amount of $150,000,000,
incurred in connection with working capital financings.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
Loans bearing interest at the Base Rate pursuant to Section
8.01) or any combination of the foregoing, in each case that
are not overdue.
"Foreign Subsidiary" means a Subsidiary other than a
Subsidiary organized and existing under the laws of the United
States of America, any State thereof or the District of
Columbia.
"Guarantee" by any Person means, without
duplication, any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt of any
other Person, and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person:
(i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise); or
(ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part);
provided that the term Guarantee shall not include:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) obligations that are not required in
accordance with generally accepted accounting
principles to be included in the financial statements
of such Person or the footnotes thereto;
(c) "unconditional purchase obligations"
(including take-or-pay contracts) as defined in and as
required to be disclosed pursuant to Statement of
Financial Accounting Standards No. 47 and the related
interpretations, as the same may be amended from time
to time, but only to the extent the aggregate amount of
all such obligations of the Borrower and its
Consolidated Subsidiaries (other than amounts reflected
on the balance sheet of the Borrower and its
Consolidated Subsidiaries) is equal to or less than 15%
of the net sales of the Borrower and its Consolidated
Subsidiaries as set forth in their Consolidated
Statement of Income, determined as of the end of the
preceding quarter for the twelve months then ending;
(d) any obligation required to be disclosed
pursuant to the Statement of Financial Accounting
Standards No. 105, Disclosure of Information about
Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit
Risk, issued March 1990, and the related
interpretations, as the same may be amended from time
to time (except to the extent any such obligation is
required to be reflected on the balance sheet of the
Borrower and its Consolidated Subsidiaries or to be
disclosed pursuant to Statement of Financial Accounting
Standards No. 5 and related interpretations, as the
same may be amended from time to time); or
(e) any difference between the fair market value
and the book value of any obligation that is required
to be disclosed pursuant to the Statement of Financial
Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments, issued December 1991,
and the related interpretations, as the same may be
amended from time to time.
The term "Guarantee" used as a verb has a corresponding
meaning.
"Interest Coverage Ratio" means, with respect to the
Borrower and its Consolidated Subsidiaries, for any period,
the ratio of
(x) the sum of (i) Consolidated Net Income,
excluding any extraordinary items of gain or loss, (ii)
consolidated interest expense, (iii) consolidated
operating lease expense, (iv) consolidated provision
for income taxes and (v) Restructuring Charges (to the
extent deducted in determining the amount specified in
(i) above) that the Borrower elects (by so stating in a
certificate delivered pursuant to Section 5.01(c)) to
add back to such Consolidated Net Income; provided that
the aggregate amount of all Restructuring Charges added
back pursuant to this clause (v) shall not exceed
$100,000,000 on a cumulative basis after June 30, 1994
to
(y) the sum of (i) consolidated interest expense
and (ii) consolidated operating lease expense.
The amounts referred to in clauses (x)(ii), (x)(iii), (x)(iv),
(y)(i) and (y)(ii) of this definition shall be adjusted to
exclude the interest expense, operating lease expense and
income taxes of Consolidated Kuwait Joint Ventures, if any.
In addition, the consolidated interest expense referred to in
clauses (x)(ii) and (y)(i) of this definition, shall be
adjusted to exclude interest on Excluded Working Capital
Financings.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable Notice
of Borrowing; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(2) with respect to each CD Borrowing, the period commencing
on the date of such Borrowing and ending 30, 60, 90 or 180
days thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(4) with respect to each Money Market LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending
such whole number of months thereafter (but not more than 12
months) as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
(5) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than seven nor more than 180 days) as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
Notwithstanding the foregoing, all Interest Periods
at any one time outstanding hereunder shall end on not more
than 25 different dates, and the duration of any Interest
Period which would otherwise exceed such limitation shall be
adjusted so as to coincide with the remaining term of such
other then current Interest Period as the Borrower may specify
in the related Notice of Borrowing.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Invitation for Money Market Quotes" means an
invitation by the Auction Agent on behalf of the Borrower to
each Bank to submit Money Market Quotes offering to make Money
Market Loans in accordance with Section 2.03, substantially in
the form of Exhibit C hereto.
"Kuwait Joint Ventures" means the joint ventures to
which the Borrower and/or any of its Subsidiaries is or is to
be a party and formed or to be formed to build and operate the
Kuwait Project or to market products produced thereby.
"Kuwait Project" means the proposed petrochemical
complex in Kuwait disclosed in the Borrower's 1993 annual
report to stockholders.
"Leverage Ratio" means the ratio of (x) Adjusted
Consolidated Debt to (y) the sum of (i) Consolidated Tangible
Net Worth plus (ii) Restructuring Charges taken after June 30,
1994 up to a maximum cumulative amount of $100,000,000.
"LIBOR Auction" means a solicitation of Money Market
Quotes setting forth Money Market LIBOR Margins pursuant to
Section 2.03.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination of
the foregoing.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.07(c).
"Material Debt" means at any time Adjusted
Consolidated Debt (other than the Debt evidenced by the Notes)
and/or Excluded Working Capital Financings (to the extent that
they constitute Debt), having an aggregate principal amount
outstanding at such time equal to or exceeding $50,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$15,000,000.
"Material Subsidiaries" means at any time (the "time
of determination") one or more Subsidiaries with respect to
which any of the events specified in clause (g) or (h) of
Section 6.01 shall have occurred after the date hereof (and
not been cured before the time of determination), but only if
the assets of such Subsidiaries (calculated in each case at
the time such event occurred) exceed, in the aggregate, 1 1/2%
of the consolidated assets of the Borrower and its
Consolidated Subsidiaries at the time of determination.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d)(ii)(D).
"Money Market Absolute Rate Loan" means a loan made
or to be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office or
branch of such Bank as it may hereafter designate as its Money
Market Lending Office by notice to the Borrower and the
Administrative Agent; provided that any Bank may from time to
time by notice to the Borrower and the Administrative Agent
designate separate Money Market Lending Offices for its Money
Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan made or to be
made by a Bank pursuant to a LIBOR Auction (including such a
loan bearing interest at the Base Rate pursuant to Section
8.01).
"Money Market LIBOR Margin" has the meaning set
forth in Section 2.03(d)(ii)(C).
"Money Market Loan" means a Money Market LIBOR Loan
or a Money Market Absolute Rate Loan.
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3)
of ERISA to which any member of the ERISA Group is then making
or accruing an obligation to make contributions or has within
the preceding five plan years made contributions, including
for these purposes any Person which ceased to be a member of
the ERISA Group during such five year period.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note"
means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either:
(i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member
of the ERISA Group; or
(ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member
of the ERISA Group.
"Potential Cross-Default" means at any time an event
or condition described in Section 6.01(f) that has occurred
and is continuing at such time and that is not a Default, but
would be a Default if the determination by the Required Banks
contemplated by Section 6.01(f) had been made and notice of
such determination had been given to the Borrower.
"Pricing Schedule" means the Pricing Schedule
attached hereto.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Reference Rate" means the rate of interest publicly
announced by Chemical Bank in New York City from time to time
as its reference rate. The Reference Rate is not intended to
be the lowest rate of interest charged by Chemical Bank in
connection with extensions of credit to borrowers.
"Refunding Borrowing" means a Committed Borrowing
which, after application of the proceeds thereof, results in
no net increase in the outstanding principal amount of
Committed Loans made by any Bank.
"Regulation D", "Regulation U" and "Regulation X"
means Regulation D, Regulation U and Regulation X,
respectively, of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Required Banks" means at any time Banks having at
least two-thirds of the aggregate amount of the Commitments,
or, if the Commitments have been terminated, holding Notes
evidencing at least two-thirds of the aggregate unpaid
principal amount of the outstanding Loans.
"Restricted Subsidiary" means at any time:
(i) any Domestic Consolidated Subsidiary with (a)
more than $20,000,000 in total assets or (b) more than
$5,000,000 in total net worth, and
(ii) any other Consolidated Subsidiary designated
by the Borrower as a Restricted Subsidiary (a) in the
certificate delivered pursuant to Section 3.01(h) or
(b) in accordance with Section 5.03, unless and until
such designated Consolidated Subsidiary becomes an
Unrestricted Subsidiary pursuant to Section 5.03.
At the Effective Date, the Restricted Subsidiaries shall be
those set forth in such certificate.
"Restructuring Charges" means all nonrecurring
after-tax charges taken after June 30, 1994 by the Borrower
and its Consolidated Subsidiaries, on a consolidated basis, to
provide for the cost of discontinuing a business, adopting a
severance program or other profit improvement program or
writing off or writing down impaired assets.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" with respect to any Person means any
corporation or other entity of which such Person directly or
indirectly owns the securities or other ownership interests
having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions.
Unless otherwise specified, "Subsidiary" means a Subsidiary of
the Borrower.
"Termination Date" means November 3, 1999, or, if
such day is not a Euro-Dollar Business Day, the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case
the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the present
value of all benefits under such Plan exceeds (ii) the fair
market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA Group to the PBGC
or any other Person under Title IV of ERISA.
"Unrestricted Subsidiary" means any Subsidiary other
than a Restricted Subsidiary.
"Wholly-Owned Consolidated Subsidiary" means any
Consolidated Subsidiary all of the shares of capital stock or
other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly
owned by the Borrower.
SECTION 1.02. Accounting Terms and Determina-
tions. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks; provided
that, if the Borrower notifies the Agent that the Borrower
wishes to amend any covenant in Article V to eliminate the
effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agent
notifies the Borrower that the Required Banks wish to amend
Article V for such purpose), then the Borrower's compliance
with such covenant shall be determined on the basis of
generally accepted accounting principles in effect immediately
before the relevant change in generally accepted accounting
principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory
to the Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date and for a single Interest Period. Borrowings are
classified for purposes of this Agreement either by reference
to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of
Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section
2.01 in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank
severally agrees, on the terms and conditions set forth in
this Agreement (including, without limitation, Section 3.02),
to make Domestic Loans and Euro-Dollar Loans to the Borrower
pursuant to this Section from time to time in amounts such
that the aggregate principal amount of Committed Loans by such
Bank at any one time outstanding hereunder shall not exceed
the amount of its Commitment. Each Borrowing under this
Section 2.01 shall be in an aggregate principal amount of
$25,000,000 or any larger multiple of $5,000,000 (except that
any such Borrowing may be in the aggregate amount available in
accordance with Section 3.02(b) and, if less than $5,000,000,
must be a Base Rate Borrowing) and shall be made from the
several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may
borrow under this Section 2.01, repay, or to the extent
permitted by Section 2.10 or 8.03(d)(ii), prepay Loans and
reborrow at any time under this Section 2.01.
SECTION 2.02. Notice of Committed Borrowings. The
Borrower shall give the Administrative Agent notice (a "Notice
of Committed Borrowing") not later than 11:00 A.M. (New York
City time) on:
(x) the date of each Base Rate Borrowing,
(y) the Domestic Business Day next preceding the
date of each CD Borrowing and
(z) the third Euro-Dollar Business Day before
each Euro-Dollar Borrowing,
specifying:
(a) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing
are to be CD Loans, Base Rate Loans or Euro-Dollar
Loans, and
(d) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks to make
offers to make Money Market Loans to the Borrower. The Banks
may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower
wishes to request offers to make Money Market Loans under this
Section, it shall transmit to the Auction Agent by telex or
facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be
received no later than 11:00 A.M. (New York City time) on:
(x) the fourth Euro-Dollar Business Day prior to
the date of Borrowing proposed therein, in the case of
a LIBOR Auction or
(y) the Domestic Business Day next preceding the
date of Borrowing proposed therein, in the case of an
Absolute Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed and shall
have notified the Banks not later than the date of the Money
Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective)
specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $25,000,000 or a larger multiple of
$5,000,000,
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market LIBOR Margin or a Money
Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for
more than one Interest Period in a single Money Market Quote
Request. No Money Market Quote Request shall be given within
four Euro-Dollar Business Days (or such other number of days
as the Borrower and the Auction Agent may agree and the
Auction Agent shall have promptly notified to the Banks) of
any other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Auction
Agent shall send to the Banks by telex or facsimile
transmission an Invitation for Money Market Quotes
substantially in the form of Exhibit C hereto with respect to
such Money Market Quote Request.
(d) Submission and Contents of Money Market Quotes.
(i) Each Bank may submit a Money Market Quote containing an
offer or offers to make Money Market Loans in response to any
Invitation for Money Market Quotes. Each Money Market Quote
must comply with the requirements of this subsection (d) and
must be submitted to the Auction Agent by telex or facsimile
transmission at its offices specified in or pursuant to
Section 9.01 not later than:
(x) 12:00 Noon (New York City time) on the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or
(y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute
Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed, and the
Auction Agent shall have notified the Banks not later than the
date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to
be effective); provided that Money Market Quotes submitted by
the Auction Agent in the capacity of a Bank may be submitted,
and may only be submitted, if the Auction Agent notifies the
Borrower of the terms of the offer or offers contained therein
not later than:
(x) one hour prior to the deadline for the other
Banks, in the case of a LIBOR Auction or
(y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction.
Subject to Articles III and VI, any Money Market Quote so made
shall be irrevocable except with the written consent of the
Auction Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit D hereto and shall in any
case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount:
(w) may be greater than or less than the
Commitment of the quoting Bank,
(x) must be $5,000,000 or a larger multiple
of $1,000,000,
(y) may not exceed the principal amount of
Money Market Loans for which offers were requested
and
(z) may be subject to an aggregate
limitation as to the principal amount of Money
Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market LIBOR Margin") offered for each
such Money Market Loan, expressed as a percentage
(rounded to the nearest 1/10,000th of 1%) to be added
to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers
by the quoting Bank with respect to each Interest Period
specified in the related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit D hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Auction Agent shall
promptly notify the Borrower of the terms:
(x) of any Money Market Quote submitted by a Bank
that is in accordance with subsection (d) and
(y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous
Money Market Quote submitted by such Bank with respect
to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by
the Auction Agent unless such subsequent Money Market
Quote is submitted solely to correct a manifest error
in such former Money Market Quote.
The Auction Agent's notice to the Borrower shall specify:
(A) the aggregate principal amount of Money
Market Loans for which offers have been received for
each Interest Period specified in the related Money
Market Quote Request,
(B) the respective principal amounts and Money
Market LIBOR Margins or Money Market Absolute Rates, as
the case may be, so offered and
(C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers
in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later
than:
(x) 1:30 P.M. (New York City time) on the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or
(y) 10:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute
Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed and the
Auction Agent shall have notified the Banks not later than the
date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to
be effective), the Borrower shall notify the Auction Agent of
its acceptance or non-acceptance of the offers so notified to
it pursuant to subsection (e) and the Auction Agent shall so
notify the Administrative Agent. In the case of acceptance,
such notice (a "Notice of Money Market Borrowing") shall
specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept
any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $25,000,000 or a larger multiple of
$5,000,000 and the principal amount of each Money
Market Loan with respect to such Money Market Borrowing
must be in an amount of $5,000,000 or a larger multiple
of $1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market LIBOR Margins or Money
Market Absolute Rates, as the case may be,
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement, and
(v) failure by the Borrower to notify the Auction
Agent by the time specified above shall be deemed a
rejection of all offers.
(g) Allocation by Borrower. If offers are made by
two or more Banks with the same Money Market LIBOR Margins or
Money Market Absolute Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the
principal amount of Money Market Loans in respect of which
such offers are accepted shall be allocated by the Borrower
among such Banks as nearly as possible in proportion to the
aggregate principal amounts of such offers (or as nearly in
proportion as shall be practicable after giving effect to the
requirement that Money Market Loans for each relevant maturity
date shall each be in a principal amount of $5,000,000 or a
multiple of $1,000,000 in excess thereof).
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share (if any) of such
Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time)
on the date of each Borrowing, each Bank participating therein
shall (except as provided in subsection (c) of this Section)
make the amount of its share of such Borrowing available to
the Administrative Agent for the account of the Borrower at
the office of the Administrative Agent specified in or
pursuant to Section 9.01 in funds immediately available to the
Administrative Agent. Unless the Administrative Agent
determines (or, in the case of the first Borrowing, the
Documentation Agent and the Administrative Agent determine)
that any applicable condition specified in Article III has not
been satisfied, the Administrative Agent shall make such
aggregate funds available to the Borrower by depositing as
promptly as practicable the proceeds thereof, in like funds as
received by the Administrative Agent, in the account of the
Borrower with the Administrative Agent on the date of such
Borrowing.
(c) If any Bank makes a new Committed Loan
hereunder to the Borrower on a day on which the Borrower is to
repay all or any part of an outstanding Committed Loan from
such Bank, such Bank shall apply the proceeds of its new
Committed Loan to make such repayment and only an amount equal
to the difference (if any) between the amount being borrowed
and the amount being repaid shall be made available by such
Bank to the Administrative Agent as provided in subsection
(b), or remitted by the Borrower to the Administrative Agent
as provided in Section 2.11, as the case may be.
(d) Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any Borrowing
that such Bank will not make available to the Administrative
Agent such Bank's share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available
to the Administrative Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04
and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent does, in
such circumstances, make available to the Borrower such
amount, such Bank shall within three Domestic Business Days
following such Borrowing make such share available to the
Administrative Agent, together with interest thereon for each
day from and including the date of such Borrowing that such
share was not made available, at the Effective Federal Funds
Rate. If such amount is so made available, such payment to
the Administrative Agent shall constitute such Bank's share of
such Borrowing for all purposes of this Agreement. If such
amount is not so made available to the Administrative Agent,
then the Administrative Agent shall on the third Domestic
Business Day following such Borrowing notify the Borrower of
such failure and on the fourth Domestic Business Day following
the date of such Borrowing, the Borrower shall pay to the
Administrative Agent such share, together with interest
thereon for each day that the Borrower had the use of such
share, at the Effective Federal Funds Rate. Nothing contained
in this subsection (d) shall relieve any Bank which has failed
to make available its share of any Borrowing hereunder from
its obligation to do so in accordance with the terms hereof.
(e) The failure of any Bank to make available to
the Administrative Agent its share of any Borrowing on the
date of such Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make available to the
Administrative Agent its share of such Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make
available the share of any Borrowing to be made available by
such other Bank on such date of Borrowing.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office in
an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Administrative Agent (to be given not later than two
Domestic Business Days prior to the first Borrowing), request
that its Loans of a particular type be evidenced by a separate
Note in an amount equal to the aggregate unpaid principal
amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely
Loans of the relevant type. Each reference in this Agreement
to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Documentation Agent shall mail such Note
to such Bank. Each Bank shall record the date, amount and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and prior to any transfer of its Note may endorse on
the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Notes.
Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its
Note a continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made to but
excluding the date it becomes due, at a rate per annum equal
to the Base Rate for such day. Such interest shall be payable
for each Interest Period on the last day thereof. Any overdue
principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day from and including
the date payment thereof was due to but excluding the date of
actual payment at a rate per annum equal to the sum of 1% plus
the Base Rate for such day.
(b) Subject to Section 8.01, each CD Loan shall
bear interest on the outstanding principal amount thereof, for
each day during the Interest Period applicable thereto, at a
rate per annum equal to the sum of the CD Margin for such day
plus the applicable Adjusted CD Rate. Such interest shall be
payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than 90 days, at intervals
of 90 days after the first day thereof. Any overdue principal
of or interest on any CD Loan shall bear interest, payable on
demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment at
a rate per annum equal to the sum of 1% plus the Base Rate for
such day.
"CD Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period
is the rate of interest determined by the Administrative Agent
to be the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of recognized
standing for the purchase at face value from each CD Reference
Bank of its certificates of deposit in an amount comparable to
the principal amount of the CD Loan of such CD Reference Bank
to which such Interest Period applies and having a maturity
comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits
exceeding $5,000,000,000 in respect of new non-personal time
deposits in Dollars in New York City having a maturity
comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in
the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.3(e) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in
the Assessment Rate.
(c) Subject to Section 8.01, each Euro-Dollar Loan
shall bear interest on the outstanding principal amount
thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin for such day plus the applicable London
Interbank Offered Rate. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in Dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 1% plus the Base Rate for such day.
(e) Subject to Section 8.01, each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at
a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money Market
LIBOR Borrowing were a Committed Euro-Dollar Borrowing) plus
(or minus) the Money Market LIBOR Margin quoted by the Bank
making such Loan in accordance with Section 2.03. Each Money
Market Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Interest on each Money Market
Loan shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day
thereof. Any overdue principal of or interest on any Money
Market Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but
excluding the date of actual payment at a rate per annum equal
to the sum of 1% plus the Base Rate for such day.
(f) The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The
Administrative Agent shall give prompt notice to the Borrower
and the Banks making such Loans by telex, facsimile
transmission or cable of each rate of interest so determined,
and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Administrative Agent as
contemplated by this Section. If any Reference Bank does not
furnish a timely quotation, the Administrative Agent shall
determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference
Bank or Banks or, if none of such quotations is available on a
timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to the
Administrative Agent for the account of the Banks ratably in
proportion to their Commitments a commitment fee at the
Commitment Fee Rate (determined for each day in accordance
with the Pricing Schedule). Such commitment fee shall be
payable for each day on the amount by which the aggregate
amount of the Commitments exceeds the sum of:
(i) the aggregate outstanding principal amount of
the Loans plus
(ii) the Applicable Alternative Currency
Outstandings.
Such commitment fee shall accrue from and including the
Effective Date to but excluding the Termination Date (or
earlier date of termination of the Commitments in their
entirety).
(b) Facility Fee. The Borrower shall pay to the
Administrative Agent for the account of the Banks ratably in
proportion to their Commitments a facility fee at the Facility
Fee Rate (determined for each day in accordance with the
Pricing Schedule). Such facility fee shall accrue:
(i) from and including the Effective Date to but
excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety), on
the daily aggregate amount of the Commitments (whether
used or unused) and
(ii) from and including the Termination Date (or
such earlier date of termination) to but excluding the
date the Loans shall be repaid in their entirety, on
the daily aggregate outstanding principal amount of the
Loans.
(c) Payments. Accrued fees under this Section
shall be payable quarterly on each March 31, June 30,
September 30 and December 31 (in arrears) commencing on
December 31, 1994 and upon the date of termination of the
Commitments in their entirety (and, if later, in the case of
the facility fee, the date the Loans shall be repaid in their
entirety).
SECTION 2.09. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least three Domestic
Business Days' notice to the Administrative Agent,
(i) terminate the Commitments at any time, if no
Loans are outstanding at such time, or
(ii) ratably reduce from time to time, by an
aggregate amount of at least $25,000,000, the aggregate
amount of the Commitments, provided that the aggregate
amount of Commitments may not be reduced below the sum
of (x) the aggregate outstanding principal amount of
the Loans plus (y) the Applicable Alternative Currency
Outstandings (after giving effect to such reduction).
SECTION 2.10. Prepayments. (a) The Borrower may,
upon giving notice to the Administrative Agent not later than
11:00 A.M. (New York City time) on the date of prepayment,
prepay any Base Rate Borrowing (or any Money Market Borrowing
bearing interest at the Base Rate pursuant to Section 8.01) in
whole at any time, or from time to time in part in amounts
aggregating $25,000,000 or any larger multiple of $5,000,000,
by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Subject
to Section 8.03(d)(ii), each such optional prepayment shall be
applied to prepay ratably the Base Rate Loans of the several
Banks included in such Borrowing.
(b) Subject to Section 2.12, upon giving notice to
the Administrative Agent not later than 11:00 A.M. (New York
City time) on the Domestic Business Day next preceding the
date of prepayment (in the case of a CD Borrowing) or the
third Euro-Dollar Business Day before the date of prepayment
(in the case of a Euro-Dollar Borrowing), the Borrower may
prepay any CD Borrowing or Euro-Dollar Borrowing in whole at
any time, or from time to time in part in amounts aggregating
$25,000,000 or any larger multiple of $5,000,000, by paying
the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Subject to
Section 8.03(d)(ii), each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
(c) Upon receipt of a notice of prepayment pursuant
to this Section, the Administrative Agent shall promptly
notify each Bank of the contents thereof and of such Bank's
ratable share (if any) of such prepayment and such notice
shall not thereafter be revocable by the Borrower.
(d) The Borrower may not prepay the Money Market
Loans at any time (other than Money Market Loans bearing
interest at the Base Rate pursuant to Section 8.01).
(e) On any day upon which, as a result of any
reduction of Commitments under this Agreement, the sum of (i)
the aggregate outstanding principal amount of the Loans plus
(ii) the Applicable Alternative Currency Outstandings exceeds
the aggregate amount of the Commitments, the Borrower shall
prepay such principal amount (together with accrued interest
thereon) of outstanding Loans hereunder as may be necessary so
that after such repayment such sum does not exceed such
aggregate amount of Commitments. Any such prepayment shall be
made in accordance with all applicable provisions of this
Agreement (including without limitation subsections (a), (b),
(c) and (d) of this Section 2.10).
SECTION 2.11. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than
11:00 A.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York City,
to the Administrative Agent at its address specified in or
pursuant to Section 9.01. The Administrative Agent will
promptly distribute to each Bank its share of each such
payment received by the Administrative Agent for the account
of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day.
Whenever any payment of principal of, or interest on, the
Money Market Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day.
If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be
payable for such extended time.
(b) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which
any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to
the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that the
Borrower shall not have so made such payment, each Bank shall
repay to the Administrative Agent forthwith on demand such
amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed
to such Bank until the date such Bank repays such amount to
the Administrative Agent, at the Effective Federal Funds Rate.
SECTION 2.12. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed Rate
Loan (pursuant to Section 2.10, Section 2.18, Article VI,
Article VIII or otherwise) on any day other than the last day
of the Interest Period applicable thereto or if the Borrower
fails to borrow or prepay any Fixed Rate Loans after notice of
such borrowing or prepayment has been given to any Bank in
accordance with Section 2.04(a) or Section 2.10(c), the
Borrower shall reimburse each Bank on demand for any resulting
loss or expense actually incurred by it (or a Participant
which has purchased or agreed to purchase a participation in
the relevant Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from
third parties, but excluding loss of margin for the period
after any such payment or failure to borrow or prepay,
provided that such Bank shall have delivered to the Borrower a
certificate containing a computation in reasonable detail of
the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.13. Computation of Interest and Fees.
Interest based on the Reference Rate hereunder shall be
computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day),
except for interest on Alternative Currency Advances, which
shall be computed according to prevailing market practices.
SECTION 2.14. Withholding Tax Exemption. At least
five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it
will deliver to each of the Borrower and the Administrative
Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case
that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Administrative Agent two
additional copies of such form (or a successor form) on or
before the date that such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, in each
case certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless
an event (including without limitation any change in treaty,
law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from
duly completing and delivering any such form with respect to
it and such Bank promptly advises the Borrower and the
Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States
federal income tax.
SECTION 2.15. Regulation D Compensation. (a) So
long as Regulation D shall require reserves to be maintained
against "Eurocurrency liabilities" (or against any other
category of liabilities which includes deposits by reference
to which the interest rate on Euro-Dollar Loans is determined
or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents), each Bank subject to and actually
incurring such reserve requirement may require the Borrower to
pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum (the
"Regulation D Rate") determined pursuant to the following
formula:
[ LIBOR ]
RDR = [ -------- ] - LIBOR
[ 1 - ERR ]
RDR = Regulation D Rate
LIBOR = The applicable London Interbank
Offered Rate
ERR = Eurocurrency Reserve Ratio
"Eurocurrency Reserve Ratio" means the applicable
reserve ratio prescribed by Regulation D (as such Regulation
shall have been amended to the first day of the related
Interest Period) for such reserve requirements (expressed as a
decimal).
Notwithstanding anything contained herein to the
contrary, the Regulation D Rate shall be adjusted
automatically on and as of the effective date of any change in
such reserve ratio.
(b) Any Bank wishing to require payment of such
additional interest:
(i) shall so notify the Borrower, in which case
such additional interest on the Euro-Dollar Loans of
such Bank shall be payable on any date interest is
payable with respect to each Euro-Dollar Loan
commencing after the giving of such notice and
(ii) shall notify the Borrower from time to time
of the amount due it under this Section;
provided that the Borrower shall not be required to make any
payment of an amount due hereunder earlier than the fifth
Euro-Dollar Business Day after receipt of the notice referred
to in clause (ii) of this Section.
SECTION 2.16. Alternative Currency Advances.
(a) Requests for Offers. From time to time the
Borrower may request any or all of the Banks to make offers
to make Alternative Currency Advances, each in a minimum
principal amount in the currency of such Alternative Currency
Advance equivalent to $1,000,000, to the Borrower; provided
that the aggregate Dollar Equivalents of all Alternative
Currency Advances outstanding at any one time shall not exceed
$300,000,000; provided further that immediately after the
making of an Alternative Currency Advance, the sum of (i) the
aggregate principal amount of the Loans plus (ii) the
Applicable Alternative Currency Outstandings will not exceed
the aggregate amount of the Commitments. Any such request
shall be transmitted directly to any such Bank at the
Euro-Dollar Lending Office of such Bank or at any other
address that the Borrower and such Bank may agree from time to
time. Each Bank may, but shall have no obligation to, make
such offers on terms and conditions as are satisfactory to
such Bank, and the Borrower may, but shall have no obligation
to, accept any such offers.
(b) Reports to Agent. (i) The Borrower shall
deliver to the Administrative Agent a report in respect of
each Alternative Currency Advance (an "Alternative Currency
Advance Report") by 12:00 Noon (New York City time) on (x) the
date on which the Borrower accepts such Alternative Currency
Advance (such report to constitute the designation of such
advance as an Alternative Currency Advance for purposes of
this Agreement), (y) the date on which any principal amount
thereof is repaid prior to the scheduled maturity date and (z)
the scheduled maturity date if payment thereof is not made on
such scheduled maturity date, specifying for such Alternative
Currency Advance:
(w) the date such advance was or will be made, on
which such amount of principal is prepaid or will be
repaid or on which payment was not made, as the case
may be;
(x) the Alternative Currency of such advance; and
(y) the principal amount of such advance or
principal prepayment or repayment or the amount not
paid (in such Alternative Currency).
On the basis of each such Alternative Currency Advance Report,
the Administrative Agent shall determine the Dollar Equivalent
of the advance then made or remaining after such principal
repayment and the Applicable Alternative Currency Outstandings
on such date after giving effect to such advance or principal
repayment and shall promptly notify the Borrower and the Banks
of such Dollar Equivalent and such Applicable Alternative
Currency Outstandings.
(ii) If the aggregate amount of Loans and
Alternative Currency Advances outstanding under this Agreement
equals or exceeds $850,000,000, at the time of each Borrowing
hereunder that is not a Refunding Borrowing, the
Administrative Agent shall determine the Dollar Equivalent of
each Alternative Currency Advance then outstanding and the
Applicable Alternative Currency Outstandings on such date,
based on such Dollar Equivalents, and shall promptly notify
the Borrower and the Banks of such Dollar Equivalents, and
such Applicable Alternative Currency Outstandings.
(c) Other Alternative Currency Borrowings. Nothing
in this Section shall restrict the Borrower's ability to
borrow in Alternative Currencies from one or more Banks or
other lenders without reporting such borrowings as Alternative
Currency Advances for purposes of this Agreement. If and to
the extent that any report designating such a borrowing as an
Alternative Currency Advance would cause the Borrower to
exceed any applicable limit set forth in Section 2.16(a) or
3.02(b) on the day such report is received by the
Administrative Agent, such designation shall be ineffective.
Except as provided in the immediately preceding sentence, a
report delivered by the Borrower pursuant to Section 2.16(b)
designating a borrowing as an Alternative Currency Advance for
purposes of this Agreement shall be effective upon receipt by
the Administrative Agent and may not thereafter be revoked by
the Borrower.
SECTION 2.17. Judgment Currency. If for the
purpose of obtaining judgment in any court it is necessary to
convert a sum due from the Borrower hereunder or under any of
the Notes in the currency expressed to be payable herein or
under the Notes (the "specified currency") into another
currency, the parties hereto agree, to the fullest extent that
they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the
specified currency with such other currency at the
Administrative Agent's New York office on the Domestic
Business Day preceding that on which final judgment is given.
The obligations of the Borrower in respect of any sum due to
any Bank or the Administrative Agent hereunder or under any
Note shall, notwithstanding any judgment in a currency other
than the specified currency, be discharged only to the extent
that on the Domestic Business Day following receipt by such
Bank or the Administrative Agent (as the case may be) of any
sum adjudged to be so due in such other currency such Bank or
the Administrative Agent (as the case may be) may in
accordance with normal banking procedures purchase the
specified currency with such other currency. If the amount of
the specified currency so purchased is less than the sum
originally due to such Bank or the Administrative Agent, as
the case may be, in the specified currency, the Borrower
agrees, to the fullest extent that it may effectively do so,
as a separate obligation and notwithstanding any such
judgment, to indemnify such Bank or the Administrative Agent,
as the case may be, against such loss, and if the amount of
the specified currency so purchased exceeds:
(a) the sum originally due to such Bank or the
Administrative Agent, as the case may be, and
(b) any amounts shared with other Banks as a
result of allocations of such excess as a
disproportionate payment to such Bank under Section
9.04,
such Bank or the Administrative Agent, as the case may be,
agrees to remit such excess to the Borrower.
SECTION 2.18. Replacement of this Credit
Facility. If the Borrower wishes at any time to replace the
credit facility provided under this Agreement with another
credit facility, the Borrower may give prior notice of the
termination of the Commitments hereunder as required by
Section 2.09 and prior notice of the prepayment of any
Committed Loans outstanding hereunder as required by Section
2.10, in each case on a conditional basis (i.e., conditioned
upon such other credit facility becoming available to the
Borrower), provided that the Borrower gives definitive notice
of such termination of the Commitments and prepayment of
outstanding Committed Loans (if any) to the Administrative
Agent before 11:00 A.M. (New York City time) on the date of
such termination and prepayment (if any) and complies with the
applicable requirements of Sections 2.09 and 2.10 in all other
respects.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall
become effective on the date that each of the following
conditions shall have been satisfied (or waived in accordance
with Section 9.05):
(a) receipt by the Documentation Agent of
counterparts hereof signed by each of the parties
hereto (or, in the case of any party as to which an
executed counterpart shall not have been received,
receipt by the Documentation Agent in form satisfactory
to it of telegraphic, telex, facsimile or other written
confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Documentation Agent for the
account of each Bank of one executed Note dated on or
before the Effective Date complying with the provisions
of Section 2.05;
(c) receipt by the Documentation Agent of an
opinion of Phyllis Savage, counsel to the Borrower,
covering the matters described in Exhibit E hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request;
(d) receipt by the Documentation Agent of an
opinion of Davis Polk & Wardwell, special counsel for
the Agents, substantially in the form of Exhibit F
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request;
(e) receipt by the Documentation Agent of a
certificate signed by any of the Chairman, any Vice
Chairman, the President, any Vice President, the
Treasurer, such Treasurer's designee, or any Associate
Treasurer or Assistant Treasurer of the Borrower, dated
the Effective Date, to the effect set forth in clauses
(c), (d) and (e) of Section 3.02;
(f) receipt by the Documentation Agent of a copy
of the Borrower's certificate of incorporation,
certified by the Secretary of State of New York;
(g) receipt by the Documentation Agent of a
certificate on behalf of the Borrower signed by the
Secretary or Assistant Secretary of the Borrower or
such other authorized officer of the Borrower
satisfactory to the Documentation Agent certifying
(i) that the Borrower's certificate of
incorporation has not been amended since May 2,
1994,
(ii) that no proceeding for the dissolution
or liquidation of the Borrower exists,
(iii) that the copy of the by-laws of the
Borrower attached to the certificate is true,
correct and complete,
(iv) that the copies of the resolutions of
the Borrower's board of directors attached to the
certificate are true and correct and in full force
and effect and
(v) as to the incumbency of each officer of
the Borrower who signed this Agreement and the
Notes on behalf of the Borrower;
(h) receipt by the Documentation Agent of a
certificate listing the Restricted Subsidiaries as of
the Effective Date;
(i) the commitments of the banks under the
$850,000,000 Credit Agreement dated as of April 15,
1992 among Union Carbide Corporation, Union Carbide
Chemicals and Plastics Company Inc., the banks listed
on the signature pages thereof, Morgan Guaranty Trust
Company of New York, Chemical Bank and Credit Suisse,
as Co-Agents, and Chemical Bank, as Administrative
Agent and as Auction Agent, shall have been terminated
and all amounts due and payable under such Agreement
shall have been paid; and
(j) receipt by the Documentation Agent of all
documents that the Documentation Agent may reasonably
request relating to the existence of the Borrower, the
corporate authority for and the validity of this
Agreement and the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the
Documentation Agent;
provided that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than November 20, 1994. The
Documentation Agent shall promptly notify the Borrower and the
Banks of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Administrative Agent of a
Notice of Borrowing as required by Section 2.02 or
2.03, as the case may be;
(b) immediately after such Borrowing, the sum of
(i) the aggregate outstanding principal amount of the
Loans plus (ii) the Applicable Alternative Currency
Outstandings will not exceed the aggregate amount of
the Commitments;
(c) immediately after such Borrowing, no Default
shall have occurred and be continuing;
(d) none of the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower shall be aware of any Potential Cross-Default
that will exist after giving effect to such Borrowing
and was not disclosed to the Banks at least two
Domestic Business Days before the date of such
Borrowing;
(e) if such Borrowing is not a Refunding
Borrowing, the fact that the representations and
warranties of the Borrower contained in this Agreement
shall be true on and as of the date of such Borrowing;
and
(f) if such Borrowing is a Refunding Borrowing,
the fact that the representations and warranties of the
Borrower contained in this Agreement (except the
representations and warranties set forth in
Sections 4.04(c) and 4.07 as to any material adverse
change which has theretofore been disclosed in writing
by the Borrower to the Banks and in Section 4.05) shall
be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b), (c)
and (d) and either clause (e) or (f), as the case may be, of
this Section, and each Notice of Borrowing shall be deemed to
be a confirmation by the Borrower to such effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New York,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement and the Notes
are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute
a default under, any provision of applicable law or regulation
or of the certificate of incorporation or by-laws of the
Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of
its Subsidiaries or result in or permit the termination or
modification of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of
its Subsidiaries or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and
the Notes, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of
the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of December 31, 1993 and
the related consolidated statements of income and cash flows
for the fiscal year then ended, reported on by KPMG Peat
Marwick, set forth in the Borrower's 1993 annual report to
stockholders, copies of which have been delivered to each of
the Banks, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as
of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of June 30, 1994
and the related unaudited consolidated statements of income
and cash flows for the six months then ended, copies of which
have been delivered to each of the Banks, fairly present, in
conformity with generally accepted accounting principles
applied on a basis consistent with the consolidated financial
statements referred to in subsection (a) of this Section, the
consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such six
month period (subject to normal year-end adjustments).
(c) Since June 30, 1994 there has been no change in
the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries,
which could materially adversely affect the present or
prospective ability of the Borrower to perform its obligations
under this Agreement or any Note or which in any manner draws
into question the validity or enforceability of this Agreement
or any Note.
SECTION 4.05. Litigation. There is no action, suit
or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the present or prospective ability
of the Borrower to perform its obligations under this
Agreement or any Note or which in any manner draws into
question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan.
No member of the ERISA Group has:
(i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code
in respect of any Plan,
(ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Internal
Revenue Code or
(iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums
under Section 4007 of ERISA and aggregate withdrawal
liabilities not in excess of $5,000,000 at any one time
outstanding.
SECTION 4.07. Environmental Matters. In the
ordinary course of its business, the Borrower conducts reviews
of the effect of Environmental Laws on the business,
operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including, without
limitation, related United States environmental protection
operating expenses, which include operating costs of pollution
control facilities and certain environmental accruals and
administrative expenses, and capital expenditures for the
current fiscal year and related amounts projected for capital
expenditures up to five years subsequent to such current
fiscal year, expressed in then-current dollar amounts). On
the basis of this review, the Borrower has reasonably
concluded that Environmental Laws are unlikely to have an
effect on the business, financial condition, results of
operations or prospects of the Borrower and its Consolidated
Subsidiaries during the term of this Agreement, which could
materially adversely affect the present or prospective ability
of the Borrower to perform its obligations under this
Agreement or any Note.
SECTION 4.08. Restricted Subsidiaries. Each
corporate Restricted Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
SECTION 4.09. Not an Investment Company. The
Borrower is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4.10. Disclosure. None of the material
furnished to the Agents and the Banks in connection herewith
(excluding financial projections and estimates of future
results) contains, or contained at the time so furnished, any
untrue statement of a material fact or omits, or omitted at
the time so furnished, to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. All
financial projections and estimates of future results included
in such material represented the Borrower's good faith
estimates, based on assumptions which the Borrower considered
reasonable, as of the date thereof (it being understood that
the Borrower does not represent or warrant that such
projections and future results will in fact be realized or
that such assumptions included all possible assumptions).
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any Note
remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks and the Administrative Agent:
(a) as promptly as practicable and in any event
within 120 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the
end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal
year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported
on in accordance with generally accepted accounting
principles (and in a manner acceptable to the SEC) by
KPMG Peat Marwick or other independent public
accountants of nationally recognized standing;
(b) as promptly as practicable and in any event
within 60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter
and comparative financial information as of the end of
the previous fiscal year, the related consolidated
statement of income for such quarter and the related
consolidated statements of income and cash flows for
the portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in
comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and
consistency by the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower or a person designated in writing by any of
the foregoing persons, and if such financial statements
are filed with the SEC, all reported on in conformity
with the financial reporting requirements of the SEC;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and
(b) above, a certificate of the principal financial
officer, the principal accounting officer or the
Treasurer of the Borrower, or a person designated in
writing by any of the foregoing persons
(i) setting forth in reasonable detail the
calculations required to establish whether the
Borrower was in compliance with any applicable
requirements of Sections 5.05, 5.07, 5.08 and 5.09
on the date of such financial statements,
(ii) stating whether the Borrower was in
compliance with the requirements of Sections 5.02
through 5.04, inclusive, on the date of such
financial statements, and
(iii) stating whether any Default or Potential
Cross-Default exists on the date of such
certificate and, if any Default or Potential
Cross-Default then exists, setting forth the
details thereof and the action which the Borrower
is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set
of financial statements referred to in clause (a)
above, a statement of the firm of independent public
accountants which reported on such statements whether
anything has come to their attention to cause them to
believe that any Default or Potential Cross-Default
existed on the date of such statements;
(e) within five days after any officer of the
Borrower obtains knowledge of any Default or Potential
Cross-Default, if such Default or Potential Cross-
Default is then continuing, a certificate of the
principal financial officer, the principal accounting
officer or the Treasurer of the Borrower setting forth
the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
public shareholders of the Borrower generally, copies
of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of
all registration statements (other than the exhibits
thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) which the Borrower shall have
filed with the SEC;
(h) if and when any member of the ERISA Group:
(i) gives or is required to give notice to
the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given
or is required to give notice of any such
reportable event, a copy of the notice of such
reportable event given or required to be given to
the PBGC;
(ii) receives notice of complete or partial
withdrawal liability in excess of $5,000,000,
under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such
notice;
(iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a
trustee to administer, any Plan, a copy of such
notice;
(iv) applies for a waiver of the minimum
funding standard under Section 412 of the Internal
Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any
Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the
PBGC;
(vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such
notice; or
(vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of
a Lien or the posting of a bond or other security,
a certificate of the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to
take;
(i) promptly after the Borrower is notified by
any rating agency referred to in the Pricing Schedule
of any actual change in any rating referred to in the
Pricing Schedule, written notice of such change; and
(j) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Documentation Agent or
the Administrative Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each of its
Subsidiaries to keep, all property useful and necessary in its
respective business in good working order and condition,
ordinary wear and tear excepted.
(b) The Borrower will maintain, and will cause each
of its Subsidiaries to maintain, insurance policies on its
assets at coverage levels that are at least as high as the
coverage levels that are usually insured against in the same
general area by companies of established repute engaged in the
same or a similar business as the Borrower or such Subsidiary,
as the case may be; and, upon request of the Documentation
Agent, will promptly furnish to the Documentation Agent for
distribution to the Banks information presented in reasonable
detail as to the insurance so carried.
SECTION 5.03. Restricted Subsidiaries.
(a) The Borrower will notify the Administrative
Agent, each time that the Borrower delivers financial
statements pursuant to Section 5.01(a) or (b), whether or not
the total assets of the Borrower and all Restricted
Subsidiaries (excluding any loans or other extensions of
credit, other than receivables related to trade transactions,
from any Restricted Subsidiary to any Unrestricted Subsidiary)
were equal to at least 60% of the total assets of the Borrower
and its Consolidated Subsidiaries as of the date of such
financial statements (the "Restricted Subsidiary Asset Test").
(b) If the total assets of the Borrower and all
Restricted Subsidiaries as so reported did not meet the
Restricted Subsidiary Asset Test as of such date, the Borrower
will, on the date such financial statements are delivered to
the Administrative Agent, designate as Restricted Subsidiaries
one or more additional Consolidated Subsidiaries which were
theretofore Unrestricted Subsidiaries having sufficient assets
as of the date of such financial statements so that the
Restricted Subsidiary Asset Test as of such date will be met.
(c) Each Consolidated Subsidiary which is a
Restricted Subsidiary by reason of clause (ii) of the
definition of "Restricted Subsidiary" (a "Designated
Subsidiary") shall be a Restricted Subsidiary from the time of
such designation until (subject to Section 5.03(d)) the
Borrower subsequently notifies the Administrative Agent,
concurrently with the delivery of financial statements
pursuant to Section 5.01(a) or (b), that it is no longer
necessary to include such Designated Subsidiary as a
Restricted Subsidiary to meet the Restricted Subsidiary Asset
Test (measured as of the date of such financial statements),
at which time such Designated Subsidiary shall become an
Unrestricted Subsidiary.
(d) The Borrower may from time to time substitute
one or more
(i) Domestic Consolidated Subsidiaries of the
Borrower having (x) total assets of $20,000,000 or less
and (y) total net worth of $5,000,000 or less or
(ii) Foreign Consolidated Subsidiaries
which (in either case) are Unrestricted Subsidiaries for one
or more Designated Subsidiaries, provided the Restricted
Subsidiary Asset Test (measured as of the date of the most
recent financial statements delivered pursuant to Section
5.01(a) or (b)) continues to be met, upon which substitution
such theretofore Designated Subsidiaries shall become
Unrestricted Subsidiaries.
SECTION 5.04. Negative Pledge. The Borrower will
not, and will not permit any of its Restricted Subsidiaries
to, create, assume or suffer to exist any Lien securing Debt
on any asset now owned or hereafter acquired by it, except:
(a) any Lien existing on the date of this
Agreement securing Debt outstanding on the date of this
Agreement in an aggregate principal amount not
exceeding $50,000,000;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Restricted Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part
of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(d) any Lien on any improvements constructed on
any property of the Borrower or any Restricted
Subsidiary and any theretofore unimproved real property
on which such improvements are located securing Debt
incurred for the purpose of financing all or any part
of the cost of constructing such improvements, provided
that such Lien attaches to such improvements within 90
days after the later of (1) completion of construction
of such improvements and (2) commencement of full
operation of such improvements;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Restricted
Subsidiary and not created in contemplation of such
acquisition;
(f) Liens on property of the Borrower or a
Restricted Subsidiary in favor of the United States of
America or any State thereof, or any department, agency
or instrumentality or political subdivision of the
United States of America or any State thereof, or any
other government or department, agency, instrumentality
or political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any
contract or statute or to secure any Debt incurred for
the purpose of financing all or any part of the
purchase price or the cost of construction of the
property subject to such Liens;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, but only to the extent that such Debt is
not increased and is not secured by any additional
assets;
(h) Liens securing Debt permitted to be secured
under Section 5.05(a)(i); and
(i) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in an
aggregate principal amount at any time outstanding not
to exceed $200,000,000.
SECTION 5.05. Limitation on Debt of Subsidiaries.
(a) The Borrower shall not permit any of its Restricted
Subsidiaries to create, incur, assume or suffer to exist any
Debt, except:
(i) any Debt owing to the Borrower or another
Subsidiary, provided that any such Debt owing to the
Borrower is made or issued solely on a senior basis,
and provided further that any such Debt owing to a
Subsidiary is made or issued solely on a senior,
unsecured basis;
(ii) Debt of a Designated Subsidiary existing at
the time such Subsidiary is designated as a Restricted
Subsidiary;
(iii) Excluded Working Capital Financings; and
(iv) (A) unsecured Debt not otherwise permitted by
the foregoing clauses (i), (ii) and (iii) of this
Section, in an aggregate principal amount at any time
outstanding not to exceed $200,000,000 and (B) Debt
secured by Liens permitted by Section 5.04.
(b) The Borrower shall not permit any of its
Unrestricted Subsidiaries that are Consolidated Subsidiaries
or any of their respective Subsidiaries that are Consolidated
Subsidiaries to create, incur, assume or suffer to exist any
Debt owing to a Person other than the Borrower or a Subsidiary
(including Debt referred to in clause (ii) of subsection (a)
of this Section) if the aggregate outstanding principal amount
of all such Debt (except Excluded Working Capital Financings)
of all such Subsidiaries would at any time exceed
$800,000,000. For purposes of this subsection (b), a
Consolidated Kuwait Joint Venture shall be deemed not to be a
Subsidiary or a Consolidated Subsidiary.
SECTION 5.06. Consolidations, Mergers and Sales of
Assets. The Borrower will not merge or consolidate with or
into any other Person or sell, lease, transfer or otherwise
dispose of all or substantially all of its assets, property or
business in any single transaction or series of related
transactions, unless
(i) in the case of any such merger or
consolidation, the Borrower shall be the continuing
corporation, or, in the case of any such sale, lease,
transfer or other disposition, the transferee or
transferees shall be one or more Wholly-Owned
Consolidated Subsidiaries organized and existing under
the laws of the United States of America or any State
thereof, each of which shall expressly assume the due
and punctual performance and observance of all of the
covenants and agreements of the Borrower contained in
this Agreement and the Notes, and
(ii) immediately after giving effect to such
merger or consolidation, or such sale, lease, transfer
or other disposition, no Default or Potential Cross-
Default shall have occurred and be continuing.
SECTION 5.07. Minimum Consolidated Tangible Net
Worth. Consolidated Tangible Net Worth will not at any time
be less than the sum of
(i) $1,050,000,000 less Restructuring Charges
taken after June 30, 1994 up to a maximum cumulative
amount of $100,000,000,
(ii) 50% of Consolidated Net Income (calculated
before giving effect to any Restructuring Charges
deducted pursuant to clause (i) above), for each fiscal
quarter beginning after June 30, 1994 for which such
Consolidated Net Income (as so calculated) is positive,
and
(iii) 50% of the proceeds from the sale after June
30, 1994 of capital stock that is not redeemable at the
option of the holder thereof and that the issuer
thereof is not required to repurchase at the option of
the holder thereof;
provided that proceeds from the sale of capital stock issued
pursuant to any employee benefit plan, stock option plan or
dividend reinvestment plan shall be excluded from any
determination under this Section 5.07.
SECTION 5.08. Leverage Ratio. The Leverage Ratio
will not (i) at any time prior to June 30, 1995 exceed 1.65
to 1 and (ii) at any time on or after June 30, 1995 exceed
1.5 to 1.
SECTION 5.09. Interest Coverage Ratio. At the end
of any fiscal quarter ending after June 30, 1994, the Interest
Coverage Ratio for the period of four consecutive fiscal
quarters then ended will not be less than 2.0 to 1.
SECTION 5.10. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used by the Borrower
for working capital and general corporate purposes of the
Borrower and its Subsidiaries. None of such proceeds will be
used, directly or indirectly, in violation of Regulation X or
for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 5.11. Payments from Domestic Restricted
Subsidiaries. The Borrower shall not, and shall not permit
any Domestic Consolidated Subsidiary that is a Restricted
Subsidiary to, enter into any agreement which expressly
prohibits or limits in any manner the ability of such
Restricted Subsidiary, directly or indirectly, to declare or
pay any dividend or other distribution, loan, advance or other
payment to the Borrower.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan or, within five days, any
interest on any Loan, any fees or any other amount
payable hereunder;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.04 to 5.11,
inclusive;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 20 days after written notice thereof has been given
to the Borrower by the Administrative Agent at the
request of any Bank;
(d) any representation, warranty, certification
or statement made (or deemed made) by the Borrower in
this Agreement or in any certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
make any payment in respect of Material Debt when due
or within any applicable grace period or any event or
condition shall occur which results in the acceleration
of the maturity of Material Debt;
(f) any event or condition (except a failure to
pay or other event or condition covered by clause (e)
above) shall occur which enables (or, with the giving
of notice or lapse of time or both, would enable) the
holder or holders of Material Debt or any Person or
Persons acting on its or their behalf to accelerate the
maturity thereof or terminate its or their commitment
in respect thereof and such event or condition shall
not have been cured within two Domestic Business Days
after both (i) the Required Banks shall have determined
that such event or condition, if not cured within two
Domestic Business Days, should be an Event of Default
under this clause (f) and (ii) the Administrative Agent
shall have given the Borrower written notice of such
determination;
(g) the Borrower or Material Subsidiaries shall:
(i) commence a voluntary case or other
proceeding seeking (1) liquidation, reorganization
or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or (2) the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property;
(ii) consent to any such relief or to the
appointment of or taking possession by any such
official in an involuntary case or other
proceeding commenced against it;
(iii) make a general assignment for the
benefit of creditors;
(iv) fail generally to pay its debts as they
become due; or
(v) take any corporate action to authorize
any of the foregoing;
(h) (i) an involuntary case or other proceeding
shall be commenced against the Borrower or Material
Subsidiaries seeking (1) liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or
hereafter in effect or (2) the appointment of a
trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of
60 days; or
(ii) an order for relief shall be entered
against the Borrower or Material Subsidiaries under the
federal bankruptcy laws as now or hereafter in effect;
(i) (i) any member of the ERISA Group shall fail
to pay when due an amount or amounts aggregating in
excess of $50,000,000 which it shall have become liable
to pay under Title IV of ERISA;
(ii) notice of intent to terminate a Material
Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or
any combination of the foregoing;
(iii) the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007
of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan;
(iv) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
(v) there shall occur a complete or partial
withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money
in excess of $50,000,000 shall be rendered against the
Borrower or any Subsidiary and shall remain unsatisfied
for a period of ten consecutive days after it becomes
due and payable, during which ten-day period execution
shall not be effectively stayed or otherwise
effectively precluded; or
(k) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated
by the SEC under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or,
during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower
on the first day of such period shall cease to
constitute a majority of the board of directors of the
Borrower;
then, and in every such event, the Administrative Agent shall:
(i) if requested by Banks having more than 50% in
aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall
thereupon terminate, and
(ii) if requested by Banks holding Notes
evidencing more than 50% in aggregate outstanding
principal amount of the Loans, by notice to the
Borrower declare the Notes (together with accrued
interest thereon) to be, and the Notes (together with
accrued interest thereon) shall thereupon become,
immediately due and payable without presentment,
demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to the
Borrower, without any notice to the Borrower or any other act
by the Administrative Agent or the Banks, the Commitments
shall thereupon automatically terminate and the Notes
(together with accrued interest thereon) shall automatically
become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Administra-
tive Agent shall give notice under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall thereupon
notify all the Banks thereof.
ARTICLE VII
THE AGENTS AND CO-AGENTS
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers
under this Agreement and the Notes as are delegated to such
Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Morgan
Guaranty Trust Company of New York and Chemical Bank shall
each have the same rights and powers under this Agreement as
any other Bank and may exercise or refrain from exercising the
same as though it were not an Agent, and Morgan Guaranty Trust
Company of New York and Chemical Bank and their respective
affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not
an Agent hereunder.
SECTION 7.03. Action by Agents. The obligations of
each Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing, no
Agent shall be required to take any action with respect to any
Default or Potential Cross-Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. Any Agent
may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. Neither any
Agent nor any of its directors, officers, agents, or employees
shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither any Agent nor any
of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder;
(ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except, in the case of the
Documentation Agent or the Administrative Agent, receipt of
items required to be delivered to it; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection
herewith. An Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex or similar
writing) believed by it to be genuine or to be signed by the
proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify each
Agent (to the extent not reimbursed by the Borrower) against
any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as
result from such Agent's gross negligence or willful
misconduct) that such Agent may suffer or incur in connection
with this Agreement or any action taken or omitted by such
Agent hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon any Agent, any Co-Agent or any other Bank, and based on
such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon any Agent, any Co-
Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking any
action under this Agreement.
SECTION 7.08. Successor Agents. (a) Any Agent may
resign at any time by giving 30 days' prior written notice
thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to
appoint a successor Agent which shall be a Bank. If no
successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30
days after the retiring Agent gives notice of resignation,
then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a Bank. Upon the acceptance
of its appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article shall inure
to its benefit as to any actions taken or omitted to be taken
by it while it was an Agent.
(b) If at any time any Agent shall have assigned
its rights and obligations in respect of all of its Commitment
hereunder, such Agent shall resign as Agent in accordance with
the procedures set forth in subsection (a) of this
Section 7.08.
SECTION 7.09. Distribution of Information. The
Administrative Agent and the Documentation Agent each agree to
mail or deliver to each of the Banks so requesting photocopies
of documents, certificates, financial statements and other
information received by it from the Borrower pursuant to the
express provisions of this Agreement and not otherwise
distributed to the Banks.
SECTION 7.10. Co-Agents. The Co-Agents, in their
capacities as such, shall have no duties or obligations of any
kind under this Agreement.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Fixed Rate Borrowing (other than Money
Market Absolute Rate Borrowings):
(a) the Administrative Agent is advised by the
Reference Banks that deposits in Dollars (in the
applicable amounts) are not being offered to the
Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Administrative Agent that the
Adjusted CD Rate or the London Interbank Offered Rate,
as the case may be, as determined by the Administrative
Agent will not adequately and fairly reflect the cost
to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Administrative Agent shall forthwith give notice thereof
to the Borrower and the Banks, whereupon until the
Administrative Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make CD Loans or Euro-Dollar
Loans, as the case may be, shall be suspended. Unless the
Borrower notifies the Administrative Agent at least two
Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, (i) if such
Fixed Rate Borrowing is a Committed Borrowing, such Borrowing
shall instead be made as a Base Rate Borrowing and (ii) if
such Fixed Rate Borrowing is a Money Market LIBOR Borrowing,
the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to
but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. Illegality. (a) If, after the date
of this Agreement, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall promptly so notify the
Administrative Agent, the Administrative Agent shall forthwith
give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank
to make Euro-Dollar Loans shall be suspended.
(b) Before giving any notice to the Administrative
Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then
outstanding principal amount of each such Euro-Dollar Loan,
together with accrued interest thereon. Concurrently with
prepaying each such Euro-Dollar Loan, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such
Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the
other Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If, after (x) the date hereof, in the case of any
Committed Loan or any obligation to make Committed Loans or
(y) the date of the related Money Market Quote, in the case of
any Money Market Loan, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its Fixed Rate Loans, its Note to the extent
evidencing Fixed Rate Loans or its obligation to make
Fixed Rate Loans, or shall change the basis of taxation
of payments to any Bank (or its Applicable Lending
Office) of the principal of or interest on its Fixed
Rate Loans or any other amounts due under this
Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes
in the rate of tax on the overall net income of such
Bank or its Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal executive
office or Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any such requirement
imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any CD
Loan any such requirement included in an applicable
Domestic Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended
by, any Bank (or its Applicable Lending Office) or
shall impose on any Bank (or its Applicable Lending
Office) or on the United States market for certificates
of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note to
the extent evidencing Fixed Rate Loans or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with
a copy to the Administrative Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation regarding capital adequacy,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency has the effect of
reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder
to a level below that which such Bank (or its Parent) could
have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect
to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent), without
duplication, for such reduction.
(c) Each Bank will promptly notify the Borrower and
the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. A certificate of
any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it
hereunder, accompanied by a computation thereof in reasonable
detail, shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) If any Bank has demanded compensation under
this Section, the Borrower:
(i) shall have the right, with the assistance of
the Documentation Agent and the Administrative Agent
and upon notification to such Bank, to require such
Bank to transfer, pursuant to an Assignment and
Assumption Agreement in substantially the form of
Exhibit H hereto, its Note and Commitment to a
substitute bank or banks satisfactory to the Borrower
and such Agents (which may be one or more of the Banks)
or
(ii) may elect to terminate this Agreement as to
such Bank, and in connection therewith to prepay any
Base Rate Loan made pursuant to Section 8.04, provided
that the Borrower (1) notifies the Administrative Agent
(which will forthwith notify such Bank) of such
election at least three Euro-Dollar Business Days
before any date fixed for such a prepayment, and (2)
either (x) repays all of such Bank's outstanding Loans
at the end of the respective Interest Periods
applicable thereto or as otherwise required by Section
8.02 or (y) subject to Section 2.12, prepays all of
such Bank's outstanding Loans (other than Money Market
Loans). Upon receipt by the Administrative Agent of
such notice, the Commitment of such Bank shall
terminate.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. Subject to Sections 2.10 and 2.12,
if (i) the obligation of any Bank to make Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03(a) and the
Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Administrative Agent,
have elected that the provisions of this Section shall apply
to such Bank, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by
such Bank as CD Loans or Euro-Dollar Loans, as the case
may be, shall be made instead as Base Rate Loans (on
which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of
the other Banks), and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid, all
payments of principal which would otherwise be applied
to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests,
instructions and other communications to any party hereunder
shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such
party: (w) in the case of the Borrower or any Agent, at its
address, facsimile number or telex number (if any) set forth
on the signature pages hereof, (x) in the case of any Bank, at
its address, facsimile number or telex number (if any) set
forth in its Administrative Questionnaire, (y) in the case of
any party hereto, such other address, facsimile number or
telex number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the
Borrower. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and
the appropriate answerback is received, (ii) if given by mail,
72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or
(iii) if given by any other means, when delivered at the
address specified in this Section; provided that notices to
the Administrative Agent under Article II or Article VIII and
notices to the Borrower under Section 6.01(c) or 6.01(f) shall
not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by
any Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
out-of-pocket expenses of the Agents, including reasonable
fees and disbursements of one special counsel (Davis Polk &
Wardwell) for the Agents, in connection with the preparation
of this Agreement, any waiver or consent hereunder or any
amendment hereof or any actual or alleged Default or Potential
Cross-Default hereunder and (ii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Agents or
any Bank, including fees and disbursements of counsel
(including the cost of staff counsel where used, without
duplication of work, in lieu of separate special counsel), in
connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Borrower
shall indemnify each Bank against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery
of this Agreement or the Notes.
(b) The Borrower shall indemnify each Bank and its
directors, officers and employees for, and hold each Bank and
its directors, officers and employees harmless from and
against (i) any and all damages, losses and other liabilities
of any kind, including, without limitation, judgments and
costs of settlement, and (ii) any and all reasonable
out-of-pocket costs and expenses of any kind, including,
without limitation, fees and disbursements of counsel
(including the cost of staff counsel where used, without
duplication of work, in lieu of separate special counsel) and
any other costs of defense, including, without limitation,
costs of discovery and investigation, for such Bank and its
officers and directors (all of which shall be paid or
reimbursed by the Borrower monthly), suffered or incurred in
connection with any investigative, administrative or judicial
proceeding (whether or not such Bank shall be designated a
party thereto) relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder;
provided that no such Bank, director, officer or employee
shall have any right to be indemnified or held harmless
hereunder for its own gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction.
The Borrower shall indemnify and hold harmless each Agent, in
its capacity as Agent hereunder, to the same extent that the
Borrower indemnifies and holds harmless each Bank pursuant to
this Section.
SECTION 9.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise (except pursuant to Section
8.03(d)(ii)), receive payment of a proportion of the aggregate
amount of principal and interest due with respect to any Note
held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal
and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the
other Banks, and such other adjustments shall be made, as may
be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be
shared by the Banks pro rata; provided that if at any time
thereafter, the Bank that originally received such payment is
required to repay (whether to the Borrower or to any other
Person) all or any portion of such payment, each other Bank
shall promptly (and in any event within five Domestic Business
Days of its receipt of notification from such Bank requiring
such repayment) repay to such Bank the portion of such payment
previously received by it under this Section 9.04, together
with such amount (if any) as is equal to the appropriate
portion of any interest (in respect of the period during which
such other Bank held such amount) such Bank shall have been
obligated to pay when repaying such amount as aforesaid, in
exchange for such participation in the Note of such other Bank
as was previously purchased by such Bank; provided further
that nothing in this Section shall impair the right of any
Bank to exercise any right of set-off or counterclaim it may
have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its
indebtedness under the Notes.
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Required Banks (and, if
the rights or duties of any Agent are affected thereby, by
such Agent); provided that no such amendment or waiver shall,
unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest
on any Loan or any fees hereunder, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan
or any fees hereunder or for the termination of any
Commitment, (iv) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any
of them to take any action under this Section or any other
provision of this Agreement or (v) amend or waive the
provisions of this Section 9.05. The exercise by the Borrower
of its right to decrease the Commitments pursuant to Section
2.09 or to decrease the Commitment of a Bank pursuant to
Section 8.03(d) shall not be deemed to require the consent of
any party to this Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower and the Agents, such Bank shall remain
responsible for the performance of its obligations hereunder,
and the Borrower and the Agents shall continue to deal solely
and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement and such Bank's
Note. Any agreement pursuant to which any Bank may grant such
a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder and under the Notes
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i)
(only to the extent such modification, amendment or waiver
would decrease the Commitment of such Bank), (ii) or (iii) of
Section 9.05 or to any modification, amendment or waiver that
would have the effect of increasing the amount of a
Participant's participation in such Bank's Commitment, in any
such case without the consent of the Participant. The
Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the
benefits of Article VIII with respect to its participating
interest, subject to subsection (f) below. An assignment or
other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under
this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit H
hereto executed by such Assignee and such transferor Bank,
with the subscribed consent of the Borrower in consultation
with the Administrative Agent and with the subscribed
acknowledgment of the Administrative Agent; provided that,
(i) if an Assignee is (x) any Person which
controls, is controlled by, or is under common control
with, or is otherwise substantially affiliated with
such transferor Bank or (y) another Bank, no such
consent shall be required,
(ii) such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding
Money Market Loans and
(iii) if the transferor Bank is assigning a
proportionate part (but not all) of its rights and
obligations under this Agreement and the Notes to an
Assignee that was not a Bank party to this Agreement
prior to such assignment, the amount so assigned
(disregarding Money Market Loans) shall be not less
than the amount that would be held at such time
(disregarding Money Market Loans) by a Bank having an
initial Commitment of $10,000,000.
Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Bank of an amount equal to
the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Administrative Agent
and the Borrower shall make appropriate arrangements so that,
if required, new Notes are issued to the Assignee and the
transferor Bank and the original Note is cancelled, and the
Administrative Agent shall notify the other Agents of such
assignment. In connection with any such assignment, the
transferor Bank shall pay to the Administrative Agent an
administrative fee of $2,000 for processing such assignment.
If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior
to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the
Administrative Agent certification as to exemption from
deduction or withholding of any United States federal income
taxes in accordance with Section 2.14.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) The Agents and the Borrower may, for all
purposes of this Agreement, treat any Bank as the holder of
any Note drawn to its order (and owner of the Loans evidenced
thereby) until written notice of assignment or other transfer
shall have been received by them.
(f) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable
Lending Office under certain circumstances or at a time when
the circumstances giving rise to such greater payment did not
exist.
(g) If any Reference Bank assigns its Note to an
unaffiliated institution, the Administrative Agent shall, with
the consent of the Borrower and the Required Banks, appoint
another Bank to act as a Reference Bank hereunder.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agents and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL. THIS AGREEMENT AND EACH
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW
YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
BORROWER, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and
all prior agreements and understandings, oral or written,
relating to the subject matter hereof.
SECTION 9.10. Confidentiality. In addition to any
confidentiality requirements under applicable law, each of the
Agents and each of the Banks (each a "Bank Party" and,
collectively, the "Bank Parties") agrees that, through and
including the later of (a) the Termination Date and (b) a date
three years from the relevant Bank Party's receipt of the
relevant information, it will take normal and reasonable
precautions so that
(i) all information expressly designated by its
provider as confidential provided to any of them by the
Borrower, any Person on behalf of the Borrower, or by
any other Bank Party on behalf of the Borrower, in
connection with this Agreement or the transactions
contemplated hereby will be held and treated by each
such Bank Party and its respective directors,
Affiliates, officers, agents and employees in
confidence and
(ii) neither it nor any of its respective
directors, Affiliates, officers, agents or employees
shall, without the prior written consent of the
Borrower, use any such information for any purpose or
in any manner other than pursuant to the terms of and
for the purposes contemplated by this Agreement.
Notwithstanding the immediately preceding sentence, any Bank
Party may disclose any such information or portions thereof
(a) that is or becomes publicly available other
than through a breach by such Bank Party of its
obligations hereunder;
(b) that is also provided to such Bank Party by a
Person other than the Borrower not in violation, to the
actual knowledge of such Bank Party, of any duty of
confidentiality;
(c) at the request of any bank regulatory
authority or examiner;
(d) pursuant to subpoena or other court process;
(e) when required by applicable law;
(f) at the written request or the express
direction of any other authorized government agency;
(g) to its independent auditors, counsel and
other professional advisors in connection with their
provision of professional services to such Bank Party;
or
(h) to any (i) Participant or (ii) prospective
Participant or prospective Bank, if such Participant,
prospective Participant or prospective Bank (which
prospective Bank is promptly identified to the
Borrower), prior to any such disclosure, agrees in
writing to keep such information confidential to the
same extent required of the Bank Parties hereunder;
provided that any Bank Party's failure to comply with the
provisions of this Section 9.10 shall not affect the
obligations of the Borrower hereunder.
SECTION 9.11. Severability. Any provision of this
Agreement that is prohibited, unenforceable or not authorized
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the
remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
UNION CARBIDE CORPORATION
By /s/ Thomas D. Jones
Title: Vice President and Treasurer
39 Old Ridgebury Road
Danbury, CT 06817-0001
Telecopy number: (203) 794-5135
Attention: Vice President and Treasurer
Commitments
$59,166,666.67 ABN AMRO BANK N.V.,
NEW YORK BRANCH
as a Co-Agent and a Bank
By /s/ David A. Mandell
Title:Vice President
By /s/ David W. Stack
Title: Corporate Banking Officer
$59,166,666.67 BANK OF AMERICA ILLINOIS,
as a Co-Agent and a Bank
By /s/ Nancy McGaw
Title: Vice President
$59,166,666.67 THE BANK OF NEW YORK,
as a Co-Agent and a Bank
By /s/ Nancy McEwen
Title: Vice President
$59,166,666.67 THE BANK OF NOVA SCOTIA,
as a Co-Agent and a Bank
By /s/ Terry K. Fryett
Title: Vice President
Commitments
$59,166,666.67 BANQUE NATIONALE DE PARIS,
as a Co-Agent and a Bank
By /s/ Sophie Revillard Kaufman
Title: Vice President
By /s/ Eric Vigne
Title: Senior Vice President
$59,166,666.67 CIBC INC.,
as a Co-Agent and a Bank
By /s/ Julia C. Collins
Title: Vice President
$59,166,666.66 CHEMICAL BANK,
as a Bank
By /s/ William Ewing IV
Title: Managing Director
$59,166,666.67 CREDIT SUISSE,
as a Co-Agent and a Bank
By /s/ Kristina Catlin
Title: Associate
By /s/ Lynn Allegaert
Title: Member of Senior
Management
Commitments
$59,166,666.67 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as a Bank
By /s/ James S. Finch
Title: Vice President
$59,166,666.67 NATIONSBANK OF NORTH CAROLINA, N.A.,
as a Co-Agent and a Bank
By /s/ Margaret K. Vandenberg
Title: Senior Vice President
$37,500,000.00 BANCA COMMERCIALE ITALIANA
By /s/ Edward Bermant
Title: First Vice President
By /s/ Julia M. Welch
Title: Assistant Vice President
$37,500,000.00 BARCLAYS BANK PLC
By /s/ J. Onischuk
Title: Associate Director
$37,500,000.00 FUJI BANK LIMITED
By /s/ Yoshihiko Shiotsugu
Title: Vice President & Manager
Commitments
$37,500,000.00 ROYAL BANK OF CANADA
By /s/ Peter D. Steffen
Title: Senior Manager
$37,500,000.00 THE SUMITOMO BANK, LIMITED
By /s/ Yoshinori Kawamura
Title: Joint General Manager
$37,500,000.00 SWISS BANK CORPORATION
By /s/ Colin T. Taylor
Title: Director Merchant Banking
By /s/ Paul D. Stendig
Title: Associate Director
Merchant Banking
$37,500,000.00 TORONTO DOMINION (NEW YORK), INC.
By /s/ Jano Mott
Title: Vice President
$20,833,333.33 COMMERZBANK AG
NEW YORK BRANCH
By /s/ Werner Niemeyer
Title: Vice President
By /s/ Michael D. Hintz
Title: Vice President
Commitments
$20,833,333.33 GENERALE BANK
By /s/ Alain Verschueren
Title: Senior Vice President
Corporate
By /s/ Hans U. Neukomm
Title: General Manager
$20,833,333.33 THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By /s/ Jeffry S. Dykes
Title: Vice President
$20,833,333.3 INSTITUTO BANCARIO SAN PAOLO DI
TORINO, S.P.A.
By /s/ William J. DeAngelo
Title: First Vice President
By /s/ Robert S. Wurster
Title: First Vice President
$20,833,333.3 MELLON BANK, N.A.
By /s/ James S. Adelsheim
Title: Vice President
$20,833,333.33 NATIONAL BANK OF KUWAIT
By /s/ Phillip M, Johnson
Title: Executive Manager
By /s/ George Y. Nasra
Title: General Manager
Commitments
$20,833,333.33 SOCIETE GENERALE
By /s/ Philippe de Rozieres
Title: Vice President
_________________
Total Commitments:
$1,000,000,000.00
=================
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Documentation Agent
By /s/ James S. Finch
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: James Finch
Telex number: 177615
Telecopy number: (212) 648-5014
CHEMICAL BANK, as Administrative Agent
By /s/ William Ewing IV
Title: Managing Director
270 Park Avenue
New York, New York 10017-2070
Attention: Terry Kennon
Telecopy number: (212) 270-7138
CHEMICAL BANK, as Auction Agent
By /s/ William Ewing IV
Title: Managing Director
270 Park Avenue
New York, New York 10017-2070
Attention: Terry Kennon
Telecopy number: (212) 270-7138
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin", "Commitment
Fee Rate" and "Facility Fee Rate" for any day are the
respective rates per annum set forth below in the applicable
row under the column corresponding to the Pricing Level that
applies on such day:
Status Level I Level II Level III Level IV Level V
Euro-Dollar
Margin 0.2250% 0.2750% 0.3250% 0.4000% 0.4500%
CD Margin 0.3500% 0.4000% 0.4500% 0.5250% 0.5750%
Commitment
Fee Rate 0.0200% 0.0150% 0.0250% 0.0500% 0.0625%
Facility
Fee Rate 0.1000% 0.1250% 0.1250% 0.1750% 0.2500%
For purposes of this Schedule, the following terms
have the following meanings:
"Level I Pricing" applies on any day if on such day
the Borrower's long-term debt securities (whether or not
outstanding at such date) are rated either A- or higher (or
the equivalent) by S&P or A3 or higher (or the equivalent) by
Moody's.
"Level II Pricing" applies on any day if on such day
(i) the Borrower's long-term debt securities (whether or not
outstanding at such date) are rated either BBB+ (or the
equivalent) by S&P or Baa1 (or the equivalent) by Moody's and
(ii) Level I Pricing does not apply.
"Level III Pricing" applies on any day if on such
day (i) the Borrower's long-term debt securities (whether or
not outstanding at such date) are rated either BBB (or the
equivalent) by S&P or Baa2 (or the equivalent) by Moody's and
(ii) no higher Pricing Level applies.
"Level IV Pricing" applies on any day if on such day
the Borrower's long-term debt securities (whether or not
outstanding at such date) are rated BBB- (or the equivalent)
by S&P and Baa3 (or the equivalent) by Moody's.
"Level V Pricing" applies on any day if no higher
Pricing Level applies on such day.
"Moody's" means Moody's Investors Service, Inc., a
Delaware corporation.
"Pricing Level" refers to the determination of which
of Level I Pricing, Level II Pricing, Level III Pricing, Level
IV Pricing or Level V Pricing applies on any day. Level I
Pricing is the highest Pricing Level and Level V Pricing the
lowest.
"S&P" means Standard & Poor's Ratings Group.
The ratings to be utilized for purposes of this Pricing
Schedule are those assigned to the senior unsecured long-term
debt securities of the Borrower without third-party credit
enhancement, and any rating assigned to any other debt
security of the Borrower shall be disregarded. The rating in
effect on any day is the rating in effect at the close of
business on such day.
If either Moody's or S&P is merged or consolidated with
another Person or if the ratings business of Moody's or S&P is
acquired by another Person (the entity conducting such ratings
business after any such merger, consolidation or acquisition
being herein called the "Successor"), the ratings provided by
the Successor shall be used for purposes of this Pricing
Schedule unless and until the Borrower and the Required Banks
shall, by notice to the Administrative Agent, designate a
different rating agency to provide such ratings, in which case
the ratings provided by the rating agency so designated shall
thereafter replace those provided by the Successor for
purposes of this Pricing Schedule.
EXHIBIT A
NOTE
New York, New York
, 199_
For value received, UNION CARBIDE CORPORATION, a New
York corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Credit Agreement referred
to below on the last day of the Interest Period relating to
such Loan. The Borrower promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All
such payments of principal and interest shall be made in
lawful money of the United States in Federal or other
immediately available funds at the office of Chemical Bank,
270 Park Avenue, New York, New York 10017-2070.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer
hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding
may be endorsed by the Bank on the schedule attached hereto,
or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any
such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit
Agreement.
This note is one of the Notes referred to in the
$1,000,000,000 Credit Agreement dated as of November 4, 1994
among the Borrower, the Banks party thereto, the Co-Agents
party thereto, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Chemical Bank, as Administrative
Agent and Auction Agent (as the same may be amended from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is
made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
UNION CARBIDE CORPORATION
By__________________________
Name:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
______________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Chemical Bank (the "Auction Agent")
From: Union Carbide Corporation
Re: $1,000,000,000 Credit Agreement dated as of
November 4, 1994 (as the same may be amended from
time to time, the "Credit Agreement") among the
Borrower, the Banks party thereto, the Co-Agents
party thereto and the Agents (as defined in the
Credit Agreement)
We hereby give notice pursuant to Section 2.03 of
the Credit Agreement that we request Money Market Quotes for
the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount* Interest Period**
$
Such Money Market Quotes should offer a Money Market
[LIBOR Margin] [Absolute Rate]. [The applicable base rate is
the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them
in the Credit Agreement.
UNION CARBIDE CORPORATION
By________________________
Name:
Title:
* Amount must be $25,000,000 or a larger multiple of
$5,000,000.
** Not less than one month (LIBOR Auction) or not less than 7
days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to Union Carbide Corporation (the
"Borrower")
Pursuant to Section 2.03 of the $1,000,000,000
Credit Agreement dated as of November 4, 1994 (as the same may
be amended from time to time, the "Credit Agreement") among
the Borrower, the Banks parties thereto, the Co-Agents party
thereto, the undersigned, as Auction Agent, and the other
Agents (as defined therein), we are pleased on behalf of the
Borrower to invite you to submit Money Market Quotes to the
Borrower for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[LIBOR Margin] [Absolute Rate]. [The applicable base rate is
the London Interbank Offered Rate.]
Please respond to this invitation by no later than
[12:00 Noon] [9:30 A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them
in the Credit Agreement.
CHEMICAL BANK
By____________________________
Authorized Officer
EXHIBIT D
Form of Money Market Quote
CHEMICAL BANK,
as Auction Agent
[Address]
Attention:
Re: Money Market Quote to
Union Carbide Corporation (the "Borrower")
In response to your invitation on behalf of the
Borrower dated __________ we hereby make the following Money
Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________1
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest Money Market
Amount2 Period3 [LIBOR Margin4] [Absolute Rate5]
$
$
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not
exceed $____________.]2
__________
1 As specified in the related Invitation.
2 Principal amount bid for each Interest Period may not
exceed principal amount requested. Specify aggregate
limitation if the sum of the individual offers exceeds the
amount the Bank is willing to lend. Bids must be made for
$5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable
conditions set forth in the $1,000,000,000 Credit Agreement
dated as of November 4, 1994 (as the same may be amended from
time to time, the "Credit Agreement") among the Borrower, the
Banks party thereto, the Co-Agents party thereto, yourselves,
as Auction Agent, and the other Agents (as defined therein),
irrevocably obligates us to make the Money Market Loan(s) for
which any offer(s) are accepted, in whole or in part.
Terms used herein have the meanings assigned to them
in the Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
3 [Not less than one month and not more than 12 months] [Not
less than seven days and not more than 180 days], as specified
in the related Invitation. No more than five bids are
permitted for each Interest Period.
4 Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/10,000th of 1%) and
specify whether "PLUS" or "MINUS".
5 Specify rate of interest per annum (rounded to the nearest
1/10,000th of 1%).
EXHIBIT E
OPINION OF
COUNSEL FOR THE
BORROWER
[Effective Date]
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I have acted as counsel to Union Carbide Corporation
(the "Borrower") in connection with the $1,000,000,000 Credit
Agreement dated as of November 4, 1994 (the "Credit
Agreement") among the Borrower, the Banks party thereto, the
Co-Agents party thereto, Morgan Guaranty Trust Company of New
York, as Documentation Agent, and Chemical Bank, as
Administrative Agent and Auction Agent, and I am rendering
this opinion pursuant to Section 3.01(c) of the Credit
Agreement. Capitalized terms used herein without definition
have the same meanings as in the Credit Agreement.
I have examined originals or copies, certified or
otherwise identified to my satisfaction as being true copies,
of the Credit Agreement, the Notes, certain information and
documents provided to me by responsible officers or employees
of the Borrower and such other documents, certificates and
corporate or other records as I have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In my examination I have assumed the genuineness of
all signatures (other than signatures on behalf of the
Borrower), the authenticity of all documents submitted to me
as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies
and the authenticity of the originals of such copies.
No opinion is expressed herein as to any matters
involving or governed by the laws of any jurisdiction other
than the laws of the State of New York, the laws of the State
of Connecticut and the federal laws of the United States of
America. Without limiting the foregoing, I express no opinion
as to the effect (if any) of any law of any jurisdiction
(except the States of New York and Connecticut) in which any
Bank is located which limits the rate of interest that such
Bank may charge. I have investigated such questions of law
and investigated such questions of fact for the purpose of
rendering the opinions expressed herein as I have deemed
necessary or appropriate.
On the basis of and subject to the foregoing, and to
the qualifications set forth below, I am of the opinion that:
1. The Borrower is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of New York and is duly
qualified as a foreign corporation to do business and
in good standing under the laws of the State of
Connecticut.
2. The Borrower has the corporate power and
corporate authority to enter into the Credit Agreement
and the Notes and to consummate the transactions
provided for therein.
3. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes and the
consummation by the Borrower of the transactions
provided for therein have been duly authorized by all
requisite corporate action on the part of the Borrower.
4. The Credit Agreement and the Notes have been
duly executed and delivered by the Borrower and are
valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with
their respective terms, except as (i) limited by
bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or
limiting creditors' rights generally, (ii) limited by
equitable principles of general applicability and the
discretion of the court before which any proceeding
thereafter may be brought in applying such principles
and (iii) the enforceability of indemnification against
securities law liabilities may be limited by applicable
federal and state securities laws and general
principles of public policy. Additionally, I express
no opinion as to the validity of the provisions of
Section 9.08 of the Agreement providing for a waiver of
trial by jury.
5. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes will not
(i) constitute a violation of any law or regulation of
the State of New York or Connecticut or the United
States of America which is binding on the Borrower,
(ii) violate the certificate of incorporation or
by-laws of the Borrower or (iii) result in a breach of,
or constitute a default under, or require any consent
under, any indenture or other agreement or instrument
known to me (such agreements being listed in Schedule 1
hereto) evidencing or governing indebtedness for
borrowed money of the Borrower.
6. No consent or approval of, or action by or
filing with, any court or administrative or
governmental body which has not been obtained, taken or
made is required under the laws of the State of New
York or Connecticut or the United States of America for
the Borrower to execute and deliver the Credit
Agreement and the Notes and to consummate the
transactions provided for therein.
7. To the best of my knowledge, there is no
action, suit or proceeding pending or threatened
against or affecting the Borrower or any of its
Restricted Subsidiaries, before any court or arbitrator
or any governmental body, agency or official in which
there is a reasonable likelihood of an adverse decision
which could materially adversely affect the present or
prospective ability of the Borrower to perform its
obligations under the Credit Agreement or any Note or
which draws into question the validity of the Credit
Agreement or the Notes.
In giving the opinions set forth in paragraphs 1 and
2 above, I have relied upon telegraphic or oral confirmations
as to the existence and good standing of the Borrower.
This opinion is rendered solely to you in connection
with the above matter. This opinion may not be relied upon by
you for any other purpose or relied upon by any other Person
(except for deliveries required in accordance with applicable
law) without my prior written consent.
Very truly yours,
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENTS
[Effective Date]
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
$1,000,000,000 Credit Agreement (the "Credit Agreement") dated
as of November 4, 1994 among Union Carbide Corporation, a New
York corporation (the "Borrower"), the Banks party thereto,
the Co-Agents party thereto, Morgan Guaranty Trust Company of
New York, as Documentation Agent, and Chemical Bank, as
Administrative Agent and Auction Agent, and have acted as
special counsel for the Agents for the purpose of rendering
this opinion pursuant to Section 3.01(d) of the Credit
Agreement. Terms defined in the Credit Agreement are used
herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by
all necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms except as limited by
(i) bankruptcy, insolvency or other laws affecting creditors'
rights generally and (ii) equitable principles of general
applicability.
We are members of the Bar of the State of New York
and the foregoing opinion is limited to the laws of the State
of New York and the federal laws of the United States of
America. In giving the foregoing opinion, we express no
opinion as to the effect (if any) of any law of any
jurisdiction (except the State of New York) in which any Bank
is located which limits the rate of interest that such Bank
may charge or collect.
This opinion is rendered solely to you in connection
with the above matter. This opinion may not be relied upon by
you for any other purpose or relied upon by any other person
(except for deliveries required in accordance with applicable
law) without our prior written consent.
Very truly yours,
EXHIBIT G
ADMINISTRATIVE QUESTIONNAIRE
______________________________________________________________
Please provide the following details:
I. Information to be included in the Credit Agreement:
(A) BANK NAME:
_________________________________________________
(B) DOMESTIC LENDING OFFICE NAME AND ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(C) EURODOLLAR LENDING OFFICE NAME AND ADDRESS
_________________________________________________
_________________________________________________
_________________________________________________
TELEX NUMBER/ANSWERBACK:
__________________________________________________
TELECOPIER/FAX NUMBER:
__________________________________________________
(D) MONEY MARKET LENDING OFFICE:
__________________________________________________
__________________________________________________
__________________________________________________
TELEX NUMBER/ANSWERBACK:
__________________________________________________
TELECOPIER/FAX NUMBER:
__________________________________________________
II. Information for the administration of the facility:
(A) Where execution copies should be sent:
NAME:
_________________________________________________
ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
(B) Where conformed copies should be sent:
NAME:
_________________________________________________
ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
(C) FOR CREDIT MATTERS:
CONTACT NAMES/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(D) FOR ADMINISTRATIVE/OPERATIONS MATTERS:
CONTACT NAMES/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(E) FOR MONEY MARKET LOANS:
PRIMARY CONTACT NAME/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
SECONDARY CONTACT NAME/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(F) PAYMENT INSTRUCTIONS (Please specify where funds,
i.e. interest, commitment fees, repayment of loans,
should be wired):
________________________________________________
________________________________________________
________________________________________________
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among
[ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
UNION CARBIDE CORPORATION (the "Borrower")* and CHEMICAL BANK,
as the Administrative Agent (the "Administrative Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement
(the "Agreement") relates to the $1,000,000,000 Credit
Agreement dated as of November 4, 1994 among the Borrower, the
Assignor and the other Banks party thereto, as Banks, the Co-
Agents party thereto, the Administrative Agent and the other
Agents (as defined therein) (as the same may be amended from
time to time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Committed Loans to the
Borrower in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Committed Loans made to the Borrower by the
Assignor under the Credit Agreement in the aggregate principal
amount of $__________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder
in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding
Committed Loans, and the Assignee proposes to accept
assignment of such rights and assume the corresponding
obligations from the Assignor on such terms;
* If the Borrower's consent to this assignment is not
required by Section 9.06(c) of the Credit Agreement,
references to the Borrower as a party hereto and Section 4
hereof should be deleted.
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties hereto
agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein have the respective meanings set
forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor
under the Credit Agreement to the extent of the Assigned
Amount, and the Assignee hereby accepts such assignment from
the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the
Assigned Amount, including the purchase from the Assignor of
the corresponding portion of the principal amount of the
Committed Loans made by the Assignor outstanding at the date
hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee, the Borrower and the Administrative
Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall,
as of the date hereof, succeed to the rights and be obligated
to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of
the date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to
the extent such obligations have been assumed by the Assignee.
The assignment provided for herein shall be without recourse
to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $_________.** It is
understood that commitment and/or facility fees accrued to the
date hereof are for the account of the Assignor and such fees
accruing from and including the date hereof with respect to
the Assigned Amount are for the account of the Assignee. Each
of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for
** Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by
the Assignor to the Assignee. It may be preferable in an
appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
the account of the other party hereto, it shall receive the
same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same
to such other party.
SECTION 4. Consent of the Borrower. This Agreement
is conditioned upon the consent of the Borrower pursuant to
Section 9.06(c) of the Credit Agreement. The execution of
this Agreement by the Borrower is evidence of this consent.
Pursuant to Section 9.06(c) the Borrower agrees to execute and
deliver Notes payable to the order of the Assignee (and, if
necessary, to the Assignor) to evidence the assignment and
assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and
shall have no responsibility with respect to, the solvency,
financial condition, or statements of the Borrower, or the
validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee
acknowledges that it has, independently and without reliance
on the Assignor, any other Bank, any Co-Agent or any Agent,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be responsible
for making its own independent appraisal of the business,
affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 7. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By __________________________________
Name:
Title:
[ASSIGNEE]
By __________________________________
Name:
Title:
UNION CARBIDE CORPORATION
By __________________________________
Name:
Title:
Acknowledged this ____ day of ____
by Chemical Bank, as Administra-
tive Agent
By________________________________
Name:
Title
EXHIBIT 10.1.2
$200,000,000
CREDIT AGREEMENT
dated as of
November 4, 1994
among
Union Carbide Corporation,
The Banks Party Hereto,
The Co-Agents Party Hereto,
Morgan Guaranty Trust Company of New York,
as Documentation Agent
and
Chemical Bank,
as Administrative Agent and Auction Agent
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions............................... 1
SECTION 1.02. Accounting Terms and
Determinations.......................... 18
SECTION 1.03. Types of Borrowings....................... 18
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend....................... 19
SECTION 2.02. Notice of Committed
Borrowings.............................. 20
SECTION 2.03. Money Market Borrowings................... 21
SECTION 2.04. Notice to Banks; Funding of
Loans................................... 26
SECTION 2.05. Notes..................................... 27
SECTION 2.06. Maturity of Loans......................... 28
SECTION 2.07. Interest Rates............................ 28
SECTION 2.08. Facility Fees............................. 31
SECTION 2.09. Optional Termination or
Reduction of Commitments................ 32
SECTION 2.10. Method of Electing Interest
Rates................................... 33
SECTION 2.11. Prepayments............................... 34
SECTION 2.12. General Provisions as to
Payments................................ 35
SECTION 2.13. Funding Losses............................ 36
SECTION 2.14. Computation of Interest and
Fees.................................... 36
SECTION 2.15. Withholding Tax Exemption................. 37
SECTION 2.16. Regulation D Compensation................. 37
_______________
* The Table of Contents is not a part of this Agreement.
Page
SECTION 2.17. Judgment Currency......................... 38
SECTION 2.18. Replacement of this Credit Facility....... 39
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness............................. 40
SECTION 3.02. Borrowings................................ 42
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and
Power................................... 43
SECTION 4.02. Corporate and Governmental
Authorization; No
Contravention........................... 43
SECTION 4.03. Binding Effect............................ 43
SECTION 4.04. Financial Information..................... 43
SECTION 4.05. Litigation................................ 44
SECTION 4.06. Compliance with ERISA..................... 44
SECTION 4.07. Environmental Matters..................... 45
SECTION 4.08. Restricted Subsidiaries................... 45
SECTION 4.09. Not an Investment Company................. 45
SECTION 4.10. Disclosure................................ 45
ARTICLE V
COVENANTS
SECTION 5.01. Information............................... 46
SECTION 5.02. Maintenance of Property;
Insurance............................... 49
SECTION 5.03. Restricted Subsidiaries................... 50
SECTION 5.04. Negative Pledge........................... 51
SECTION 5.05. Limitation on Debt of
Subsidiaries............................ 52
SECTION 5.06. Consolidations, Mergers and
Sales of Assets......................... 53
SECTION 5.07. Minimum Consolidated
Tangible Net Worth...................... 53
SECTION 5.08. Leverage Ratio............................ 54
Page
SECTION 5.09. Interest Coverage Ratio................... 54
SECTION 5.10. Use of Proceeds........................... 54
SECTION 5.11. Payments from Domestic
Restricted Subsidiaries................. 54
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default......................... 54
SECTION 6.02. Notice of Default......................... 58
ARTICLE VII
THE AGENTS AND CO-AGENTS
SECTION 7.01. Appointment and
Authorization........................... 58
SECTION 7.02. Agents and Affiliates..................... 58
SECTION 7.03. Action by Agents.......................... 58
SECTION 7.04. Consultation with Experts................. 58
SECTION 7.05. Liability of Agents....................... 59
SECTION 7.06. Indemnification........................... 59
SECTION 7.07. Credit Decision........................... 59
SECTION 7.08. Successor Agents.......................... 60
SECTION 7.09. Distribution of Information............... 60
SECTION 7.10. Co-Agents................................. 60
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining
Interest Rate Inadequate
or Unfair............................... 60
SECTION 8.02. Illegality................................ 61
SECTION 8.03. Increased Cost and Reduced
Return.................................. 62
SECTION 8.04. Base Rate Loans Substituted
for Affected Fixed Rate
Loans................................... 65
Page
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices................................... 66
SECTION 9.02. No Waivers................................ 66
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification......................... 66
SECTION 9.04. Sharing of SetOffs........................ 67
SECTION 9.05. Amendments and Waivers.................... 68
SECTION 9.06. Successors and Assigns.................... 68
SECTION 9.07. Collateral................................ 71
SECTION 9.08. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER
OF JURY TRIAL...... 71
SECTION 9.09. Counterparts; Integration................. 71
SECTION 9.10. Confidentiality........................... 72
SECTION 9.11. Severability.............................. 73
Pricing Schedule
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the Agents
Exhibit G - Administrative Questionnaire
Exhibit H - Assignment and Assumption Agreement
CREDIT AGREEMENT
AGREEMENT dated as of November 4, 1994 among UNION
CARBIDE CORPORATION, the BANKS party hereto, the CO-AGENTS party
hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Documentation Agent, and CHEMICAL BANK, as Administrative Agent
and Auction Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as
used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of Money
Market Quotes setting forth Money Market Absolute Rates pursuant
to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section
2.07(b).
"Adjusted Consolidated Debt" means at any date the
consolidated Debt of the Borrower and its Consolidated
Subsidiaries determined as of such date, excluding
(i) Debt of any Consolidated Kuwait Joint Venture
(including its obligation under any Guarantee by it of
Debt of any other Kuwait Joint Venture) so long as such
Debt (including any such obligation under a Guarantee)
is not Guaranteed by the Borrower or any other
Consolidated Subsidiary (except a Consolidated Kuwait
Joint Venture),
(ii) the Borrower's Kuwait Completion Guarantees
and the Debt of the Kuwait Joint Ventures Guaranteed
pursuant thereto, but only to the extent that the
aggregate amount of Debt Guaranteed by the Borrower's
Kuwait Completion Guarantees does not exceed
$650,000,000 and
(iii) Excluded Working Capital Financings.
"Administrative Agent" means Chemical Bank in its
capacity as Administrative Agent for the Banks hereunder, and
its successors in such capacity.
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in substantially the
form of Exhibit G hereto submitted to the Administrative Agent
(which shall promptly following receipt thereof give a copy to
the Borrower and the Documentation Agent) duly completed by
such Bank.
"Affiliate" means, with respect to any Person,
(i) any other Person that directly, or indirectly
through one or more intermediaries, controls such
Person (a "Controlling Person"), or
(ii) any other Person which is controlled by or
under common control with a Controlling Person.
As used in this definition, the term "control" means, with
respect to any Person, possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agents" means the Administrative Agent, the Auction
Agent and the Documentation Agent, and "Agent" means any of the
foregoing.
"Applicable Lending Office" means, with respect to
any Bank,
(i) in the case of its Domestic Loans, its
Domestic Lending Office,
(ii) in the case of its Euro-Dollar Loans, its
Euro-Dollar Lending Office and
(iii) in the case of its Money Market Loans, its
Money Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Auction Agent" means Chemical Bank in its capacity
as Auction Agent for the Banks hereunder, and its successors in
such capacity.
"Bank" means each lender listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Bank Parties" has the meaning set forth in Section
9.10.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Reference Rate for such day or
(ii) the sum of 1/2 of 1% plus the Effective Federal Funds Rate
for such day.
"Base Rate Loan" means (i) a Committed Loan which
bears interest at the Base Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or the provisions of Article VIII or (ii) an overdue
amount which was a Base Rate Loan immediately before it became
overdue.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which
is not a Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.
"Borrower" means Union Carbide Corporation, a New
York corporation, and its successors.
"Borrower's Kuwait Completion Guarantees" means
completion guarantees by the Borrower with respect to the
Kuwait Project.
"Borrowing" has the meaning set forth in Section
1.03.
"CD Base Rate" has the meaning set forth in Section
2.07(b).
"CD Loan" means (i) a Committed Loan which bears
interest at a CD Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election or (ii)
an overdue amount which was a CD Loan immediately before it
became overdue.
"CD Margin" has the meaning set forth in Section
2.07(b).
"CD Rate" means a rate of interest determined
pursuant to Section 2.07(b) on the basis of an Adjusted CD
Rate.
"CD Reference Banks" means Chemical Bank, Credit
Suisse and Morgan Guaranty Trust Company of New York and each
such other Bank as may be appointed pursuant to Section
9.06(g).
"Co-Agents" means ABN AMRO Bank N.V., Bank of America
Illinois, The Bank of New York, The Bank of Nova Scotia, Banque
Nationale de Paris, CIBC Inc., Credit Suisse and NationsBank of
North Carolina, N.A., each in its capacity as one of the co-
agents for the Banks hereunder.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof (or, in the case of an Assignee, the
portion of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 9.06(c)), in each case as such
amount may be reduced from time to time pursuant to Sections
2.01(a) and 2.09 or changed as a result of an assignment
pursuant to Section 9.06(c).
"Committed Loan" means a revolving credit loan made
by a Bank pursuant to Section 2.01(a) or a term loan made by a
Bank pursuant to Section 2.01(b); provided that, if any such
loan or loans are combined or subdivided pursuant to a Notice
of Interest Rate Election, the term "Committed Loan" shall
refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be.
"Consolidated Kuwait Joint Venture" means at any date
any Kuwait Joint Venture that is a Consolidated Subsidiary at
such date.
"Consolidated Net Income" for any period means the
consolidated net income of the Borrower and its Consolidated
Subsidiaries for such period.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any date
the consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries minus consolidated Intangible Assets,
all determined as of such date. For purposes of this
definition "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated stockholders'
equity) of
(i) all write-ups (other than write-ups resulting
from foreign currency translations and write-ups of
assets of a going concern business made within twelve
months after the acquisition of such business)
subsequent to June 30, 1994 in the book value of any
asset owned by the Borrower or a Consolidated
Subsidiary,
(ii) all investments of the Borrower and its
Consolidated Subsidiaries in unconsolidated
Subsidiaries, and
(iii) all goodwill, patents, trademarks, service
marks, trade names, copyrights, organization or
developmental expenses and other intangible assets.
"Debt" of any Person means at any date, without
duplication, to the extent required in accordance with
generally accepted accounting principles to be included in the
financial statements of such Person or the footnotes thereto,
(i) all obligations of such Person for borrowed
money,
(ii) all obligations of such Person evidenced by
bonds, debentures, notes or other substantially similar
instruments containing an unconditional promise to pay
a sum certain,
(iii) all obligations of such Person for
installment purchase transactions involving the
purchase of property or services over $5,000,000 for
any particular transaction, except trade accounts
payable and expense accruals arising in the ordinary
course of business,
(iv) all obligations of such Person as lessee
which are capitalized in accordance with generally
accepted accounting principles,
(v) all non-contingent obligations of such Person
to reimburse any bank or other Person in respect of
amounts paid or to be paid under a letter of credit,
and
(vi) all obligations of others of the types
described in clauses (i) through (v) above that are
Guaranteed by such Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default; provided that an event or condition
covered by clause (f) of Section 6.01 (and not covered by any
other clause of said Section) shall not constitute a Default
unless and until the Required Banks shall have made the
determination specified in such clause (f) and the
Administrative Agent shall have given the Borrower written
notice of such determination.
"Designated Subsidiary" has the meaning set forth in
Section 5.03(c).
"Documentation Agent" means Morgan Guaranty Trust
Company of New York, in its capacity as documentation agent for
the Banks hereunder, and its successors in such capacity.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
"Domestic Consolidated Subsidiary" means a
Consolidated Subsidiary organized and existing under the laws
of the United States of America, any State thereof or the
District of Columbia.
"Domestic Lending Office" means, as to each Bank, its
office identified in its Administrative Questionnaire as its
Domestic Lending Office or such other office of such Bank as
such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Administrative Agent;
provided that any Bank may so designate separate Domestic
Lending Offices for its Base Rate Loans, on the one hand, and
its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the
context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or
both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Effective Federal Funds Rate" means the weighted
average of the rates on overnight federal funds transactions
between members of the Federal Reserve System arranged by
federal funds brokers as published daily (or, if such day is
not a Domestic Business Day, for the immediately preceding
Domestic Business Day) by the Federal Reserve Bank of New York
in the Composite Closing Quotations for U.S. Government
Securities (or any successor quotations).
"Environmental Laws" means all applicable federal,
state, local and foreign laws, ordinances, codes, regulations,
orders and requirements relating to the protection of, or
discharge of materials into, the environment, including,
without limitation, the Resource Conservation and Recovery Act
of 1976, as amended; the Comprehensive Environmental Response,
Compensation and Liability Act; the Toxic Substance Control
Act; the Clean Water Act; the Clean Air Act; and the Safe
Drinking Water Act.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Restricted
Subsidiary and all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower or any Restricted Subsidiary, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Eurocurrency Reserve Ratio" has the meaning set
forth in Section 2.16.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in Dollar deposits)
in London.
"Euro-Dollar Lending Office" means, as to each Bank,
its office or branch located at its address identified in its
Administrative Questionnaire as its Euro-Dollar Lending Office
or such other office or branch of such Bank as it may hereafter
designate as its Euro-Dollar Lending Office by notice to the
Borrower and the Administrative Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which
bears interest at a Euro-Dollar Rate pursuant to the applicable
Notice of Committed Borrowing or Notice of Interest Rate
Election or (ii) an overdue amount which was a Euro-Dollar Loan
immediately before it became overdue.
"Euro-Dollar Margin" has the meaning set forth in
Section 2.07(c).
"Euro-Dollar Rate" means a rate of interest
determined pursuant to Section 2.07(c) on the basis of a London
Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal
London offices of Chemical Bank, Credit Suisse and Morgan
Guaranty Trust Company of New York, and each such other Bank as
may be appointed pursuant to Section 9.06(g).
"Event of Default" has the meaning set forth in
Section 6.01.
"Excluded Working Capital Financings" means
obligations of the Borrower or any of its Consolidated
Subsidiaries (other than a Consolidated Kuwait Joint Venture),
up to an aggregate outstanding amount of $150,000,000, incurred
in connection with working capital financings.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR Loans
bearing interest at the Base Rate pursuant to Section 8.01) or
any combination of the foregoing, in each case that are not
overdue.
"Foreign Subsidiary" means a Subsidiary other than a
Subsidiary organized and existing under the laws of the United
States of America, any State thereof or the District of
Columbia.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Revolving Credit Loans which are Base
Rate Loans at such time, (ii) all Term Loans which are Base
Rate Loans at such time, (iii) all Revolving Credit Loans which
are Fixed Rate Loans of the same type having the same
Interest Period at such time or (iv) all Term Loans which are
Fixed Rate Loans of the same type having the same Interest
Period at such time; provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan
pursuant to Section 8.02 or 8.04, such Loan shall be included
in the same Group or Groups of Loans from time to time as it
would have been in if it had not been so converted or made.
"Guarantee" by any Person means, without duplication,
any obligation, contingent or otherwise, of such Person
directly or indirectly guaranteeing any Debt of any other
Person, and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of
such Person:
(i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise); or
(ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part);
provided that the term Guarantee shall not include:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) obligations that are not required in
accordance with generally accepted accounting
principles to be included in the financial statements
of such Person or the footnotes thereto;
(c) "unconditional purchase obligations"
(including take-or-pay contracts) as defined in and as
required to be disclosed pursuant to Statement of
Financial Accounting Standards No. 47 and the related
interpretations, as the same may be amended from time
to time, but only to the extent the aggregate amount of
all such obligations of the Borrower and its
Consolidated Subsidiaries (other than amounts reflected
on the balance sheet of the Borrower and its
Consolidated Subsidiaries) is equal to or less than 15%
of the net sales of the Borrower and its Consolidated
Subsidiaries as set forth in their Consolidated
Statement of Income, determined as of the end of the
preceding quarter for the twelve months then ending;
(d) any obligation required to be disclosed
pursuant to the Statement of Financial Accounting
Standards No. 105, Disclosure of Information about
Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit
Risk, issued March 1990, and the related
interpretations, as the same may be amended from time
to time (except to the extent any such obligation is
required to be reflected on the balance sheet of the
Borrower and its Consolidated Subsidiaries or to be
disclosed pursuant to Statement of Financial Accounting
Standards No. 5 and related interpretations, as the
same may be amended from time to time); or
(e) any difference between the fair market value
and the book value of any obligation that is required
to be disclosed pursuant to the Statement of Financial
Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments, issued December 1991,
and the related interpretations, as the same may be
amended from time to time.
The term "Guarantee" used as a verb has a corresponding
meaning.
"Interest Coverage Ratio" means, with respect to the
Borrower and its Consolidated Subsidiaries, for any period, the
ratio of
(x) the sum of (i) Consolidated Net Income,
excluding any extraordinary items of gain or loss,
(ii) consolidated interest expense, (iii) consolidated
operating lease expense, (iv) consolidated provision
for income taxes and (v) Restructuring Charges (to the
extent deducted in determining the amount specified in
(i) above) that the Borrower elects (by so stating in a
certificate delivered pursuant to Section 5.01(c)) to
add back to such Consolidated Net Income; provided that
the aggregate amount of all Restructuring Charges added
back pursuant to this clause (v) shall not exceed
$100,000,000 on a cumulative basis after June 30, 1994
to
(y) the sum of (i) consolidated interest expense
and (ii) consolidated operating lease expense.
The amounts referred to in clauses (x)(ii), (x)(iii), (x)(iv),
(y)(i) and (y)(ii) of this definition shall be adjusted to
exclude the interest expense, operating lease expense and
income taxes of Consolidated Kuwait Joint Ventures, if any. In
addition, the consolidated interest expense referred to in
clauses (x)(ii) and (y)(i) of this definition, shall be
adjusted to exclude interest on Excluded Working Capital
Financings.
"Interest Period" means: (1) with respect to each
Euro-Dollar Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or the date
specified in the applicable Notice of Interest Rate Election
and ending one, two, three or six months thereafter, as the
Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period with respect to a
Revolving Credit Loan which would otherwise end after
the Revolving Credit Termination Date shall end on the
Revolving Credit Termination Date, and any Interest
Period with respect to a Term Loan which would
otherwise end after the Term Loan Maturity Date shall
end on the Term Loan Maturity Date.
(2) with respect to each CD Loan, a period commencing on the
date of borrowing specified in the applicable Notice of
Borrowing or the date specified in the applicable Notice of
Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable notice;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period with respect to a
Revolving Credit Loan which would otherwise end after
the Revolving Credit Termination Date shall end on the
Revolving Credit Termination Date, and any Interest
Period with respect to a Term Loan which would
otherwise end after the Term Loan Maturity Date shall
end on the Term Loan Maturity Date.
(3) with respect to each Money Market LIBOR Loan, the period
commencing on the date of borrowing specified in the applicable
Notice of Borrowing and ending such whole number of months
thereafter (but not more than 12 months) as the Borrower may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Revolving Credit Termination Date shall end
on the Revolving Credit Termination Date.
(4) with respect to each Money Market Absolute Rate Loan, the
period commencing on the date of borrowing specified in the
applicable Notice of Borrowing and ending such number of days
thereafter (but not less than seven nor more than 180 days) as
the Borrower may elect in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Revolving Credit Termination Date shall end
on the Revolving Credit Termination Date.
Notwithstanding the foregoing, all Interest Periods
at any one time outstanding hereunder shall end on not more
than 25 different dates, and the duration of any Interest
Period which would otherwise exceed such limitation shall be
adjusted so as to coincide with the remaining term of such
other then current Interest Period as the Borrower may specify
in the related Notice of Borrowing.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Invitation for Money Market Quotes" means an
invitation by the Auction Agent on behalf of the Borrower to
each Bank to submit Money Market Quotes offering to make Money
Market Loans in accordance with Section 2.03, substantially in
the form of Exhibit C hereto.
"Kuwait Joint Ventures" means the joint ventures to
which the Borrower and/or any of its Subsidiaries is or is to
be a party and formed or to be formed to build and operate the
Kuwait Project or to market products produced thereby.
"Kuwait Project" means the proposed petrochemical
complex in Kuwait disclosed in the Borrower's 1993 annual
report to stockholders.
"Leverage Ratio" means the ratio of (x) Adjusted
Consolidated Debt to (y) the sum of (i) Consolidated Tangible
Net Worth plus (ii) Restructuring Charges taken after June 30,
1994 up to a maximum cumulative amount of $100,000,000.
"LIBOR Auction" means a solicitation of Money Market
Quotes setting forth Money Market LIBOR Margins pursuant to
Section 2.03.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or
a Money Market Loan and "Loans" means Domestic Loans or
Euro-Dollar Loans or Money Market Loans or any combination of
the foregoing.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.07(c).
"Material Debt" means at any time Adjusted
Consolidated Debt (other than the Debt evidenced by the Notes)
and/or Excluded Working Capital Financings (to the extent that
they constitute Debt), having an aggregate principal amount
outstanding at such time equal to or exceeding $50,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of $15,000,000.
"Material Subsidiaries" means at any time (the "time
of determination") one or more Subsidiaries with respect to
which any of the events specified in clause (g) or (h) of
Section 6.01 shall have occurred after the date hereof (and not
been cured before the time of determination), but only if the
assets of such Subsidiaries (calculated in each case at the
time such event occurred) exceed, in the aggregate, 1 1/2% of
the consolidated assets of the Borrower and its Consolidated
Subsidiaries at the time of determination.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d)(ii)(D).
"Money Market Absolute Rate Loan" means a loan made
or to be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank,
its Domestic Lending Office or such other office or branch of
such Bank as it may hereafter designate as its Money Market
Lending Office by notice to the Borrower and the Administrative
Agent; provided that any Bank may from time to time by notice
to the Borrower and the Administrative Agent designate separate
Money Market Lending Offices for its Money Market LIBOR Loans,
on the one hand, and its Money Market Absolute Rate Loans, on
the other hand, in which case all references herein to the
Money Market Lending Office of such Bank shall be deemed to
refer to either or both of such offices, as the context may
require.
"Money Market LIBOR Loan" means a loan made or to be
made by a Bank pursuant to a LIBOR Auction (including such a
loan bearing interest at the Base Rate pursuant to Section
8.01).
"Money Market LIBOR Margin" has the meaning set forth
in Section 2.03(d)(ii)(C).
"Money Market Loan" means a Money Market LIBOR Loan
or a Money Market Absolute Rate Loan.
"Money Market Quote" means an offer by a Bank to make
a Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3)
of ERISA to which any member of the ERISA Group is then making
or accruing an obligation to make contributions or has within
the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note" means
any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning
set forth in Section 2.10.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either:
(i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member
of the ERISA Group; or
(ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member
of the ERISA Group.
"Potential Cross-Default" means at any time an event
or condition described in Section 6.01(f) that has occurred and
is continuing at such time and that is not a Default, but would
be a Default if the determination by the Required Banks
contemplated by Section 6.01(f) had been made and notice of
such determination had been given to the Borrower.
"Pricing Schedule" means the Pricing Schedule
attached hereto.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Reference Rate" means the rate of interest publicly
announced by Chemical Bank in New York City from time to time
as its reference rate. The Reference Rate is not intended to
be the lowest rate of interest charged by Chemical Bank in
connection with extensions of credit to borrowers.
"Regulation D", "Regulation U" and "Regulation X"
means Regulation D, Regulation U and Regulation X,
respectively, of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Required Banks" means at any time Banks having at
least two-thirds of the aggregate amount of the Commitments,
or, if the Commitments have been terminated, holding Notes
evidencing at least two-thirds of the aggregate unpaid
principal amount of the outstanding Loans.
"Restricted Subsidiary" means at any time:
(i) any Domestic Consolidated Subsidiary with (a)
more than $20,000,000 in total assets or (b) more than
$5,000,000 in total net worth, and
(ii) any other Consolidated Subsidiary designated
by the Borrower as a Restricted Subsidiary (a) in the
certificate delivered pursuant to Section 3.01(h) or
(b) in accordance with Section 5.03, unless and until
such designated Consolidated Subsidiary becomes an
Unrestricted Subsidiary pursuant to Section 5.03.
At the Effective Date, the Restricted Subsidiaries shall be
those set forth in such certificate.
"Restructuring Charges" means all nonrecurring after-
tax charges taken after June 30, 1994 by the Borrower and its
Consolidated Subsidiaries, on a consolidated basis, to provide
for the cost of discontinuing a business, adopting a severance
program or other profit improvement program or writing off or
writing down impaired assets.
"Revolving Credit Loan" means a Committed Loan made
pursuant to Section 2.01(a).
"Revolving Credit Period" means the period from and
including the Effective Date to and including the Revolving
Credit Termination Date.
"Revolving Credit Termination Date" means November 2,
1995, or, if such day is not a Euro-Dollar Business Day, the
next preceding Euro-Dollar Business Day.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" with respect to any Person means any
corporation or other entity of which such Person directly or
indirectly owns the securities or other ownership interests
having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions.
Unless otherwise specified, "Subsidiary" means a Subsidiary of
the Borrower.
"Term Loan" means a Committed Loan made pursuant to
Section 2.01(b).
"Term Loan Maturity Date" has the meaning set forth
in Section 2.01(b).
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the present
value of all benefits under such Plan exceeds (ii) the fair
market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA Group to the PBGC
or any other Person under Title IV of ERISA.
"Unrestricted Subsidiary" means any Subsidiary other
than a Restricted Subsidiary.
"Wholly-Owned Consolidated Subsidiary" means any
Consolidated Subsidiary all of the shares of capital stock or
other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned
by the Borrower.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required
to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants)
with the most recent audited consolidated financial statements
of the Borrower and its Consolidated Subsidiaries delivered to
the Banks; provided that, if the Borrower notifies the Agent
that the Borrower wishes to amend any covenant in Article V to
eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if
the Agent notifies the Borrower that the Required Banks wish to
amend Article V for such purpose), then the Borrower's
compliance with such covenant shall be determined on the basis
of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted
accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Banks.
SECTION 1.03. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date, all of which Loans are of the same type (subject
to clause (a) of Section 8.04) and, except in the case of Base
Rate Loans, have the same initial Interest Period; provided
that Revolving Credit Loans and Term Loans shall not be
aggregated in the same Borrowing. Borrowings are classified
for purposes of this Agreement either by reference to the
pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar
Loans) or by reference to the provisions of Article II under
which participation therein is determined (i.e., a "Committed
Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money
Market Borrowing" is a Borrowing under Section 2.03 in which
the Bank participants are determined on the basis of their bids
in accordance therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Revolving
Credit Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement (including, without
limitation, Section 3.02), to make Domestic Loans and
Euro-Dollar Loans to the Borrower pursuant to this Section from
time to time during the Revolving Credit Period in amounts such
that the aggregate principal amount of Revolving Credit Loans
by such Bank at any one time outstanding hereunder shall not
exceed the amount of its Commitment. Each Borrowing under this
subsection (a) shall be in an aggregate principal amount of
$25,000,000 or any larger multiple of $5,000,000 (except that
any such Borrowing may be in the aggregate amount available in
accordance with Section 3.02(b) and, if less than $5,000,000,
must be a Base Rate Borrowing) and shall be made from the
several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Borrower may
borrow under this subsection (a), repay, or to the extent
permitted by Section 2.11 or 8.03(d)(ii), prepay Revolving
Credit Loans and reborrow at any time during the Revolving
Credit Period under this subsection (a). The Commitments shall
terminate at the close of business on the Revolving Credit
Termination Date, and shall automatically be reduced pro rata
by the aggregate amount borrowed pursuant to subsection (b)
below at the close of business on the date of such borrowing.
(b) Term Loans. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make one
or more term loans to the Borrower on a single day (to be
specified by the Borrower in the applicable Notice of
Borrowing) on or before the Revolving Credit Termination Date
in amounts such that the aggregate principal amount of
Committed Loans by such Bank to be outstanding at the close of
business on such day shall not exceed its Commitment (as in
effect immediately before any termination or reduction thereof
on such day). Each such Term Loan shall mature on the date
(the "Term Loan Maturity Date") which is either the first
anniversary of the date of borrowing or the second anniversary
of the date of borrowing, as specified by the Borrower in the
applicable Notice of Borrowing. Each Borrowing under this
subsection (b) shall be made from the several Banks ratably in
proportion to their respective Commitments. Amounts of Term
Loans repaid pursuant to Section 2.11 shall not be reborrowed.
SECTION 2.02. Notice of Committed Borrowings. The
Borrower shall give the Administrative Agent notice (a "Notice
of Committed Borrowing") not later than 11:00 A.M. (New York
City time) on:
(x) the date of each Base Rate Borrowing,
(y) the Domestic Business Day next preceding the
date of each CD Borrowing, and
(z) the third Euro-Dollar Business Day before
each Euro-Dollar Borrowing,
specifying:
(a) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing
are to bear interest initially at the Base Rate or at a
CD Rate or at a Euro-Dollar Rate,
(d) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period, and
(e) in the case of a Borrowing under Section
2.01(b), (i) that such Borrowing is under such
subsection (b) (in the absence of which specification a
Borrowing shall be deemed to be under Section 2.01(a))
and (ii) whether the Term Loan Maturity Date is to be
the first anniversary or the second anniversary of the
date of such Borrowing.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks during the
Revolving Credit Period to make offers to make Money Market
Loans to the Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Borrower
wishes to request offers to make Money Market Loans under this
Section, it shall transmit to the Auction Agent by telex or
facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be
received no later than 11:00 A.M. (New York City time) on:
(x) the fourth Euro-Dollar Business Day prior to
the date of Borrowing proposed therein, in the case of
a LIBOR Auction or
(y) the Domestic Business Day next preceding the
date of Borrowing proposed therein, in the case of an
Absolute Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed and shall have
notified the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $25,000,000 or a larger multiple of
$5,000,000,
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market LIBOR Margin or a Money
Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for
more than one Interest Period in a single Money Market Quote
Request. No Money Market Quote Request shall be given within
four Euro-Dollar Business Days (or such other number of days as
the Borrower and the Auction Agent may agree and the Auction
Agent shall have promptly notified the Banks) of any other
Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Auction Agent
shall send to the Banks by telex or facsimile transmission an
Invitation for Money Market Quotes substantially in the form of
Exhibit C hereto with respect to such Money Market Quote
Request.
(d) Submission and Contents of Money Market Quotes.
(i) Each Bank may submit a Money Market Quote containing an
offer or offers to make Money Market Loans in response to any
Invitation for Money Market Quotes. Each Money Market Quote
must comply with the requirements of this subsection (d) and
must be submitted to the Auction Agent by telex or facsimile
transmission at its offices specified in or pursuant to Section
9.01 not later than:
(x) 12:00 Noon (New York City time) on the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or
(y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute
Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed, and the
Auction Agent shall have notified the Banks not later than the
date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by the
Auction Agent in the capacity of a Bank may be submitted, and
may only be submitted, if the Auction Agent notifies the
Borrower of the terms of the offer or offers contained therein
not later than:
(x) one hour prior to the deadline for the other
Banks, in the case of a LIBOR Auction or
(y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction.
Subject to Articles III and VI, any Money Market Quote so made
shall be irrevocable except with the written consent of the
Auction Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit D hereto and shall in any
case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount:
(w) may be greater than or less than the
Commitment of the quoting Bank,
(x) must be $5,000,000 or a larger multiple
of $1,000,000,
(y) may not exceed the principal amount of
Money Market Loans for which offers were requested
and
(z) may be subject to an aggregate
limitation as to the principal amount of Money
Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market LIBOR Margin") offered for each
such Money Market Loan, expressed as a percentage
(rounded to the nearest 1/10,000th of 1%) to be added
to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (rounded to the nearest
1/10,000th of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers
by the quoting Bank with respect to each Interest Period
specified in the related Invitation for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if
it:
(A) is not substantially in conformity with
Exhibit D hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Auction Agent shall
promptly notify the Borrower of the terms:
(x) of any Money Market Quote submitted by a Bank
that is in accordance with subsection (d) and
(y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous
Money Market Quote submitted by such Bank with respect
to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by
the Auction Agent unless such subsequent Money Market
Quote is submitted solely to correct a manifest error
in such former Money Market Quote.
The Auction Agent's notice to the Borrower shall specify:
(A) the aggregate principal amount of Money
Market Loans for which offers have been received for
each Interest Period specified in the related Money
Market Quote Request,
(B) the respective principal amounts and Money
Market LIBOR Margins or Money Market Absolute Rates, as
the case may be, so offered and
(C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers
in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later
than:
(x) 1:30 P.M. (New York City time) on the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or
(y) 10:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute
Rate Auction
(or, in either case, such other time or date as the Borrower
and the Auction Agent shall have mutually agreed and the
Auction Agent shall have notified the Banks not later than the
date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Auction Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e) and the Auction Agent shall so
notify the Administrative Agent. In the case of acceptance,
such notice (a "Notice of Money Market Borrowing") shall
specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept any
Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $25,000,000 or a larger multiple of
$5,000,000 and the principal amount of each Money
Market Loan with respect to such Money Market Borrowing
must be in an amount of $5,000,000 or a larger multiple
of $1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market LIBOR Margins or Money
Market Absolute Rates, as the case may be,
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement, and
(v) failure by the Borrower to notify the Auction
Agent by the time specified above shall be deemed a
rejection of all offers.
(g) Allocation by Borrower. If offers are made by
two or more Banks with the same Money Market LIBOR Margins or
Money Market Absolute Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which
such offers are accepted for the related Interest Period, the
principal amount of Money Market Loans in respect of which such
offers are accepted shall be allocated by the Borrower among
such Banks as nearly as possible in proportion to the aggregate
principal amounts of such offers (or as nearly in proportion as
shall be practicable after giving effect to the requirement
that Money Market Loans for each relevant maturity date shall
each be in a principal amount of $5,000,000 or a multiple of
$1,000,000 in excess thereof).
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share (if any) of such
Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time)
on the date of each Borrowing, each Bank participating therein
shall make the amount of its share of such Borrowing available
to the Administrative Agent for the account of the Borrower at
the office of the Administrative Agent specified in or pursuant
to Section 9.01 in funds immediately available to the
Administrative Agent. Unless the Administrative Agent
determines (or, in the case of the first Borrowing, the
Documentation Agent and the Administrative Agent determine)
that any applicable condition specified in Article III has not
been satisfied, the Administrative Agent shall make such
aggregate funds available to the Borrower by depositing as
promptly as practicable the proceeds thereof, in like funds as
received by the Administrative Agent, in the account of the
Borrower with the Administrative Agent on the date of such
Borrowing.
(c) Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any Borrowing
that such Bank will not make available to the Administrative
Agent such Bank's share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available
to the Administrative Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the
Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If the Administrative Agent does, in such
circumstances, make available to the Borrower such amount, such
Bank shall within three Domestic Business Days following such
Borrowing make such share available to the Administrative
Agent, together with interest thereon for each day from and
including the date of such Borrowing that such share was not
made available, at the Effective Federal Funds Rate. If such
amount is so made available, such payment to the Administrative
Agent shall constitute such Bank's share of such Borrowing for
all purposes of this Agreement. If such amount is not so made
available to the Administrative Agent, then the Administrative
Agent shall on the third Domestic Business Day following such
Borrowing notify the Borrower of such failure and on the fourth
Domestic Business Day following the date of such Borrowing, the
Borrower shall pay to the Administrative Agent such share,
together with interest thereon for each day that the Borrower
had the use of such share, at the Effective Federal Funds Rate.
Nothing contained in this subsection (c) shall relieve any Bank
which has failed to make available its share of any Borrowing
hereunder from its obligation to do so in accordance with the
terms hereof.
(d) The failure of any Bank to make available to the
Administrative Agent its share of any Borrowing on the date of
such Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make available to the
Administrative Agent its share of such Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make
available the share of any Borrowing to be made available by
such other Bank on such date of Borrowing.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office in
an amount equal to the aggregate unpaid principal amount of
such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Administrative Agent (to be given not later than two Domestic
Business Days prior to the first Borrowing), request that its
Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form
of Exhibit A hereto with appropriate modifications to reflect
the fact that it evidences solely Loans of the relevant type.
Each reference in this Agreement
to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Documentation Agent shall mail such Note
to such Bank. Each Bank shall record the date, amount and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and prior to any transfer of its Note may endorse on
the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank to
make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Notes. Each
Bank is hereby irrevocably authorized by the Borrower so to
endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Revolving
Credit Loan shall mature, and the principal amount thereof
shall be due and payable, on the Revolving Credit Termination
Date. Each Term Loan shall mature, and the principal amount
thereof shall be due and payable, on the Term Loan Maturity
Date. Each Money Market Loan shall mature, and the principal
amount thereof shall be due and payable, on the last day of the
Interest Period applicable to such Money Market Loan.
SECTION 2.07. Interest Rates. (a) Each Base Rate
Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made to but
excluding the date it becomes due, at a rate per annum equal to
the Base Rate for such day. Such interest shall be payable
monthly in arrears on the last day of each calendar month and,
with respect to the principal amount of any Base Rate Loan
converted to a CD Loan or a Euro-Dollar Loan, on the date such
principal amount is so converted. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on
demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment at
a rate per annum equal to the sum of 1% plus the Base Rate for
such day.
(b) Subject to Section 8.01, each CD Loan shall bear
interest on the outstanding principal amount thereof, for each
day during the Interest Period applicable thereto, at a rate
per annum equal to the sum of the CD Margin for such day plus
the applicable Adjusted CD Rate. Such interest shall be
payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than 90 days, at intervals of
90 days after the first day thereof. Any overdue principal of
or interest on any CD Loan shall bear interest, payable on
demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment at
a rate per annum equal to the sum of 1% plus the Base Rate for
such day.
"CD Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period
is the rate of interest determined by the Administrative Agent
to be the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or
more New York certificate of deposit dealers of recognized
standing for the purchase at face value from each CD Reference
Bank of its certificates of deposit in an amount comparable to
the principal amount of the CD Loan of such CD Reference Bank
to which such Interest Period applies and having a maturity
comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits exceeding
$5,000,000,000 in respect of new non-personal time deposits in
Dollars in New York City having a maturity comparable to the
related Interest Period and in an amount of $100,000 or more.
The Adjusted CD Rate shall be adjusted automatically on and as
of the effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the
meaning of 12 C.F.R. Section 327.3(e) (or any successor
provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in
the Assessment Rate.
(c) Subject to Section 8.01, each Euro-Dollar Loan
shall bear interest on the outstanding principal amount
thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin for such day plus the applicable London
Interbank Offered Rate. Such interest shall be payable for
each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of
three months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in Dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two
Euro-Dollar Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount
of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 1% plus the Base Rate for such day.
(e) Subject to Section 8.01, each Money Market LIBOR
Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the London Interbank Offered Rate
for such Interest Period (determined in accordance with Section
2.07(c) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money
Market LIBOR Margin quoted by the Bank making such Loan in
accordance with Section 2.03. Each Money Market Absolute Rate
Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the Money Market Absolute Rate quoted by the
Bank making such Loan in accordance with Section 2.03. Interest
on each Money Market Loan shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after
the first day thereof. Any overdue principal of or interest on
any Money Market Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was
due to but excluding the date of actual payment at a rate per
annum equal to the sum of 1% plus the Base Rate for such day.
(f) The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The
Administrative Agent shall give prompt notice to the Borrower
and the Banks making such Loans by telex, facsimile
transmission or cable of each rate of interest so determined,
and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Administrative Agent as
contemplated by this Section. If any Reference Bank does not
furnish a timely quotation, the Administrative Agent shall
determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference
Bank or Banks or, if none of such quotations is available on a
timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Facility Fees. (a) Revolving Credit
Facility Fee. The Borrower shall pay to the Administrative
Agent for the account of the Banks ratably in proportion to
their Commitments a facility fee at the Facility Fee Rate
(determined for each day in accordance with the Pricing
Schedule). Such facility fee shall accrue:
(i) from and including the Effective Date to but
excluding the Revolving Credit Termination Date (or
earlier date of termination of the Commitments in their
entirety), on the daily aggregate amount of the
Commitments (whether used or unused), and
(ii) from and including the Revolving Credit
Termination Date (or such earlier date of termination)
to but excluding the date the Revolving Credit Loans
shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Revolving
Credit Loans.
(b) Term Loan Facility Fee. The Borrower shall pay
to the Administrative Agent for the account of the Banks
ratably in proportion to the outstanding principal amounts of
their Term Loans a facility fee at the Facility Fee Rate
(determined for each day in accordance with the Pricing
Schedule). Such facility fee shall accrue from and including
the date on which the Term Loans are borrowed pursuant to
Section 2.01(b) to but excluding the date the Term Loans shall
be repaid in their entirety, on the daily aggregate outstanding
principal amount of the Term Loans.
(c) Payments. Accrued fees under this Section shall
be payable quarterly on each March 31, June 30, September 30
and December 31 (in arrears) commencing on December 31, 1994.
In the case of the facility fee payable with respect to the
Commitments, such facility fee shall also be payable on the
date of termination of the Commitments in their entirety (and,
if later, the date the Revolving Credit Loans shall be repaid
in their entirety). In the case of the facility fee payable
with respect to the Term Loans, such facility fee shall also be
payable on the date the Term Loans shall be repaid in their
entirety.
SECTION 2.09. Optional Termination or Reduction of
Commitments. During the Revolving Credit Period, the Borrower
may, upon at least three Domestic Business Days' notice to the
Administrative Agent,
(i) terminate the Commitments at any time, if no
Loans (other than Term Loans) are outstanding at such
time, or
(ii) ratably reduce from time to time, by an
aggregate amount of at least $25,000,000, the aggregate
amount of the Commitments, provided that the aggregate
amount of the Commitments may not be reduced below the
aggregate outstanding principal amount of the Loans
(other than Term Loans).
SECTION 2.10. Method of Electing Interest Rates. (a)
The Loans included in each Committed Borrowing shall bear
interest initially at the type of rate specified by the
Borrower in the applicable Notice of Committed Borrowing.
Thereafter, the Borrower may from time to time elect to change
or continue the type of interest rate borne by each Group of
Loans (subject in each case to the provisions of Article VIII),
as follows:
(i) if such Loans are Base Rate Loans, the
Borrower may elect to convert such Loans to CD Loans as
of any Domestic Business Day or to Euro-Dollar Loans as
of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or
Euro-Dollar Loans or elect to continue such Loans as CD
Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest
Period applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the
Borrower may elect to convert such Loans to Base Rate
Loans or CD Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third
Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective (unless the relevant
Loans are to be converted from Domestic Loans to Domestic Loans
of the other type or continued as Domestic Loans of the same
type for an additional Interest Period, in which case such
notice shall be delivered to the Administrative Agent not later
than 11:00 A.M. (New York City time) on the Domestic Business
Day next preceding the date the conversion or continuation
selected in such notice is be effective). A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion
of the aggregate principal amount of the relevant Group of
Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to
which such Notice applies, and
the remaining portion to which it does not apply, are each
$25,000,000 or any larger multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to
which such notice applies;
(ii) the date on which the conversion or
continuation selected in such notice is to be
effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans
are Fixed Rate Loans, the duration of the initial
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans
or Euro-Dollar Loans for an additional Interest Period,
the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate
Election from the Borrower pursuant to subsection (a) above,
the Administrative Agent shall promptly notify each Bank of the
contents thereof and such notice shall not thereafter be
revocable by the Borrower. If the Borrower fails to deliver a
timely Notice of Interest Rate Election to the Administrative
Agent for any Group of Fixed Rate Loans, such Loans shall be
converted into Base Rate Loans on the last day of the then
current Interest Period applicable thereto.
SECTION 2.11. Prepayments. (a) The Borrower may,
upon giving notice to the Administrative Agent not later than
11:00 A.M. (New York City time) on the date of prepayment,
prepay a Group of Base Rate Loans (or any Money Market Loan
bearing interest at the Base Rate pursuant to Section 8.01) in
whole at any time, or from time to time in part in amounts
aggregating $25,000,000 or any larger multiple of $5,000,000,
by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment.
(b) Subject to Section 2.13, upon giving notice to
the Administrative Agent not later than 11:00 A.M. (New York
City time) on the Domestic Business Day next preceding the date
of prepayment (in the case of a Group of CD Loans) or the third
Euro-Dollar Business Day before the date of prepayment (in the
case of a Group of Euro-Dollar Loans), the Borrower may prepay
the Loans comprising such Group of Loans in whole at any time,
or from time to time in part in amounts aggregating $25,000,000
or any larger multiple of $5,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon to
the date of prepayment.
(c) Upon receipt of a notice of prepayment pursuant
to this Section, the Administrative Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower. Each such optional
prepayment shall be applied to prepay ratably the Loans of the
several Banks included in the relevant Group of Loans.
(d) The Borrower may not prepay the Money Market
Loans at any time (other than Money Market Loans bearing
interest at the Base Rate pursuant to Section 8.01).
SECTION 2.12. General Provisions as to Payments. (a)
The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than
11:00 A.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York City,
to the Administrative Agent at its address specified in or
pursuant to Section 9.01. The Administrative Agent will
promptly distribute to each Bank its share of each such payment
received by the Administrative Agent for the account of the
Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of fees shall be due on a day which is
not a Domestic Business Day, the date for payment thereof shall
be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month,
in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be
due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day.
If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be
payable for such extended time.
(b) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which
any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to
the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that the
Borrower shall not have so made such payment, each Bank shall
repay to the Administrative Agent forthwith on demand such
amount distributed to such Bank together with interest thereon,
for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Administrative Agent, at the Effective Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes
any payment of principal with respect to any Fixed Rate Loan
(pursuant to Section 2.11, Section 2.18, Article VI, Article
VIII or otherwise) on any day other than the last day of an
Interest Period applicable thereto or if any Euro-Dollar Loan
is converted to a Base Rate Loan pursuant to Section
8.02(b)(ii) on any day other than the last day of an Interest
Period applicable thereto or if the Borrower fails to borrow or
prepay any Fixed Rate Loans after notice of such borrowing or
prepayment has been given to any Bank in accordance with
Section 2.04(a) or 2.11(c), the Borrower shall reimburse each
Bank on demand for any resulting loss or expense actually
incurred by it (or a Participant which has purchased or agreed
to purchase a participation in the relevant Loan), including
(without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment
or conversion or failure to borrow or prepay, provided that
such Bank shall have delivered to the Borrower a certificate
containing a computation in reasonable detail of the amount of
such loss or expense, which certificate shall be conclusive in
the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Reference Rate hereunder shall be
computed on the basis of a year of 365 days (or 366 days in a
leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 2.15. Withholding Tax Exemption. At least
five Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will
deliver to each of the Borrower and the Administrative Agent
two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such
Bank is entitled to receive payments under this Agreement and
the Notes without deduction or withholding of any United States
federal income taxes. Each Bank which so delivers a Form 1001
or 4224 further undertakes to deliver to each of the Borrower
and the Administrative Agent two additional copies of such form
(or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the
Administrative Agent, in each case certifying that such Bank is
entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank promptly advises the
Borrower and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of
United States federal income tax.
SECTION 2.16. Regulation D Compensation. (a) So
long as Regulation D shall require reserves to be maintained
against "Eurocurrency liabilities" (or against any other
category of liabilities which includes deposits by reference to
which the interest rate on Euro-Dollar Loans is determined or
any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents), each Bank subject to and actually
incurring such reserve requirement may require the Borrower to
pay, contemporaneously with each payment of interest on the
Euro-Dollar Loans additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum (the
"Regulation D Rate") determined pursuant to the following
formula:
[ LIBOR ]
RDR = [ -------- ] - LIBOR
[ 1 - ERR ]
RDR = Regulation D Rate
LIBOR = The applicable London Interbank
Offered Rate
ERR = Eurocurrency Reserve Ratio
"Eurocurrency Reserve Ratio" means the applicable
reserve ratio prescribed by Regulation D (as such Regulation
shall have been amended to the first day of the related
Interest Period) for such reserve requirements (expressed as a
decimal).
Notwithstanding anything contained herein to the
contrary, the Regulation D Rate shall be adjusted automatically
on and as of the effective date of any change in such reserve
ratio.
(b) Any Bank wishing to require payment of such
additional interest:
(i) shall so notify the Borrower, in which case
such additional interest on the Euro-Dollar Loans of
such Bank shall be payable on any date interest is
payable with respect to each Euro-Dollar Loan
commencing after the giving of such notice and
(ii) shall notify the Borrower from time to time
of the amount due it under this Section;
provided that the Borrower shall not be required to make any
payment of an amount due hereunder earlier than the fifth
Euro-Dollar Business Day after receipt of the notice referred
to in clause (ii) of this Section.
SECTION 2.17. Judgment Currency. If for the purpose
of obtaining judgment in any court it is necessary to convert a
sum due from the Borrower hereunder or under any of the Notes
in the currency expressed to be payable herein or under the
Notes (the "specified currency") into another currency, the
parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that
at which in accordance with normal banking procedures the
Administrative Agent could purchase the specified currency with
such other currency at the
Administrative Agent's New York office on the Domestic Business
Day preceding that on which final judgment is given. The
obligations of the Borrower in respect of any sum due to any
Bank or the Administrative Agent hereunder or under any Note
shall, notwithstanding any judgment in a currency other than
the specified currency, be discharged only to the extent that
on the Domestic Business Day following receipt by such Bank or
the Administrative Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Bank or the
Administrative Agent (as the case may be) may in accordance
with normal banking procedures purchase the specified currency
with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to
such Bank or the Administrative Agent, as the case may be, in
the specified currency, the Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation
and notwithstanding any such judgment, to indemnify such Bank
or the Administrative Agent, as the case may be, against such
loss, and if the amount of the specified currency so purchased
exceeds:
(a) the sum originally due to such Bank or the
Administrative Agent, as the case may be, and
(b) any amounts shared with other Banks as a
result of allocations of such excess as a
disproportionate payment to such Bank under Section
9.04,
such Bank or the Administrative Agent, as the case may be,
agrees to remit such excess to the Borrower.
SECTION 2.18. Replacement of this Credit Facility.
If the Borrower wishes at any time to replace the credit
facility provided under this Agreement with another credit
facility, the Borrower may give prior notice of the termination
of the Commitments hereunder as required by Section 2.09 and
prior notice of the prepayment of any Committed Loans
outstanding hereunder as required by Section 2.11, in each case
on a conditional basis (i.e., conditioned upon such other
credit facility becoming available to the Borrower), provided
that the Borrower gives definitive notice of such termination
of the Commitments and prepayment of outstanding Committed
Loans (if any) to the Administrative Agent before 11:00 A.M.
(New York City time) on the date of such termination and
prepayment (if any) and complies with the applicable
requirements of Sections 2.09 and 2.11 in all other respects.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall
become effective on the date that each of the following
conditions shall have been satisfied (or waived in accordance
with Section 9.05):
(a) receipt by the Documentation Agent of
counterparts hereof signed by each of the parties
hereto (or, in the case of any party as to which an
executed counterpart shall not have been received,
receipt by the Documentation Agent in form satisfactory
to it of telegraphic, telex, facsimile or other written
confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Documentation Agent for the
account of each Bank of one executed Note dated on or
before the Effective Date complying with the provisions
of Section 2.05;
(c) receipt by the Documentation Agent of an
opinion of Phyllis Savage, counsel to the Borrower,
covering the matters described in Exhibit E hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request;
(d) receipt by the Documentation Agent of an
opinion of Davis Polk & Wardwell, special counsel for
the Agents, substantially in the form of Exhibit F
hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required
Banks may reasonably request;
(e) receipt by the Documentation Agent of a
certificate signed by any of the Chairman, any Vice
Chairman, the President, any Vice President, the
Treasurer, such Treasurer's designee, or any Associate
Treasurer or Assistant Treasurer of the Borrower, dated
the Effective Date, to the effect set forth in clauses
(c), (d) and (e) of Section 3.02;
(f) receipt by the Documentation Agent of a copy
of the Borrower's certificate of incorporation,
certified by the Secretary of State of New York;
(g) receipt by the Documentation Agent of a
certificate on behalf of the Borrower signed by the
Secretary or Assistant Secretary of the Borrower or
such other authorized officer of the Borrower
satisfactory to the Documentation Agent certifying
(i) that the Borrower's certificate of
incorporation has not been amended since May 2,
1994,
(ii) that no proceeding for the dissolution
or liquidation of the Borrower exists,
(iii) that the copy of the by-laws of the
Borrower attached to the certificate is true,
correct and complete,
(iv) that the copies of the resolutions of
the Borrower's board of directors attached to the
certificate are true and correct and in full force
and effect and
(v) as to the incumbency of each officer of
the Borrower who signed this Agreement and the
Notes on behalf of the Borrower;
(h) receipt by the Documentation Agent of a
certificate listing the Restricted Subsidiaries as of
the Effective Date;
i) the commitments of the banks under the
$850,000,000 Credit Agreement dated as of April 15,
1992 among Union Carbide Corporation, Union Carbide
Chemicals and Plastics Company Inc., the banks listed
on the signature pages thereof, Morgan Guaranty Trust
Company of New York, Chemical Bank and Credit Suisse,
as Co-Agents, and Chemical Bank, as Administrative
Agent and as Auction Agent, shall have been terminated
and all amounts due and payable under such Agreement
shall have been paid; and
(j) receipt by the Documentation Agent of all
documents that the Documentation Agent may reasonably
request relating to the existence of the Borrower, the
corporate authority for and the validity of this
Agreement and the Notes, and any other matters relevant
hereto, all in form and substance satisfactory to the
Documentation Agent;
provided that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than November 20, 1994. The
Documentation Agent shall promptly notify the Borrower and the
Banks of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is subject
to the satisfaction of the following conditions:
(a) receipt by the Administrative Agent of a
Notice of Borrowing as required by Section 2.02 or
2.03, as the case may be;
(b) immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans
(other than Term Loans) will not exceed the aggregate
amount of the Commitments (as reduced by any reduction
thereof on the date of such Borrowing);
(c) immediately after such Borrowing, no Default
shall have occurred and be continuing;
(d) none of the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower shall be aware of any Potential Cross-Default
that will exist after giving effect to such Borrowing
and was not disclosed to the Banks at least two
Domestic Business Days before the date of such
Borrowing; and
(e) the fact that the representations and
warranties of the Borrower contained in this Agreement
shall be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Borrowing as
to the facts specified in clauses (b), (c), (d) and (e) of this
Section, and each Notice of Borrowing shall be deemed to be a
confirmation by the Borrower to such effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New York,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement and the Notes are
within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Borrower
or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or any of its
Subsidiaries or result in or permit the termination or
modification of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of
its Subsidiaries or result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and
the Notes, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the
Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of December 31, 1993 and
the related consolidated statements of income and cash flows
for the fiscal year then ended, reported on by KPMG Peat
Marwick, set forth in the Borrower's 1993 annual report to
stockholders, copies of which have been delivered to each of
the Banks, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as
of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of June 30, 1994
and the related unaudited consolidated statements of income and
cash flows for the six months then ended, copies of which have
been delivered to each of the Banks, fairly present, in
conformity with generally accepted accounting principles
applied on a basis consistent with the consolidated financial
statements referred to in subsection (a) of this Section, the
consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such six
month period (subject to normal year-end adjustments).
(c) Since June 30, 1994 there has been no change in
the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries,
which could materially adversely affect the present or
prospective ability of the Borrower to perform its obligations
under this Agreement or any Note or which in any manner draws
into question the validity or enforceability of this Agreement
or any Note.
SECTION 4.05. Litigation. There is no action, suit
or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, the Borrower or any
of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the present or prospective ability
of the Borrower to perform its obligations under this Agreement
or any Note or which in any manner draws into question the
validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of
the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material
respects with the currently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has:
(i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code
in respect of any Plan,
(ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Internal
Revenue Code or
(iii) incurred any liability under Title IV of
ERISA other than a liability to the PBGC for premiums
under Section 4007 of ERISA and aggregate withdrawal
liabilities not in excess of $5,000,000 at any one time
outstanding.
SECTION 4.07. Environmental Matters. In the
ordinary course of its business, the Borrower conducts reviews
of the effect of Environmental Laws on the business, operations
and properties of the Borrower and its Subsidiaries, in the
course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, related
United States environmental protection operating expenses,
which include operating costs of pollution control facilities
and certain environmental accruals and administrative expenses,
and capital expenditures for the current fiscal year and
related amounts projected for capital expenditures up to five
years subsequent to such current fiscal year, expressed in
then-current dollar amounts). On the basis of this review, the
Borrower has reasonably concluded that Environmental Laws are
unlikely to have an effect on the business, financial
condition, results of operations or prospects of the Borrower
and its Consolidated Subsidiaries during the term of this
Agreement, which could materially adversely affect the present
or prospective ability of the Borrower to perform its
obligations under this Agreement or any Note.
SECTION 4.08. Restricted Subsidiaries. Each
corporate Restricted Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.09. Not an Investment Company. The
Borrower is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4.10. Disclosure. None of the material
furnished to the Agents and the Banks in connection herewith
(excluding financial projections and estimates of future
results) contains, or contained at the time so furnished, any
untrue statement of a material fact or omits, or omitted at the
time so furnished, to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. All
financial projections and estimates of future results included
in such material represented the Borrower's good faith
estimates, based on assumptions which the Borrower considered
reasonable, as of the date thereof (it being understood that
the Borrower does not represent or warrant that such
projections and future results will in fact be realized or that
such assumptions included all possible assumptions).
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note
remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks and the Administrative Agent:
(a) as promptly as practicable and in any event
within 120 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the
end of such fiscal year and the related consolidated
statements of income and cash flows for such fiscal
year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported
on in accordance with generally accepted accounting
principles (and in a manner acceptable to the SEC) by
KPMG Peat Marwick or other independent public
accountants of nationally recognized standing;
(b) as promptly as practicable and in any event
within 60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter
and comparative financial information as of the end of
the previous fiscal year, the related consolidated
statement of income for such quarter and the related
consolidated statements of income and cash flows for
the portion of the Borrower's fiscal year ended at the
end of such quarter, setting forth in each case in
comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and
consistency by the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower or a person designated in writing by any of
the foregoing persons, and if such financial statements
are filed with the SEC, all reported on in conformity
with the financial reporting requirements of the SEC;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and
(b) above, a certificate of the principal financial
officer, the principal accounting officer or the
Treasurer of the Borrower, or a person designated in
writing by any of the foregoing persons
(i) setting forth in reasonable detail the
calculations required to establish whether the
Borrower was in compliance with any applicable
requirements of Sections 5.05, 5.07, 5.08 and 5.09
on the date of such financial statements,
(ii) stating whether the Borrower was in
compliance with the requirements of Sections 5.02
through 5.04, inclusive, on the date of such
financial statements, and
(iii) stating whether any Default or Potential
Cross-Default exists on the date of such
certificate and, if any Default or Potential
Cross-Default then exists, setting forth the
details thereof and the action which the Borrower
is taking or proposes to take with respect
thereto;
(d) simultaneously with the delivery of each set
of financial statements referred to in clause (a)
above, a statement of the firm of independent public
accountants which reported on such statements whether
anything has come to their attention to cause them to
believe that any Default or Potential Cross-Default
existed on the date of such statements;
(e) within five days after any officer of the
Borrower obtains knowledge of any Default or Potential
Cross-Default, if such Default or Potential Cross-
Default is then continuing, a certificate of the
principal financial officer, the principal accounting
officer or the Treasurer of the Borrower setting forth
the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
public shareholders of the Borrower generally, copies
of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of
all registration statements (other than the exhibits
thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) which the Borrower shall have
filed with the SEC;
(h) if and when any member of the ERISA Group:
(i) gives or is required to give notice to
the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given
or is required to give notice of any such
reportable event, a copy of the notice of such
reportable event given or required to be given to
the PBGC;
(ii) receives notice of complete or partial
withdrawal liability in excess of $5,000,000,
under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such
notice;
(iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a
trustee to administer, any Plan, a copy of such
notice;
(iv) applies for a waiver of the minimum
funding standard under Section 412 of the Internal
Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any
Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the
PBGC;
(vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such
notice; or
(vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of
a Lien or the posting of a bond or other security,
a certificate of the principal financial officer, the
principal accounting officer or the Treasurer of the
Borrower setting forth details as to such occurrence
and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to
take;
(i) promptly after the Borrower is notified by
any rating agency referred to in the Pricing Schedule
of any actual change in any rating referred to in the
Pricing Schedule, written notice of such change; and
(j) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Documentation
Agent or the Administrative Agent, at the request of
any Bank, may reasonably request.
SECTION 5.02. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each of its
Subsidiaries to keep, all property useful and necessary in its
respective business in good working order and condition,
ordinary wear and tear excepted.
(b) The Borrower will maintain, and will cause each
of its Subsidiaries to maintain, insurance policies on its
assets at coverage levels that are at least as high as the
coverage levels that are usually insured against in the same
general area by companies of established repute engaged in the
same or a similar business as the Borrower or such Subsidiary,
as the case may be; and, upon request of the Documentation
Agent, will promptly furnish to the Documentation Agent for
distribution to the Banks information presented in reasonable
detail as to the insurance so carried.
SECTION 5.03. Restricted Subsidiaries.
(a) The Borrower will notify the Administrative
Agent, each time that the Borrower delivers financial
statements pursuant to Section 5.01(a) or (b), whether or not
the total assets of the Borrower and all Restricted
Subsidiaries (excluding any loans or other extensions of
credit, other than receivables related to trade transactions,
from any Restricted Subsidiary to any Unrestricted Subsidiary)
were equal to at least 60% of the total assets of the Borrower
and its Consolidated Subsidiaries as of the date of such
financial statements (the "Restricted Subsidiary Asset Test").
(b) If the total assets of the Borrower and all
Restricted Subsidiaries as so reported did not meet the
Restricted Subsidiary Asset Test as of such date, the Borrower
will, on the date such financial statements are delivered to
the Administrative Agent, designate as Restricted Subsidiaries
one or more additional Consolidated Subsidiaries which were
theretofore Unrestricted Subsidiaries having sufficient assets
as of the date of such financial statements so that the
Restricted Subsidiary Asset Test as of such date will be met.
(c) Each Consolidated Subsidiary which is a
Restricted Subsidiary by reason of clause (ii) of the
definition of "Restricted Subsidiary" (a "Designated
Subsidiary") shall be a Restricted Subsidiary from the time of
such designation until (subject to Section 5.03(d)) the
Borrower subsequently notifies the Administrative Agent,
concurrently with the delivery of financial statements pursuant
to Section 5.01(a) or (b), that it is no longer necessary to
include such Designated Subsidiary as a Restricted Subsidiary
to meet the Restricted Subsidiary Asset Test (measured as of
the date of such financial statements), at which time such
Designated Subsidiary shall become an Unrestricted Subsidiary.
(d) The Borrower may from time to time substitute
one or more
(i) Domestic Consolidated Subsidiaries of the
Borrower having (x) total assets of $20,000,000 or less
and (y) total net worth of $5,000,000 or less or
(ii) Foreign Consolidated Subsidiaries
which (in either case) are Unrestricted Subsidiaries for one or
more Designated Subsidiaries, provided the Restricted
Subsidiary Asset Test (measured as of the date of the most
recent financial statements delivered pursuant to Section
5.01(a) or (b)) continues to be met, upon which substitution
such theretofore Designated Subsidiaries shall become
Unrestricted Subsidiaries.
SECTION 5.04. Negative Pledge. The Borrower will
not, and will not permit any of its Restricted Subsidiaries to,
create, assume or suffer to exist any Lien securing Debt on any
asset now owned or hereafter acquired by it, except:
(a) any Lien existing on the date of this
Agreement securing Debt outstanding on the date of this
Agreement in an aggregate principal amount not
exceeding $50,000,000;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Restricted Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part
of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(d) any Lien on any improvements constructed on
any property of the Borrower or any Restricted
Subsidiary and any theretofore unimproved real property
on which such improvements are located securing Debt
incurred for the purpose of financing all or any part
of the cost of constructing such improvements, provided
that such Lien attaches to such improvements within 90
days after the later of (1) completion of construction
of such improvements and (2) commencement of full
operation of such improvements;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Restricted
Subsidiary and not created in contemplation of such
acquisition;
(f) Liens on property of the Borrower or a
Restricted Subsidiary in favor of the United States of
America or any State thereof, or any department, agency
or instrumentality or political subdivision of the
United States of America or any State thereof, or any
other government or department, agency, instrumentality
or political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any
contract or statute or to secure any Debt incurred for
the purpose of financing all or any part of the
purchase price or the cost of construction of the
property subject to such Liens;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, but only to the extent that such Debt is
not increased and is not secured by any additional
assets;
(h) Liens securing Debt permitted to be secured
under Section 5.05(a)(i); and
(i) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in an
aggregate principal amount at any time outstanding not
to exceed $200,000,000.
SECTION 5.05. Limitation on Debt of Subsidiaries.
(a) The Borrower shall not permit any of its Restricted
Subsidiaries to create, incur, assume or suffer to exist any
Debt, except:
(i) any Debt owing to the Borrower or another
Subsidiary, provided that any such Debt owing to the
Borrower is made or issued solely on a senior basis,
and provided further that any such Debt owing to a
Subsidiary is made or issued solely on a senior,
unsecured basis;
(ii) Debt of a Designated Subsidiary existing at
he time such Subsidiary is designated as a Restricted
Subsidiary;
(iii) Excluded Working Capital Financings; and
(iv) (A) unsecured Debt not otherwise permitted by
the foregoing clauses (i), (ii) and (iii) of this
Section, in an aggregate principal amount at any time
outstanding not to exceed $200,000,000 and (B) Debt
secured by Liens permitted by Section 5.04.
(b) The Borrower shall not permit any of its
Unrestricted Subsidiaries that are Consolidated Subsidiaries or
any of their respective Subsidiaries that are Consolidated
Subsidiaries to create, incur, assume or suffer to exist any
Debt owing to a Person other than the Borrower or a Subsidiary
(including Debt referred to in clause (ii) of subsection (a) of
this Section) if the aggregate outstanding principal amount of
all such Debt (except Excluded Working Capital Financings) of
all such Subsidiaries would at any time exceed $800,000,000.
For purposes of this subsection (b), a Consolidated Kuwait
Joint Venture shall be deemed not to be a Subsidiary or a
Consolidated Subsidiary.
SECTION 5.06. Consolidations, Mergers and Sales of
Assets. The Borrower will not merge or consolidate with or
into any other Person or sell, lease, transfer or otherwise
dispose of all or substantially all of its assets, property or
business in any single transaction or series of related
transactions, unless
(i) in the case of any such merger or
consolidation, the Borrower shall be the continuing
corporation, or, in the case of any such sale, lease,
transfer or other disposition, the transferee or
transferees shall be one or more Wholly-Owned
Consolidated Subsidiaries organized and existing under
the laws of the United States of America or any State
thereof, each of which shall expressly assume the due
and punctual performance and observance of all of the
covenants and agreements of the Borrower contained in
this Agreement and the Notes, and
(ii) immediately after giving effect to such
merger or consolidation, or such sale, lease, transfer
or other disposition, no Default or Potential
Cross-Default shall have occurred and be continuing.
SECTION 5.07. Minimum Consolidated Tangible Net
Worth. Consolidated Tangible Net Worth will not at any time be
less than the sum of
(i) $1,050,000,000 less Restructuring Charges
taken after June 30, 1994 up to a maximum cumulative
amount of $100,000,000,
(ii) 50% of Consolidated Net Income (calculated
before giving effect to any Restructuring Charges
deducted pursuant to clause (i) above), for each fiscal
quarter beginning after June 30, 1994 for which such
Consolidated Net Income (as so calculated) is positive,
and
(iii) 50% of the proceeds from the sale after June
30, 1994 of capital stock that is not redeemable at the
option of the holder thereof and that the issuer
thereof is not required to repurchase at the option of
the holder thereof;
provided that proceeds from the sale of capital stock issued
pursuant to any employee benefit plan, stock option plan or
dividend reinvestment plan shall be excluded from any
determination under this Section 5.07.
SECTION 5.08. Leverage Ratio. The Leverage Ratio
will not (i) at any time prior to June 30, 1995 exceed 1.65 to
1 and (ii) at any time on or after June 30, 1995 exceed 1.5 to
1.
SECTION 5.09. Interest Coverage Ratio. At the end
of any fiscal quarter ending after June 30, 1994, the Interest
Coverage Ratio for the period of four consecutive fiscal
quarters then ended will not be less than 2.0 to 1.
SECTION 5.10. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used by the Borrower
for working capital and general corporate purposes of the
Borrower and its Subsidiaries. None of such proceeds will be
used, directly or indirectly, in violation of Regulation X or
for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 5.11. Payments from Domestic Restricted
Subsidiaries. The Borrower shall not, and shall not permit any
Domestic Consolidated Subsidiary that is a Restricted
Subsidiary to, enter into any agreement which expressly
prohibits or limits in any manner the ability of such
Restricted Subsidiary, directly or indirectly, to declare or
pay any dividend or other distribution, loan, advance or other
payment to the Borrower.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan or, within five days, any interest
on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.04 to 5.11,
inclusive;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 20 days after written notice thereof has been given
to the Borrower by the Administrative Agent at the
request of any Bank;
(d) any representation, warranty, certification
or statement made (or deemed made) by the Borrower in
this Agreement or in any certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
make any payment in respect of Material Debt when due
or within any applicable grace period or any event or
condition shall occur which results in the acceleration
of the maturity of Material Debt;
(f) any event or condition (except a failure to
pay or other event or condition covered by clause (e)
above) shall occur which enables (or, with the giving
of notice or lapse of time or both, would enable) the
holder or holders of Material Debt or any Person or
Persons acting on its or their behalf to accelerate the
maturity thereof or terminate its or their commitment
in respect thereof and such event or condition shall
not have been cured within two Domestic Business Days
after both (i) the Required Banks shall have determined
that such event or condition, if not cured within two
Domestic Business Days, should be an Event of Default
under this clause (f) and (ii) the Administrative Agent
shall have given the Borrower written notice of such
determination;
(g) the Borrower or Material Subsidiaries shall:
(i) commence a voluntary case or other proceeding
seeking (1) liquidation, reorganization or other relief
with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or
hereafter in effect or (2) the appointment of a
trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its
property;
(ii) consent to any such relief or to the
appointment of or taking possession by any such
official in an involuntary case or other proceeding
commenced against it;
(iii) make a general assignment for the benefit
of creditors;
(iv) fail generally to pay its debts as they
become due; or
(v) take any corporate action to authorize any of
the foregoing;
(h) (i) an involuntary case or other proceeding
shall be commenced against the Borrower or Material
Subsidiaries seeking (1) liquidation, reorganization or
other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or
hereafter in effect or (2) the appointment of a
trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of
60 days; or
(ii) an order for relief shall be entered against
the Borrower or Material Subsidiaries under the federal
bankruptcy laws as now or hereafter in effect;
(i) (i) any member of the ERISA Group shall fail
to pay when due an amount or amounts aggregating in
excess of $50,000,000 which it shall have become liable
to pay under Title IV of ERISA;
(ii) notice of intent to terminate a Material
Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or
any combination of the foregoing;
(iii) the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007
of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan;
(iv) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
(v) there shall occur a complete or partial
withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or
more Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $50,000,000;
(j) a judgment or order for the payment of money
in excess of $50,000,000 shall be rendered against the
Borrower or any Subsidiary and shall remain unsatisfied
for a period of ten consecutive days after it becomes
due and payable, during which ten-day period execution
shall not be effectively stayed or otherwise
effectively precluded; or
(k) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated
by the SEC under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or,
during any period of twelve consecutive calendar
months, individuals who were directors of the Borrower
on the first day of such period shall cease to
constitute a majority of the board of directors of the
Borrower;
then, and in every such event, the Administrative Agent shall:
(i) if requested by Banks having more than 50% in
aggregate amount of the Commitments, by notice to the
Borrower terminate the Commitments and they shall
thereupon terminate, and
(ii) if requested by Banks holding Notes
evidencing more than 50% in aggregate outstanding
principal amount of the Loans, by notice to the
Borrower declare the Notes (together with accrued
interest thereon) to be, and the Notes (together with
accrued interest thereon) shall thereupon become,
immediately due and payable without presentment,
demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to the
Borrower, without any notice to the Borrower or any other act
by the Administrative Agent or the Banks, the Commitments shall
thereupon automatically terminate and the Notes (together with
accrued interest thereon) shall automatically become
immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower.
SECTION 6.02. Notice of Default. The Administrative
Agent shall give notice under Section 6.01(c) promptly upon
being requested to do so by any Bank and shall thereupon notify
all the Banks thereof.
ARTICLE VII
THE AGENTS AND CO-AGENTS
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers
under this Agreement and the Notes as are delegated to such
Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Morgan
Guaranty Trust Company of New York and Chemical Bank shall each
have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same
as though it were not an Agent, and Morgan Guaranty Trust
Company of New York and Chemical Bank and their respective
affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not
an Agent hereunder.
SECTION 7.03. Action by Agents. The obligations of
each Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, no Agent
shall be required to take any action with respect to any
Default or Potential Cross-Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. Any Agent
may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. Neither any
Agent nor any of its directors, officers, agents, or employees
shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither any Agent nor any of
its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except, in the case of the
Documentation Agent or the Administrative Agent, receipt of
items required to be delivered to it; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or
any other instrument or writing furnished in connection
herewith. An Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex or similar
writing) believed by it to be genuine or to be signed by the
proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify each Agent
(to the extent not reimbursed by the Borrower) against any
cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result
from such Agent's gross negligence or willful misconduct) that
such Agent may suffer or incur in connection with this
Agreement or any action taken or omitted by such Agent
hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon any Agent, any Co-Agent or any other Bank, and based on
such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon any Agent, any Co-Agent
or any other Bank, and based on such documents and information
as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under
this Agreement.
SECTION 7.08. Successor Agents. (a) Any Agent may
resign at any time by giving 30 days prior written notice
thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint
a successor Agent which shall be a Bank. If no successor Agent
shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a Bank. Upon the acceptance of its appointment
as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an
Agent.
(b) If at any time any Agent shall have assigned its
rights and obligations in respect of all of its Commitment
hereunder, such Agent shall resign as Agent in accordance with
the procedures set forth in subsection (a) of this
Section 7.08.
SECTION 7.09. Distribution of Information. The
Administrative Agent and the Documentation Agent each agree to
mail or deliver to each of the Banks so requesting photocopies
of documents, certificates, financial statements and other
information received by it from the Borrower pursuant to the
express provisions of this Agreement and not otherwise
distributed to the Banks.
SECTION 7.10. Co-Agents. The Co-Agents, in their
capacities as such, shall have no duties or obligations of any
kind under this Agreement.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Fixed Rate Loan (other than Money
Market Absolute Rate Loans):
(a) the Administrative Agent is advised by the
Reference Banks that deposits in Dollars (in the
applicable amounts) are not being offered to the
Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans,
Banks having 50% or more of the aggregate amount of the
affected Loans advise the Administrative Agent that the
Adjusted CD Rate or the London Interbank Offered Rate,
as the case may be, as determined by the Administrative
Agent will not adequately and fairly reflect the cost
to such Banks of funding their CD Loans or Euro-Dollar
Loans, as the case may be, for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise
to such suspension no longer exist, (i) the obligations of the
Banks to make CD Loans or Euro-Dollar Loans, as the case may
be, or to convert outstanding Loans into CD Loans or Euro-
Dollar Loans, as the case may be, shall be suspended and (ii)
each outstanding CD Loan or Euro-Dollar Loan, as the case may
be, shall be converted into a Base Rate Loan on the last day of
the then current Interest Period applicable thereto. Unless
the Borrower notifies the Administrative Agent at least two
Domestic Business Days before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, (i) if such
Fixed Rate Borrowing is a Committed Borrowing, such Borrowing
shall instead be made as a Base Rate Borrowing and (ii) if such
Fixed Rate Borrowing is a Money Market LIBOR Borrowing, the
Money Market LIBOR Loans comprising such Borrowing shall bear
interest for each day from and including the first day to but
excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
SECTION 8.02. Illegality. (a) If, after the date of
this Agreement, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall promptly so notify the
Administrative Agent, the Administrative Agent shall forthwith
give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended.
(b) Before giving any notice to the Administrative
Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will
avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such
notice, each Euro-Dollar Loan of such Bank then outstanding
shall be converted to a Base Rate Loan either (i) on the last
day of the then current Interest Period applicable to such
Euro-Dollar Loan if such Bank may lawfully continue to maintain
and fund such Loan to such day or (ii) immediately if such Bank
shall determine that it may not lawfully continue to maintain
and fund such Loan to such day.
SECTION 8.03. Increased Cost and Reduced Return. (a)
If, after (x) the date hereof, in the case of any Committed
Loan or any obligation to make Committed Loans or (y) the date
of the related Money Market Quote, in the case of any Money
Market Loan, the adoption of, or any change in, any applicable
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) shall subject any Bank (or its Applicable
Lending Office) to any tax, duty or other charge with
respect to its Fixed Rate Loans, its Note to the extent
evidencing Fixed Rate Loans or its obligation to make
Fixed Rate Loans, or shall change the basis of taxation
of payments to any Bank (or its Applicable Lending
Office) of the principal of or interest on its Fixed
Rate Loans or any other amounts due under this
Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes
in the rate of tax on the overall net income of such
Bank or its Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal executive
office or Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement
(including, without limitation, any such requirement
imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any CD
Loan any such requirement included in an applicable
Domestic Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended
by, any Bank (or its Applicable Lending Office) or
shall impose on any Bank (or its Applicable Lending
Office) or on the United States market for certificates
of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note to
the extent evidencing Fixed Rate Loans or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost
to such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of any
sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with
a copy to the Administrative Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation regarding capital adequacy,
or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency has the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level
below that which such Bank (or its Parent) could have achieved
but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then
from time to time, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent), without
duplication, for such reduction. Any determination by any such
authority, central bank or comparable agency that, for purposes
of capital adequacy requirements, the Commitments hereunder do
not constitute commitments with an original maturity of one
year or less, shall be deemed a change in the interpretation
and administration of such requirements for purposes of this
subsection (b), and the additional amount or amounts payable by
the Borrower to each Bank under this subsection (b) as a result
thereof shall be calculated, with respect to the relevant
unused portion of such Bank's Commitment for the relevant
period, at the rate of 0.05% per annum.
(c) Each Bank will promptly notify the Borrower and
the Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. A certificate of
any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it
hereunder, accompanied by a computation thereof in reasonable
detail, shall be conclusive in the absence of manifest error.
In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) If any Bank has demanded compensation under this
Section, the Borrower:
(i) shall have the right, with the assistance of
the Documentation Agent and the Administrative Agent
and upon notification to such Bank, to require such
Bank to transfer, pursuant to an Assignment and
Assumption Agreement in substantially the form of
Exhibit H hereto, its Note and Commitment to a
substitute bank or banks satisfactory to the Borrower
and such Agents (which may be one or more of the Banks)
or
(ii) may elect to terminate this Agreement as to
such Bank, and in connection therewith to prepay any
Base Rate Loan made pursuant to Section 8.04, provided
that the Borrower (1) notifies the Administrative Agent
(which will forthwith notify such Bank) of such
election at least three Euro-Dollar Business Days
before any date fixed for such a prepayment, and (2)
either (x) repays all of such Bank's outstanding Loans
at the end of the respective Interest Periods
applicable thereto or as otherwise required by Section
8.02 or (y) subject to Section 2.13, prepays all of
such Bank's outstanding Loans (other than Money Market
Loans). Upon receipt by the Administrative Agent of
such notice, the Commitment of such Bank shall
terminate.
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. Subject to Sections 2.11 and 2.13,
if (i) the obligation of any Bank to make Euro-Dollar Loans has
been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Borrower
shall, by at least five Euro-Dollar Business Days' prior notice
to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by
such Bank as (or continued as or converted into) CD
Loans or Euro-Dollar Loans, as the case may be, shall
instead be made as or converted into Base Rate Loans
(on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of
the other Banks), and
(b) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid (or
converted to a Base Rate Loan), all payments of
principal which would otherwise be applied to repay
such Fixed Rate Loans shall be applied to repay its
Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the principal
amount of each such Base Rate Loan shall be converted into a CD
Loan or Euro-Dollar Loan, as the case may be, on the first day
of the next succeeding Interest Period applicable to the
related CD Loans or Euro-Dollar Loans of the other Banks.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests,
instructions and other communications to any party hereunder
shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such
party: (w) in the case of the Borrower or any Agent, at its
address, facsimile number or telex number (if any) set forth on
the signature pages hereof, (x) in the case of any Bank, at its
address, facsimile number or telex number (if any) set forth in
its Administrative Questionnaire, (y) in the case of any party
hereto, such other address, facsimile number or telex number as
such party may hereafter specify for the purpose by notice to
the Administrative Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number
specified in this Section and the appropriate answerback is
received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in
this Section; provided that notices to the Administrative Agent
under Article II or Article VIII and notices to the Borrower
under Section 6.01(c) or 6.01(f) shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by
any Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive
of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
out-of-pocket expenses of the Agents, including reasonable fees
and disbursements of one special counsel (Davis Polk &
Wardwell) for the Agents, in connection with the preparation of
this Agreement, any waiver or consent hereunder or any
amendment hereof or any actual or alleged Default or Potential
Cross-Default hereunder and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by the Agents or any Bank,
including fees and disbursements of counsel (including the cost
of staff counsel where used, without duplication of work, in
lieu of separate special counsel), in
connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom. The Borrower
shall indemnify each Bank against any transfer taxes,
documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery
of this Agreement or the Notes.
(b) The Borrower shall indemnify each Bank and its
directors, officers and employees for, and hold each Bank and
its directors, officers and employees harmless from and against
(i) any and all damages, losses and other liabilities of any
kind, including, without limitation, judgments and costs of
settlement, and (ii) any and all reasonable out-of-pocket costs
and expenses of any kind, including, without limitation, fees
and disbursements of counsel (including the cost of staff
counsel where used, without duplication of work, in lieu of
separate special counsel) and any other costs of defense,
including, without limitation, costs of discovery and
investigation, for such Bank and its officers and directors
(all of which shall be paid or reimbursed by the Borrower
monthly), suffered or incurred in connection with any
investigative, administrative or judicial proceeding (whether
or not such Bank shall be designated a party thereto) relating
to or arising out of this Agreement or any actual or proposed
use of proceeds of Loans hereunder; provided that no such Bank,
director, officer or employee shall have any right to be
indemnified or held harmless hereunder for its own gross
negligence or willful misconduct as finally determined by a
court of competent jurisdiction. The Borrower shall indemnify
and hold harmless each Agent, in its capacity as Agent
hereunder, to the same extent that the Borrower indemnifies and
holds harmless each Bank pursuant to this Section.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise (except pursuant to Section
8.03(d)(ii)), receive payment of a proportion of the aggregate
amount of principal and interest due with respect to any Note
held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank,
the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest
with respect to the Notes held by the Banks shall be shared by
the Banks pro rata; provided that if at any time
thereafter, the Bank that originally received such payment is
required to repay (whether to the Borrower or to any other
Person) all or any portion of such payment, each other Bank
shall promptly (and in any event within five Domestic Business
Days of its receipt of notification from such Bank requiring
such repayment) repay to such Bank the portion of such payment
previously received by it under this Section 9.04, together
with such amount (if any) as is equal to the appropriate
portion of any interest (in respect of the period during which
such other Bank held such amount) such Bank shall have been
obligated to pay when repaying such amount as aforesaid, in
exchange for such participation in the Note of such other Bank
as was previously purchased by such Bank; provided further that
nothing in this Section shall impair the right of any Bank to
exercise any right of set-off or counterclaim it may have and
to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under
the Notes.
SECTION 9.05. Amendments and Waivers. Any provision
of this Agreement or the Notes may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed
by the Borrower and the Required Banks (and, if the rights or
duties of any Agent are affected thereby, by such Agent);
provided that no such amendment or waiver shall, unless signed
by all the Banks, (i) increase or decrease the Commitment of
any Bank or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment
of principal of or interest on any Loan or any fees hereunder
or for any reduction or termination of any Commitment, (iv)
change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks,
which shall be required for the Banks or any of them to take
any action under this Section or any other provision of this
Agreement or (v) amend or waive the provisions of this Section
9.05. Neither a pro rata reduction of the Commitments pursuant
to Section 2.01(a) nor any exercise by the Borrower of its
right to decrease the Commitments pro rata pursuant to Section
2.09 or to decrease the Commitment of a Bank pursuant to
Section 8.03(d) shall require the consent of any party to this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign
or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of its
Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower and the Agents, such Bank shall remain
responsible for the performance of its obligations hereunder,
and the Borrower and the Agents shall continue to deal solely
and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement and such Bank's
Note. Any agreement pursuant to which any Bank may grant such
a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder and under the Notes
including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i)
(only to the extent such modification, amendment or waiver
would decrease the Commitment of such Bank), (ii) or (iii) of
Section 9.05 or to any modification, amendment or waiver that
would have the effect of increasing the amount of a
Participant's participation in such Bank's Commitment, in any
such case without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided in
its participation agreement, be entitled to the benefits of
Article VIII with respect to its participating interest,
subject to subsection (f) below. An assignment or other
transfer which is not permitted by subsection (c) or (d) below
shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more
banks or other institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under
this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit H
hereto executed by such Assignee and such transferor Bank, with
the subscribed consent of the Borrower in consultation with the
Administrative Agent and with the subscribed acknowledgment of
the Administrative Agent; provided that,
(i) if an Assignee is (x) any Person which
controls, is controlled by, or is under common control
with, or is otherwise substantially affiliated with
such transferor Bank or (y) another Bank, no such
consent shall be required,
(ii) such assignment may, but need not, include
rights of the transferor Bank in respect of outstanding
Money Market Loans and
(iii) if the transferor Bank is assigning a
proportionate part (but not all) of its rights and
obligations under this Agreement and the Notes to an
Assignee that was not a Bank party to this Agreement
prior to such assignment, the amount so assigned
(disregarding Money Market Loans) shall be not less
than the amount that would be held at such time
(disregarding Money Market Loans) by a Bank having an
initial Commitment of $10,000,000.
Upon execution and delivery of such instrument and payment by
such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and
the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (c), the
transferor Bank, the Administrative Agent and the Borrower
shall make appropriate arrangements so that, if required, new
Notes are issued to the Assignee and the transferor Bank and
the original Note is cancelled, and the Administrative Agent
shall notify the other Agents of such assignment. In
connection with any such assignment, the transferor Bank shall
pay to the Administrative Agent an administrative fee of $2,000
for processing such assignment. If the Assignee is not
incorporated under the laws of the United States of America or
a state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver
to the Borrower and the Administrative Agent certification as
to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 2.15.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) The Agents and the Borrower may, for all
purposes of this Agreement, treat any Bank as the holder of any
Note drawn to its order (and owner of the Loans evidenced
thereby) until written notice of assignment or other transfer
shall have been received by them.
(f) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not
exist.
(g) If any Reference Bank assigns its Note to an
unaffiliated institution, the Administrative Agent shall, with
the consent of the Borrower and the Required Banks, appoint
another Bank to act as a Reference Bank hereunder.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agents and each of the other Banks that it in
good faith is not relying upon any "margin stock" (as defined
in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 9.08. GOVERNING LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL. THIS AGREEMENT AND EACH
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE BORROWER, THE
AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and
all prior agreements and understandings, oral or written,
relating to the subject matter hereof.
SECTION 9.10. Confidentiality. In addition to any
confidentiality requirements under applicable law, each of the
Agents and each of the Banks (each a "Bank Party" and,
collectively, the "Bank Parties") agrees that, through and
including the latest of (a) the Revolving Credit Termination
Date, (b) the Term Loan Maturity Date and (c) a date three
years from the relevant Bank Party's receipt of the relevant
information, it will take normal and reasonable precautions so
that
(i) all information expressly designated by its
provider as confidential provided to any of them by the
Borrower, any Person on behalf of the Borrower, or by
any other Bank Party on behalf of the Borrower, in
connection with this Agreement or the transactions
contemplated hereby will be held and treated by each
such Bank Party and its respective directors,
Affiliates, officers, agents and employees in
confidence and
(ii) neither it nor any of its respective
directors, Affiliates, officers, agents or employees
shall, without the prior written consent of the
Borrower, use any such information for any purpose or
in any manner other than pursuant to the terms of and
for the purposes contemplated by this Agreement.
Notwithstanding the immediately preceding sentence, any Bank
Party may disclose any such information or portions thereof
(a) that is or becomes publicly available other
than through a breach by such Bank Party of its
obligations hereunder;
(b) that is also provided to such Bank Party by a
Person other than the Borrower not in violation, to the
actual knowledge of such Bank Party, of any duty of
confidentiality;
(c) at the request of any bank regulatory
authority or examiner;
(d) pursuant to subpoena or other court process;
(e) when required by applicable law;
(f) at the written request or the express
direction of any other authorized government agency;
(g) to its independent auditors, counsel and
other professional advisors in connection with their
provision of professional services to such Bank Party;
or
(h) to any (i) Participant or (ii) prospective
Participant or prospective Bank, if such Participant,
prospective Participant or prospective Bank (which
prospective Bank is promptly identified to the
Borrower), prior to any such disclosure, agrees in
writing to keep such information confidential to the
same extent required of the Bank Parties hereunder;
provided that any Bank Party's failure to comply with the
provisions of this Section 9.10 shall not affect the
obligations of the Borrower hereunder.
SECTION 9.11. Severability. Any provision of this
Agreement that is prohibited, unenforceable or not authorized
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
UNION CARBIDE CORPORATION
By /s/ Thomas D. Jones
Title: Vice President and Treasurer
39 Old Ridgebury Road
Danbury, CT 06817-0001
Telecopy number: (203) 794-5135
Attention: Vice President and Treasurer
Commitments
$11,833,333.33 ABN AMRO BANK N.V.,
NEW YORK BRANCH
as a Co-Agent and a Bank
By /s/ David A. Mandell
Title: Vice President
By /s/ David W. Stack
Title: Corporate Banking
Officer
$11,833,333.33 BANK OF AMERICA ILLINOIS,
as a Co-Agent and a Bank
By /s/ Nancy McGaw
Title: Vice President
$11,833,333.33 THE BANK OF NEW YORK,
as a Co-Agent and a Bank
By /s/ Nancy McEwen
Title: Vice President
$11,833,333.33 THE BANK OF NOVA SCOTIA,
as a Co-Agent and a Bank
By /s/ Terry K. Fryett
Title: Vice President
Commitments
$11,833,333.33 BANQUE NATIONALE DE PARIS,
as a Co-Agent and a Bank
By /s/ Sophie Revillard Kaufman
Title: Vice President
By /s/ Eric Vigne
Title: Senior Vice President
$11,833,333.33 CIBC INC.,
as a Co-Agent and a Bank
By /s/ Julia C. Collins
Title: Vice President
$11,833,333.34 CHEMICAL BANK,
as a Bank
By /s/ William Ewing IV
Title: Managing Director
$11,833,333.33 CREDIT SUISSE,
as a Co-Agent and a Bank
By /s/ Kristina Catlin
Title: Associate
By /s/ Lynn Allegaert
Title: Member of Senior
Commitments
$11,833,333.33 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as a Bank
By /s/ James S. Finch
Title: Vice President
$11,833,333.33 NATIONSBANK OF NORTH CAROLINA, N.A.,
as a Co-Agent and a Bank
By /s/ Margaret K. Vandenberg
Title: Senior Vice President
$ 7,500,000.00 BANCA COMMERCIALE ITALIANA
By /s/ Edward Bermant
Title: First Vice President
By /s/ Julia M. Welch
Title: Assistant Vice President
$ 7,500,000.00 BARCLAYS BANK PLC
By /s/ J. Onischuk
Title: Associate Director
$ 7,500,000.00 FUJI BANK LIMITED
By /s/ Yoshihiko Shiotsugu
Title: Vice President and
Manager
Commitments
$ 7,500,000.00 ROYAL BANK OF CANADA
By /s/ Peter D. Steffen
Title: Senior Manager
$ 7,500,000.00 THE SUMITOMO BANK, LIMITED
By /s/ Yoshinori Kawamura
Title: Joint General Manager
$ 7,500,000.00 SWISS BANK CORPORATION
By /s/ Colin T. Taylor
Title: Director Merchant Banking
By /s/ Paul D. Stendig
Title: Associate Director
Merchant Banking
$ 7,500,000.00 TORONTO DOMINION (NEW YORK), INC.
By /s/ Jano Mott
Title: Vice President
$ 4,166,666.67 COMMERZBANK AG
NEW YORK BRANCH
By /s/ Werner Niemeyer
Title: Vice President
By /s/ Michael D. Hintz
Title: Vice President
Commitments
$ 4,166,666.67 GENERALE BANK
By /s/ Alain Verschueren
Title: Senior Vice President
Corporate
By /s/ Hans U. Neukomm
Title: General Manager
$ 4,166,666.67 THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By /s/ Jeffry S. Dykes
Title: Vice President
$ 4,166,666.67 INSTITUTO BANCARIO SAN PAOLO DI
TORINO, S.P.A.
By /s/ William J. DeAngelo
Title: First Vice President
By /s/ Robert S. Wurster
Title: First Vice President
$ 4,166,666.67 MELLON BANK, N.A.
By /s/ James S. Adelsheim
Title: Vice President
$ 4,166,666.67 NATIONAL BANK OF KUWAIT
By /s/ Phillip M. Johnson
Title: Executive Manager
By /s/ George Y. Nasra
Title: General Manager
Commitments
$ 4,166,666.67 SOCIETE GENERALE
By /s/ Philippe de Rozieres
Title: Vice President
_________________
Total Commitments:
$200,000,000.00
===============
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Documentation Agent
By /s/ James S. Finch
Title: Vice President
60 Wall Street
New York, New York 10260
Attention: James Finch
Telex number: 177615
Telecopy number: (212) 648-5014
CHEMICAL BANK, as Administrative Agent
By /s/ William Ewing IV
Title: Managing Director
270 Park Avenue
New York, New York 10017-2070
Attention: Terry Kennon
Telecopy number: (212) 270-7138
CHEMICAL BANK, as Auction Agent
By /s/ William Ewing IV
Title: Managing Director
270 Park Avenue
New York, New York 10017-2070
Attention: Terry Kennon
Telecopy number: (212) 270-7138
PRICING SCHEDULE
The "Euro-Dollar Margin", "CD Margin" and "Facility Fee
Rate" for any day are the respective rates per annum set forth
below in the applicable row under the column corresponding to the
Pricing Level that applies on such day; provided that the
Euro-Dollar Margins and CD Margins applicable to Term Loans shall
be the applicable rate per annum set forth below plus 0.0625% if
the Borrower selects a one-year maturity for the Term Loans or
0.1250% if the Borrower selects a two-year maturity for the Term
Loans:
Status Level I Level II Level III
Euro-Dollar Margin 0.3250% 0.3250% 0.4000%
CD Margin 0.4500% 0.4500% 0.5250%
Facility Fee Rate 0.1000% 0.1250% 0.1750%
For purposes of this Schedule, the following terms have
the following meanings:
"Level I Pricing" applies on any day if on such day the
Borrower's long-term debt securities (whether or not outstanding
at such date) are rated BBB or higher (or the equivalent) by S&P
and Baa2 or higher (or the equivalent) by Moody's.
"Level II Pricing" applies on any day if on such day
(i) the Borrower's long-term debt securities (whether or not
outstanding at such date) are rated either BBB or higher (or the
equivalent) by S&P or Baa2 or higher (or the equivalent) by
Moody's and (ii) Level I Pricing does not apply.
"Level III Pricing" applies on any day if no higher
Pricing Level applies on such day.
"Moody's" means Moody's Investors Service, Inc., a
Delaware corporation.
"Pricing Level" refers to the determination of which of
Level I Pricing, Level II Pricing or Level III Pricing
applies on any day. Level I Pricing is the highest Pricing Level
and Level III Pricing the lowest.
"S&P" means Standard & Poor's Ratings Group.
The ratings to be utilized for purposes of this Pricing Schedule
are those assigned to the senior unsecured long-term debt
securities of the Borrower without thirdparty credit enhancement,
and any rating assigned to any other debt security of the
Borrower shall be disregarded. The rating in effect on any day
is the rating in effect at the close of business on such day.
If either Moody's or S&P is merged or consolidated with another
Person or if the ratings business of Moody's or S&P is acquired
by another Person (the entity conducting such ratings business
after any such merger, consolidation or acquisition being herein
called the "Successor"), the ratings provided by the Successor
shall be used for purposes of this Pricing Schedule unless and
until the Borrower and the Required Banks shall, by notice to the
Administrative Agent, designate a different rating agency to
provide such ratings, in which case the ratings provided by the
rating agency so designated shall thereafter replace those
provided by the Successor for purposes of this Pricing Schedule.
EXHIBIT A
NOTE
New York, New York
, 199_
For value received, UNION CARBIDE CORPORATION, a New
York corporation (the "Borrower"), promises to pay to the order
of
(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below on
the applicable maturity date specified in or pursuant to the
Credit Agreement. The Borrower promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at the
rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money
of the United States in Federal or other immediately available
funds at the office of Chemical Bank, 270 Park Avenue, New York,
New York 10017-2070.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof
shall be recorded by the Bank and, prior to any transfer hereof,
appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the
Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the
$200,000,000 Credit Agreement dated as of November 4, 1994 among
the Borrower, the Banks party thereto, the Co-Agents party
thereto, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Chemical Bank, as Administrative Agent
and Auction Agent (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement
are used herein with the same meanings. Reference is
made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
UNION CARBIDE CORPORATION
By__________________________
Name:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
______________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Chemical Bank (the "Auction Agent")
From: Union Carbide Corporation
Re: $200,000,000 Credit Agreement dated as of November
4, 1994 (as the same may be amended from time to
time, the "Credit Agreement") among the Borrower,
the Banks party thereto, the Co-Agents party
thereto and the Agents (as defined in the Credit
Agreement)
We hereby give notice pursuant to Section 2.03 of the
Credit Agreement that we request Money Market Quotes for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount** Interest Period***
$
Such Money Market Quotes should offer a Money Market
[LIBOR Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in
the Credit Agreement.
[NAME OF BORROWER]
By________________________
Name:
Title:
** Amount must be $25,000,000 or a larger multiple of $5,000,000.
*** Not less than one month (LIBOR Auction) or not less than 7
days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to Union Carbide Corporation (the
"Borrower")
Pursuant to Section 2.03 of the $200,000,000 Credit
Agreement dated as of November 4, 1994 (as the same may be
amended from time to time, the "Credit Agreement") among the
Borrower, the Banks parties thereto, the Co-Agents party thereto,
the undersigned, as Auction Agent, and the other Agents (as
defined therein), we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the
following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market
[LIBOR Margin] [Absolute Rate]. [The applicable base rate is the
London Interbank Offered Rate.]
Please respond to this invitation by no later than
[12:00 Noon] [9:30 A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in
the Credit Agreement.
CHEMICAL BANK
By________________________________
Authorized Officer
EXHIBIT D
Form of Money Market Quote
CHEMICAL BANK,
as Auction Agent
[Address]
Attention:
Re: Money Market Quote to
Union Carbide Corporation (the "Borrower")
In response to your invitation on behalf of the
Borrower dated __________ we hereby make the following Money
Market Quote on the following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________1
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
Principal Interest Money Market
Amount2 Period3 [LIBOR Margin4] [Absolute Rate5]
$
$
[Provided, that the aggregate principal amount of Money Market
Loans for which the above offers may be accepted shall not exceed
$____________.]2
__________
1 As specified in the related Invitation.
2 Principal amount bid for each Interest Period may not exceed
principal amount requested. Specify aggregate limitation if the
sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger
multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions
set forth in the $200,000,000 Credit Agreement dated as of
November 4, 1994 (as the same may be amended from time to time,
the "Credit Agreement") among the Borrower, the Banks party
thereto, the Co-Agents party thereto, yourselves, as Auction
Agent, and the other Agents (as defined therein), irrevocably
obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.
Terms used herein have the meanings assigned to them in
the Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
__________
3 [Not less than one month and not more than 12 months] [Not less
than seven days and not more than 180 days], as specified in the
related Invitation. No more than five bids are permitted for
each Interest Period.
4 Margin over or under the London Interbank Offered Rate
determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/10,000th of 1%) and specify
whether "PLUS" or "MINUS".
5 Specify rate of interest per annum (rounded to the nearest
1/10,000th of 1%).
EXHIBIT E
OPINION OF
COUNSEL FOR THE
BORROWER
[Effective Date]
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I have acted as counsel to Union Carbide Corporation
(the "Borrower") in connection with the $200,000,000 Credit
Agreement dated as of November 4, 1994 (the "Credit Agreement")
among the Borrower, the Banks party thereto, the Co-Agents party
thereto, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Chemical Bank, as Administrative Agent
and Auction Agent, and I am rendering this opinion pursuant to
Section 3.01(c) of the Credit Agreement. Capitalized terms used
herein without definition have the same meanings as in the Credit
Agreement.
I have examined originals or copies, certified or
otherwise identified to my satisfaction as being true copies, of
the Credit Agreement, the Notes, certain information and
documents provided to me by responsible officers or employees of
the Borrower and such other documents, certificates and corporate
or other records as I have deemed necessary or appropriate as a
basis for the opinions set forth herein.
In my examination I have assumed the genuineness of all
signatures (other than signatures on behalf of the Borrower), the
authenticity of all documents submitted to me as originals, the
conformity to original documents of all documents submitted to me
as certified or photostatic copies and the authenticity of the
originals of such copies.
No opinion is expressed herein as to any matters
involving or governed by the laws of any jurisdiction other
than the laws of the State of New York, the laws of the State of
Connecticut and the federal laws of the United States of America.
Without limiting the foregoing, I express no opinion as to the
effect (if any) of any law of any jurisdiction (except the States
of New York and Connecticut) in which any Bank is located which
limits the rate of interest that such Bank may charge. I have
investigated such questions of law and investigated such
questions of fact for the purpose of rendering the opinions
expressed herein as I have deemed necessary or appropriate.
On the basis of and subject to the foregoing, and to
the qualifications set forth below, I am of the opinion that:
1. The Borrower is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of New York and is duly
qualified as a foreign corporation to do business and
in good standing under the laws of the State of
Connecticut.
2. The Borrower has the corporate power and
corporate authority to enter into the Credit Agreement
and the Notes and to consummate the transactions
provided for therein.
3. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes and the
consummation by the Borrower of the transactions
provided for therein have been duly authorized by all
requisite corporate action on the part of the Borrower.
4. The Credit Agreement and the Notes have been
duly executed and delivered by the Borrower and are
valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with
their respective terms, except as (i) limited by
bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or
limiting creditors' rights generally, (ii) limited by
equitable principles of general applicability and the
discretion of the court before which any proceeding
thereafter may be brought in applying such principles
and (iii) the enforceability of indemnification against
securities law liabilities may be limited by applicable
federal and state securities laws and general
principles of public policy. Additionally, I express
no opinion as to the validity of the provisions of
Section 9.08 of the Agreement providing for a waiver of
trial by jury.
5. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes will not
(i) constitute a violation of any law or regulation of
the State of New York or Connecticut or the United
States of America which is binding on the Borrower,
(ii) violate the certificate of incorporation or
by-laws of the Borrower or (iii) result in a breach of,
or constitute a default under, or require any consent
under, any indenture or other agreement or instrument
known to me (such agreements being listed in Schedule 1
hereto) evidencing or governing indebtedness for
borrowed money of the Borrower.
6. No consent or approval of, or action by or
filing with, any court or administrative or
governmental body which has not been obtained, taken or
made is required under the laws of the State of New
York or Connecticut or the United States of America for
the Borrower to execute and deliver the Credit
Agreement and the Notes and to consummate the
transactions provided for therein.
7. To the best of my knowledge, there is no
action, suit or proceeding pending or threatened
against or affecting the Borrower or any of its
Restricted Subsidiaries, before any court or arbitrator
or any governmental body, agency or official in which
there is a reasonable likelihood of an adverse decision
which could materially adversely affect the present or
prospective ability of the Borrower to perform its
obligations under the Credit Agreement or any Note or
which draws into question the validity of the Credit
Agreement or the Notes.
In giving the opinions set forth in paragraphs 1 and 2
above, I have relied upon telegraphic or oral confirmations as to
the existence and good standing of the Borrower.
This opinion is rendered solely to you in connection
with the above matter. This opinion may not be relied upon by
you for any other purpose or relied upon by any other Person
(except for deliveries required in accordance with applicable
law) without my prior written consent.
Very truly yours,
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENTS____________
[Effective Date]
To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Documentation Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the
$200,000,000 Credit Agreement (the "Credit Agreement") dated as
of November 4, 1994 among Union Carbide Corporation, a New York
corporation (the "Borrower"), the Banks party thereto, the Co-
Agents party thereto, Morgan Guaranty Trust Company of New York,
as Documentation Agent, and Chemical Bank, as Administrative
Agent and Auction Agent, and have acted as special counsel for
the Agents for the purpose of rendering this opinion pursuant to
Section 3.01(d) of the Credit Agreement. Terms defined in the
Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
corporate records, certificates of public officials and other
instruments and have conducted such other investigations of fact
and law as we have deemed necessary or advisable for purposes of
this opinion.
Upon the basis of the foregoing, we are of the opinion
that:
1. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by all
necessary corporate action.
2. The Credit Agreement constitutes a valid and
binding agreement of the Borrower and the Notes constitute
valid and binding obligations of the Borrower, in each case
enforceable in accordance with its terms except as limited by (i)
bankruptcy, insolvency or other laws affecting creditors' rights
generally and (ii) equitable principles of general applicability.
We are members of the Bar of the State of New York and
the foregoing opinion is limited to the laws of the State of New
York and the federal laws of the United States of America. In
giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State
of New York) in which any Bank is located which limits the rate
of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection
with the above matter. This opinion may not be relied upon by
you for any other purpose or relied upon by any other person
(except for deliveries required in accordance with applicable
law) without our prior written consent.
Very truly yours,
EXHIBIT G
ADMINISTRATIVE QUESTIONNAIRE
___________________________________________________________
Please provide the following details:
I. Information to be included in the Credit Agreement:
(A) BANK NAME:
_________________________________________________
(B) DOMESTIC LENDING OFFICE NAME AND ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
TELEX NUMBER/ANSWERBACK:
__________________________________________________
TELECOPIER/FAX NUMBER:
__________________________________________________
(C) EURO-DOLLAR LENDING OFFICE NAME AND ADDRESS
__________________________________________________
__________________________________________________
__________________________________________________
TELEX NUMBER/ANSWERBACK:
__________________________________________________
TELECOPIER/FAX NUMBER:
__________________________________________________
(D) MONEY MARKET LENDING OFFICE:
__________________________________________________
__________________________________________________
__________________________________________________
TELEX NUMBER/ANSWERBACK:
__________________________________________________
TELECOPIER/FAX NUMBER:
__________________________________________________
II. Information for the administration of the facility:
(A) Where execution copies should be sent:
NAME:
_________________________________________________
ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
(B) Where conformed copies should be sent:
NAME:
_________________________________________________
ADDRESS:
_________________________________________________
_________________________________________________
_________________________________________________
(C) FOR CREDIT MATTERS:
CONTACT NAMES/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(D) FOR ADMINISTRATIVE/OPERATIONS MATTERS:
CONTACT NAMES/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(E) FOR MONEY MARKET LOANS:
PRIMARY CONTACT NAME/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
SECONDARY CONTACT NAME/DEPT.:
_________________________________________________
TELEPHONE NUMBER:
_________________________________________________
TELEX NUMBER/ANSWERBACK:
_________________________________________________
TELECOPIER/FAX NUMBER:
_________________________________________________
(F) PAYMENT INSTRUCTIONS (Please specify where funds,
i.e., interest, commitment fees, repayment of loans,
should be wired):
________________________________________________
________________________________________________
________________________________________________
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR]
(the "Assignor"), [ASSIGNEE] (the "Assignee"), UNION CARBIDE
CORPORATION (the "Borrower")** and CHEMICAL BANK, as the
Administrative Agent (the "Administrative Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $200,000,000 Credit Agreement dated
as of November 4, 1994 among the Borrower, the Assignor and the
other Banks party thereto, as Banks, the Co-Agents party thereto,
the Administrative Agent and the other Agents (as defined
therein) (as the same may be amended from time to time, the
"Credit Agreement");
[WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Committed Loans to the Borrower
in an aggregate principal amount at any time outstanding not to
exceed $__________;]
WHEREAS, Committed Loans made to the Borrower by the
Assignor under the Credit Agreement in the aggregate principal
amount of $__________ are outstanding at the date hereof; and
[WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder in
an amount equal to $__________ (the "Assigned Amount"), together
with a corresponding portion of its outstanding
__________________
* If the Borrower's consent to this assignment is not required by
Section 9.06(c) of the Credit Agreement, references to the
Borrower as a party hereto and Section 4 hereof should be
deleted.
Committed Loans, and the Assignee proposes to accept assignment
of such rights and assume the corresponding obligations from the
Assignor on such terms;]
[WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its outstanding Term Loans
in an amount equal to $_______ (the "Assigned Amount"), and the
Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;]
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein have the respective meanings set forth
in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor under
the Credit Agreement to the extent of the Assigned Amount, and
the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Committed Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery
hereof by the Assignor, the Assignee, the Borrower and the
Administrative Agent and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the
date hereof, be reduced by a like amount and the Assignor
released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in
Federal funds an amount equal to $_________.** It is understood
that facility fees accrued to the date hereof are for the account
of the Assignor and such fees accruing from and including the
date hereof with respect to the Assigned Amount are for the
account of the Assignee. Each of the Assignor and the Assignee
hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it
shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly
pay the same to such other party.
SECTION 4. Consent of the Borrower. This Agreement is
conditioned upon the consent of the Borrower pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement
by the Borrower is evidence of this consent. Pursuant to Section
9.06(c) the Borrower agrees to execute and deliver Notes payable
to the order of the Assignee (and, if necessary, to the Assignor)
to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and shall
have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower, or the validity and
enforceability of the obligations of the Borrower in respect of
the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, any
other Bank, any Co-Agent or any Agent, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and
will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the
Borrower.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
SECTION 7. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be
____________________
** Amount should combine principal together with accrued interest
and breakage compensation, if any, to be paid by the Assignee,
net of any portion of any upfront fee to be paid by the Assignor
to the Assignee. It may be preferable in an appropriate case to
specify these amounts generically or by formula rather than as a
fixed sum.
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By __________________________________
Name:
Title:
[ASSIGNEE]
By __________________________________
Name:
Title:
UNION CARBIDE CORPORATION
By __________________________________
Name:
Title:
Acknowledged this ____ day
of ____ by Chemical Bank,
as Administrative Agent
By________________________________
Name:
Title
EXHIBIT 10.8.3
FIFTH AMENDMENT TO
CARBIDE CENTER LEASE
THIS AMENDMENT, made as of June 30, 1994, between UNION
CARBIDE CORPORATION (formerly known as UNION CARBIDE CHEMICALS
AND PLASTICS COMPANY INC.), a New York corporation having offices
at 39 Old Ridgebury Road, Danbury, Connecticut 06817
("Landlord"), and PRAXAIR, INC. (formerly known as UNION CARBIDE
INDUSTRIAL GASES INC.), a Delaware corporation having offices at
39 Old Ridgebury Road, Danbury Connecticut 06817 ("Tenant"),
W I T N E S S E T H:
WHEREAS, by Danbury Lease Agreement dated as of January 1,
1989, as modified by First Amendment of Lease dated as of June 1,
1989, Second Amendment of Lease dated as of October 24, 1990,
Third Amendment to Carbide Center Lease dated as of June 4, 1992,
and Fourth Amendment to Carbide Center Lease dated as of July 1,
1992 (collectively, the "Lease"), Landlord has leased to Tenant
certain office space in the building known as Carbide Center,
Danbury, Connecticut, as more particularly identified in the
Lease (the "Demised Premises"); and
WHEREAS, Landlord is the tenant of Danbury Buildings,
Inc.("Overlandlord"); and
WHEREAS, the parties wish to amend the lease to clarify the
computation of the Base Rent and the Additional Rent;
NOW, THEREFORE, in consideration of the Lease and the mutual
undertakings set forth herein, Landlord and Tenant hereby amend
the Lease effective as of July 1, 1992 as follows:
1. Section 1.03(a): The Base Rent, as set forth in
Section 1.03(a) of the Lease, shall be modified by deleting
Exhibit C-3 from the Lease and Exhibit C-4 attached hereto shall
be substituted in place thereof.
2. Section 3.06(a): Section 3.06(a) shall be modified by
adding the following subdivision:
"(vii) costs incurred after April 30, 1994 by Landlord,
after reasonable consultation with Tenant, that do not
otherwise qualify hereunder as Operating Expenses and
that result in, and are directly related to, a net
decrease in aggregate related Operating Expenses for
the Building, as reasonably justified by Landlord, at
least equivalent to such costs in the year incurred or
thereafter (but not to exceed twenty-four (24)
months)."
3. Section 3.06: Delete subdivision (d) of Section 3.06.
4. Section 3.07: Section 3.07 of the Lease shall be
modified to read as follows:
"3.07 Landlord shall furnish to Tenant on or about
December 15 of each year a statement setting forth (i)
the estimated Operating Expenses for the forthcoming
Operational Year, and (ii) Tenant's Proportionate Share
of the Operating Expenses for the Operational Year
(computed on the basis of such estimate). Tenant shall
pay to Landlord, together with each monthly installment
of Base Rent, an amount equal to one-twelfth (1/12th)
of Tenant's Proportionate Share of Operating Expenses
as so estimated. Landlord shall furnish to Tenant as
soon as practicable following the close of each
Operational Year a detailed statement setting forth
with respect to such Operational Year (i) the actual
amount of the Operating Expenses, and (ii) the actual
amount of Tenant's Proportionate Share of Operating
Expenses, adjusted to reflect the payments on account
theretofore made by Tenant; and within thirty (30) days
after receipt of such statement, Tenant shall pay to
Landlord the amount so shown to be payable by Tenant.
The Operating Expenses for any Operational Year which
is only partly within the Term shall be prorated.
Landlord shall refund to Tenant any overpayment of
Operating Expenses for any Operational Year within
thirty (30) days after presentation of Landlord's
statement of actual Operating Expenses or as soon as
practicable after any termination of this Lease."
5. Section 3.09: In Section 3.09 of the Lease, line 3,
delete "any increase in."
6. Section 3.10 (New): The following provision shall be
added to the Lease:
"3.10 Landlord shall inform Tenant within a reasonable
period prior to (i) adopting annual operating budgets
(commencing not later than October 30 in each
Operational Year), (ii) extending or executing major
service agreements (viz., involving annual payments
exceeding $100,000) or (iii) incurring extraordinary
expenses (viz., exceeding $100,000) with respect to
Operating Expenses. Such annual budgets shall be based
upon reasonable, documented cost estimates."
7. Section 3.11 (New): The following provision shall be
added to the Lease:
"3.11 On or before November 1, 1994, Tenant shall have
the right to assume or decline, for the 1995
Operational Year and the balance of the Term,
responsibility for those Operating Expenses comprising
Tenant Services, as identified on Schedule I attached
hereto; provided, however, that (i) Tenant shall give
Landlord reasonable notice of any Tenant Services work
it performs in excess of $2,000.00 per job, (ii) any
Tenant Services work shall conform to Building standard
as to materials and workmanship, (iii) Tenant shall be
liable for any damage to the Building due to such work,
except to the extent of Landlord's negligence or
willful misconduct, and (iv) Landlord and Tenant shall
each promptly notify the other in writing of its
representative with respect to all matters concerning
Tenant Services. As to any safety or environmentally
related items of Tenant Services, if Tenant does not
perform any necessary repairs within forty-eight (48)
hours after written notification from Landlord,
Landlord may do so and invoice Tenant for the
reasonable costs of such work. At the request of
Tenant, after December 31, 1994, as to those Tenant
Services for which Tenant has assumed responsibility,
Landlord shall perform such Tenant Services on a
project basis at a mutually agreed upon cost in each
instance."
8. Section 12.03 (New): The following provision shall be
added to the Lease:
"12.03 Tenant shall have the right to use all
telecommunications and computer wiring in the Building
which now services the Demised Premises or the Linde
Data Center located at 55 Old Ridgebury Road, Danbury,
Connecticut (the "Linde Data Center"), to install its
own telephone switching equipment for the Demised
Premises and the Linde Data Center in Landlord's N-0
telephone room and to use the telecommunications cables
located between (i) Old Ridgebury Road and the Linde
Data Center, (ii) the Linde Data Center and the
Building, and (iii) Old Ridgebury Road and the
Building. Further, Tenant shall have the right to
repair and replace, or cause to be repaired and
replaced, any such telecommunications and computer
wiring, switching equipment or cables. Landlord shall
cooperate fully to permit Tenant to receive
telecommunications service at the Demised Premises and
the Linde Data Center."
9. Tenant hereby acknowledges that Landlord is not
required by the Lease and does not intend to seek the consent of
Overlandlord with respect to this Amendment.
10. Landlord shall inform Tenant in advance of any
modifications of the Prime Lease with Overlandlord and Landlord
shall give to Tenant a reasonable opportunity to benefit from any
transaction with Overlandlord reducing Landlord's payments to
Overlandlord. Tenant will take no benefit under the Lease from
any decrease in Landlord's payments of Basic Rent, Additional
Rent or other amounts to Overlandlord unless Tenant has
contributed in a mutually agreed proportionate amount to the cost
of obtaining any such decrease. As used herein, "cost" shall
include all costs and expenses incurred by Landlord and related
to such reductions, whether paid to Overlandlord or to others,
including but not limited to, prepayments of Basic Rent or
Additional Rent and payment of transaction costs such as
underwriting fees, legal fees, appraisal fees, survey fees,
brokers' fees, or otherwise, of any nature whatsoever, whether
similar or dissimilar to the foregoing.
11. All terms which are defined in the Lease shall have the
same meaning when used herein.
12. Except as otherwise provided herein, the Lease shall
remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment by their duly authorized officers as of the day and
year first above written.
UNION CARBIDE CORPORATION
By: Robert F.X. Fusaro
Attorney-in-Fact
PRAXAIR, INC.
By: David H. Chaifetz
Vice President
EXHIBIT C-4
Base Rent
Period Base Rent ($/Month)
1. July 1992 $221,020.10
through December 1996
2. January 1997 through $268,909.27
December 2001
3. January 2002 through $327,213.00
December 2006
SCHEDULE I
Tenant Services
1. Repair chairs/furniture
2. Jammed cabinet/desk drawers
3. Repair baseboards
4. Adjust and/or repair ceiling panels
5. Close and lost windows
6. Repair/replace carpet and floor tiles
7. Repair doors/latches for offices, closets and
conference rooms
8. Repair furniture locks
9. Brushlon and vinyl repair
10. Tripping hazards
11. Missing/broken outlet covers
12. Hang pictures
13. Pendaflex frames
14. Extension cords
15. Adjust chairs
16. Relamping/no power call-lights
17. Replace sprinkler caps
18. Temperature complaints where HVAC meets Lease standard
19. Faucet leaks in K-1, K-2, M-1 and M-2 support areas
20. Restroom repairs caused by improper use of Tenant's employees
EXHIBIT 10.8.5
THIRD AMENDMENT TO
LINDE DATA CENTER LEASE
THIS AMENDMENT, made as of June 30, 1994, between UNION
CARBIDE CORPORATION (formerly known as UNION CARBIDE CHEMICALS AND
PLASTICS COMPANY INC.), a New York corporation having offices at 39
Old Ridgebury Road, Danbury, Connecticut 06817
("Landlord"), and PRAXAIR, INC. (formerly known as UNION CARBIDE
INDUSTRIAL GASES INC.), a Delaware corporation having offices at 39
Old Ridgebury Road, Danbury, Connecticut 06817 ("Tenant"),
W I T N E S S E T H:
WHEREAS, by Danbury lease Agreement dated as of January 1,
1989, as modified by First Amendment to Linde Data Center Lease
(Danbury) dated as of June 4, 1992 and Second Amendment to Linde
Data Center Lease (Danbury) dated as of July 1, 1992 (collectively,
the "Lease"), Landlord has leased to Tenant certain office space in
the building known as Linde Data Center, Danbury, Connecticut, as
more particularly identified in the Lease (the "Demised Premises");
and
WHEREAS, Landlord is the tenant of Danbury Buildings, Inc.
("Overlandlord"); and
WHEREAS, the parties wish to amend the Lease to clarify the
computation of the Base Rent and the Additional Rent;
NOW, THEREFORE, in consideration of the Lease and the mutual
undertakings set forth herein, Landlord and Tenant hereby amend the
Lease effective as of July 1, 1992 as follows:
1. Section 3.02: In Section 3.02 of the Lease, line 5,
after "Term" insert" all in accordance with section 3.07"; and
delete the second sentence.
2. Section 3.07: Section 3.07 of the Lease shall be
modified to read as follows:
"3.07. Landlord shall furnish to Tenant on or
about December 15 of each year a statement setting
forth (i) the estimated Operating Expenses and Taxes
for the forthcoming Operational Year, and (ii)
Tenant's Proportionate Share of any increase or
decrease in the total aggregate Operating Expenses and
Taxes for the Operational Year (computed on the basis
of such estimate) over the total aggregate Operating
Expenses and Taxes for the Base Year, viz., $11.56.
Tenant shall pay to Landlord, together with each
monthly installment of Base Rent, an amount equal to
one-twelfth (1/12th) of Tenant's Proportionate Share
of any increase in Operating Expenses and Taxes as so
estimated and Landlord shall issue to Tenant a monthly
credit applicable against the Base Rent equal to one-
twelfth (1/12th) of Tenant's Proportionate Share of
any decrease in Operating Expenses and Taxes as so
estimated. Landlord shall furnish to Tenant as soon
as practicable following the close of each Operational
Year a detailed statement setting forth with respect
to such Operational Year (i) the actual amount of the
Operational Expenses and Taxes, and (ii) the actual
amount of Tenant's Proportionate Share of any total
aggregate increase or decrease in Operating Expenses
and Taxes, adjusted to reflect the payments on account
theretofore made by Tenant or credits received from
Landlord; and within thirty (30) days after receipt of
such statement, Tenant shall pay to Landlord the
amount so shown to be payable by Tenant. The
Operating Expenses for any Operational Year which is
only partly within the Term shall be prorated.
Landlord shall refund to Tenant any overpayment of
Operating Expenses and taxes for any Operational Year
within thirty (30) days after presentation of
Landlord's statement of actual Operating Expenses and
Taxes or as soon as practicable after any termination
of this Lease. As of August 1 of each Operational
Year, Landlord shall deliver to Tenant an estimate of
Operating Expenses and Taxes paid or incurred through
June 30 of such Operational Year."
3. Section 3.11: Section 3.11 of the Lease shall be
modified to read as follows:
"3.11. On or before November 1 of any year, Tenant
shall have the right to assume or decline, for the
next succeeding Operational Year, responsibility for
the following categories of Operating Expenses:
cleaning services, in-building security, and such
other categories as may be mutually agreed upon by the
parties. Tenant shall conform to reasonable standards
in performing any such work."
Landlord and Tenant hereby acknowledge that (i) for the 1994
Operational Year, Tenant has duly assumed responsibility for
cleaning and in-building security (as of August 1, 1994); (ii)
administration expenses shall consist only of costs of
administering the Prime Lease and Superior Mortgages as to the
Building, Building maintenance and repairs, and Danbury Operating
Emergency Center activities to the Building; and (iii) Landlord
shall have the right from time to time to audit Tenant's cleaning
activities at the Demised Premises against reasonable standards.
4. Section 3.12: Delete Section 3.12 from the Lease.
5. Section 12.03 (New): The following provision shall
be added to the Lease:
"12.03. Tenant shall have the right to use all
telecommunications and computer wiring in the Building
which now services the Demised Premises, to install
its own telephone switching equipment for the Demised
Premises in Landlord's N-O telephone room in the
Corporate Center located at 39 Old Ridgebury Road,
Danbury, Connecticut (the "Corporate Center"), and to
use the telecommunications cables located between (i)
Old Ridgebury Road and the Demised Premises, (ii) the
Demised Premises and the Corporate Center, and (iii)
the Corporate Center and Old Ridgebury Road. Further,
Tenant shall have the right to repair and replace, or
cause to be repaired and replaced, any such
telecommunications and computer wiring, switching
equipment or cables. Landlord shall cooperate fully
to permit Tenant to receive telecommunications service
at the Demised Premises."
6. Tenant hereby acknowledges that Landlord is not
required by the Lease and does not intend to seek the consent of
Overlandlord with respect to this Amendment.
7. Landlord shall inform Tenant in advance of any
modifications of the Prime Lease with Overlandlord and Landlord
shall give to Tenant a reasonable opportunity to benefit from any
transaction with Overlandlord reducing Landlord's payments to
Overlandlord. Tenant will take no benefit under the Lease from
any decrease in Landlord's payments of Basic Rent, Additional Rent
or other amounts to Overlandlord unless Tenant has contributed in
a mutually agreed proportionate amount to the cost of obtaining
any such decrease. As used herein, "cost" shall include all costs
and expenses incurred by Landlord and related to such reductions,
whether paid to Overlandlord or to others, including but not
limited to, prepayments of Basic Rent or Additional Rent and
payment of transaction costs such as underwriting fees, legal
fees, appraisal fees, survey fees, brokers' fees, or otherwise, of
any nature whatsoever, whether similar or dissimilar to the
foregoing.
8. All terms which are defined in the Lease shall have
the same meaning when used herein.
9. Except as otherwise provided herein, the Lease shall
remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment by their duly authorized officers as of the day and year
first above written.
UNION CARBIDE CORPORATION
By: Robert F.X. Fusaro
Attorney-in-Fact
PRAXAIR, INC.
By: David H. Chaifetz
Vice President
EXHIBIT 10.9.2
TAX SETTLEMENT AGREEMENT
AGREEMENT made May 31, 1994 among Union Carbide Corporation,
a New York corporation ("Union Carbide") with offices at 39 Old
Ridgebury Road, Danbury, Connecticut 06817, and Praxair, Inc., a
Delaware corporation ("Praxair"), with offices at 39 Old Ridgebury
Road, Danbury, Connecticut 06817,
W I T N E S S E T H:
WHEREAS, Union Carbide spun-off its industrial gases and
coatings service businesses to its shareholders on June 30, 1992
by distributing the shares of Praxair to such shareholders;
WHEREAS, Union Carbide and Praxair each have a number of tax
claims and open items relating to the spin-off;
WHEREAS, Union Carbide and Praxair hereby agree to resolve
the tax issues as set forth below;
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements hereinafter set forth, the parties hereby
agree as follows:
1. Reference is made to the Tax Disaffiliation Agreement
dated as of June 4, 1992 between Union Carbide and Praxair
("TDA").
(a) Praxair acknowledges its liability under the TDA and
agrees to pay Union Carbide $6,495,624 representing
Praxair's share of federal income taxes for the short
taxable period January 1, 1992 through June 30, 1992.
(b) This is to clarify that Section 1.04 "Business of
Gases" includes assets or liabilities transferred to
Praxair pursuant to the Transfer Agreement. In
particular, Praxair acknowledges its liability under
Section 2.02(a)(v) of the TDA for any sales, use or
similar transfer taxes imposed by a taxing
jurisdiction in California or any other taxing
jurisdiction outside California in connection with the
transfer of the assets and liabilities pursuant to the
Transfer Agreement. Capitalized terms used herein
without definition shall have the meanings ascribed to
them in the TDA.
(c) Pursuant to Section 2.02(a)(i)(A) and Section
2.02(a)(ii) of the TDA, Praxair is liable to Union
Carbide for any unintentional erroneous exclusion of
income for periods prior to July 1, 1992. Praxair
inadvertently omitted income for the year 1991 on the
sale of the assets of Linde Gases of the Great Lakes,
Inc. and Linde Gases of the Mid-Atlantic, Inc. resulting
in additional federal income tax in the amount of
$5,607,163. The TDA does not specifically provide for a
payment of a tax audit issue prior to the time of a Final
Determination as defined in the TDA. In order to stop
the running of interest on the $5,607,163 owed to Union
Carbide, Praxair will pay Union Carbide $5,607,163 plus
interest at 7% i.e. $938,036 for a total of $6,545,199
(plus $1,241 interest per day for any period after May
31, 1994 for which the sum of $6,545,199 remains unpaid).
Union Carbide hereby waives and shall hold Praxair
harmless for any additional interest (other than interest
stated in the preceding sentence) that may otherwise
become due under the TDA on the amount of $5,607,163 owed
to the Internal Revenue Service for federal income taxes
on the sale of Linde Gases of the Great Lakes, Inc. and
Linde Gases of the Mid-Atlantic, Inc. State and local
income taxes (and interest and penalties if any,) for
which Praxair acknowledges liability to Union Carbide
under Section 2.02(a)(ii) of the TDA, shall be computed
and paid to Union Carbide at the time of a Final
Determination of such liability. For this purpose, a
Final Determination will occur when the federal revenue
agent's report (RAR) results in a state and local income
tax assessment against Union Carbide.
(d) Section 9.01 of the TDA , Deduction for Employee
Stock Options, 3rd sentence shall be amended to read as
follows:
"...The amount of the decrease in the cumulative
income taxes actually paid by a party shall equal
the difference, if any, between (a) the income tax
liability of the party determined without regard to
any deduction claimed or income realized with respect
to the transfer or exercise of the stock option and
(b) the actual income tax liability of the party."
2. Reference is made to the Transfer Agreement as defined in
the TDA. Although the Transfer Agreement is unclear because
Praxair is referred to as the "Transferee", Union Carbide
acknowledges its liability within the spirit of the Transfer
Agreement for the Stock Exchange Transfer Tax for the transfer of
Union Carbide Chemicals (Deutschland) GmbH and Union Carbide
Metals GmbH. The aggregate tax liability for the transfer of
shares of both companies is $23,410 which Union Carbide hereby
agrees to pay Praxair.
3. A credit memorandum of $3,400,000 will be issued to
Praxair by Union Carbide representing the tax accrual for the 8%
tax imposed on Electric Furnace Products Company (EFP) for
undistributed profits of S.A. White Martins (SAWM) for which
Praxair is liable and for which Union Carbide received the
$3,400,000 tax accrual. The $3,400,000 credit memorandum is to
reverse the inadvertent error.
4. Praxair acknowledges liability for and hereby agrees to
pay Union Carbide $67,000 for Connecticut Sales taxes in
connection with services provided to Praxair by Union Carbide
Chemicals and Plastics Company Inc. ("UCC&P") during the period
July 1, 1992 and September 30, 1993 pursuant to the Bridging
Services Agreement among Union Carbide, UCC&P, Praxair and Praxair
Surface Technologies Inc.("PST") dated June 4, 1992, the Services
Agreement between Union Carbide, UCC&P, Praxair and PST dated June
4, 1992 and the Aviation Services Agreement between Union Carbide
and Praxair dated June 10, 1992.
IN WITNESSETH WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
UNION CARBIDE CORPORATION
By: Robert F.X. Fusaro
Title: Attorney-in-Fact
PRAXAIR, INC.
By: David H. Chaifetz
Title: General Counsel
EXHIBIT 10.10.2
FIRST AMENDATORY AGREEMENT TO THE
EMPLOYEE BENEFITS AGREEMENT
This Amendatory Agreement, dated as of May 31, 1994, between
Union Carbide Corporation ("UCC") and Praxair, Inc. (formerly
Union Carbide Industrial Gases Inc.) ("Praxair") amends the
Employee Benefits Agreement between the same parties dated as of
June 4, 1992 ("Employee Benefits Agreement"). All capitalized
terms in this Agreement, unless otherwise defined herein, shall
have the same meaning as set forth in the Employee Benefits
Agreement.
W I T N E S S E T H:
WHEREAS, UCC and Praxair are parties to the Employee
Benefits Agreement, which was intended, inter alia, to establish
a system of payments and reimbursements between the parties with
respect to employee benefit matters arising out of the spinoff of
Praxair (formerly a wholly owned subsidiary of UCC) to UCC's
shareholders; and
WHEREAS, UCC and Praxair wish to settle the transfer of
assets between their respective defined benefit plans as provided
in Paragraph 1 below; and
WHEREAS, UCC and Praxair desire to revise certain provisions
of the Employee Benefits Agreement for simplification purposes
and have determined that the best way to achieve such
simplification is for each party to give up the right to certain
payments under the Employee Benefits Agreement in amounts which
are intended to be, to the extent possible, economically neutral,
as provided in Paragraphs 2 to 5 below.
NOW, THEREFORE, in consideration of the mutual premises and
covenants contained herein, UCC and Praxair agree as follows:
1. In final satisfaction of all obligations with respect
to the transfer of assets between the parties' qualified defined
benefit plans, Two Million Dollars ($2,000,000.00) shall be
transferred in cash or securities from the trust for Praxair's
Retirement Plan to the trust for UCC's Retirement Plan ten days
after the date of this Agreement.
2. With respect to Paragraph 6 of the Employee Benefits
Agreement:
(a) A book reserve is maintained under UCC's
retire medical plan for claims incurred but unpaid (as
of June 30, 1992). The Praxair portion (29%) of such
reserve is fixed at Three Million Seven Hundred Thousand
Dollars ($3,700,000.00). This amount shall be applied
to Praxair's obligations for retiree medical claims.
Praxair's obligation to reimburse UCC for retiree
medical claims will commence only when such reserve
amount has been exhausted.
(b) There are reserves at Metropolitan Life for
Basic Life Plan claims for deaths before the Spinoff
Date and for employees who were disabled before 1986 and
die before attaining age 65. Settlement of these
claims shall be entirely for UCC's account. Thus, UCC
will be entitled to the positive or negative experience
of such reserves after payment of such claims. Praxair
shall have no responsibility for, or rights in, such
reserves and shall have no liability with respect to
such claims.
(c) The Consumer Products reserve credit
adjustment, and the value of Kemet reimbursements, for
retiree life and medical benefits shall be eliminated
from all calculations under the Employee Benefits
Agreement.
(d) Internal and external administrative costs for
retiree life and medical shall be 7.5% of gross claims
paid.
(e) The value of UCAR reimbursement is eliminated
from all calculations under retiree life and medical
and, in exchange, Praxair's reimbursement obligations is
changed from twenty-nine percent (29%) to twenty-seven
and four one-hundredths percent (27.04%). In keeping
with UCC's past practice for charging businesses for
expenses before the Spinoff Date, if UCAR defaults on
its payment obligation to UCC, and UCC is not otherwise
compensated with respect to such default, Praxair's
obligation will revert to twenty-nine percent (29%)
during the period of any such default. Should
UCC subsequently be reimbursed by UCAR with respect to
such defaulted amount, Praxair will share in such
reimbursement to the extent necessary to restore it to
its 27.04% contribution level.
3. Paragraph 8 of the Employee Benefits Agreement is
expanded to provide that from and after the Spinoff Date, Praxair
will be entitled to twenty-nine percent (29%) of any recovery,
whether by successful claim or settlement, made by the UCC
Retirement Plan arising from events which occurred before the
Spinoff Date, excluding any recovery in the Aqua Culture
investment which was retained in UCC's Retirement Plan after the
Spinoff. The calculation of any such recovery will be net of
expenses, including legal fees, incurred in pursuing such claims.
For purposes of Paragraph 8 of the Employee Benefits
Agreement, the American Typlax settlement is expressly included
in claims against the UCC Retirement Plan for which Praxair has a
contribution obligation.
4. With respect to Paragraph 22 of the Employee Benefits
Agreement:
(a) The administrative cost of UCC's pension
operations is excluded from all calculations of
Praxair's reimbursement obligations.
(b) Praxair's annual reimbursement obligation for
administrative services other than pension operations
shall be the lesser of (i) fourteen and one-half percent
(14.5%) of UCC's cost, or (ii) one-hundred thousand
dollars ($100,000.00).
5. All the above provisions are effective as of the
Spinoff Date, as if included in the Employee Benefits Agreement,
and any contrary or inconsistent provision in the Employee
Benefits Agreement is hereby superceded.
6. In the event of national health care legislation which
would substantially change the rights of the parties under the
Employee Benefits Agreement and this Amendatory Agreement, the
parties agree to re-negotiate the provisions of this Amendatory
Agreement to the extent necessary to achieve an equitable
arrangement which comports with the intent of the Employee
Benefits Agreement and this Amendatory Agreement.
7. All bills rendered and paid to date under the Employee
Benefits Agreement will be adjusted to comport with this
Amendatory Agreement.
8. The parties believe that Exhibit A hereto is an
accurate representation of the financial impact of the terms of
this Amendatory Agreement for the period July 1, 1992 through
December 31, 1993, but reserve the right to subject to contents
of such Exhibit A to the review and audit procedures described in
Paragraph 28 of the Employee Benefits Agreement.
IN WITNESS WHEREOF, the parties have duly executed and
entered into this Agreement, as of the date first above written.
UNION CARBIDE CORPORATION
By:____Robert F.X. Fusaro
Name:__Robert F.X. Fusaro
Title: Attorney-in-Fact__
PRAXAIR, INC.
By:____David H. Chaifetz_
Name:__David H. Chaifetz_
Title:_General Counsel___
UCC will furnish to the Commission supplementally on request
a copy of Exhibit A (financial impact of terms of this Amendatory
Agreement for the period July 1, 1992 through December 31, 1993)
which has been omitted.
EXHIBIT 10.11.2
FIRST AMENDMENT TO
DANBURY LEASE-RELATED SERVICES AGREEMENT
THIS AMENDMENT, made as of June 30, 1994, between UNION
CARBIDE CORPORATION (formerly known as UNION CARBIDE CHEMICALS AND
PLASTICS COMPANY INC.), a New York corporation having offices at
39 Old Ridgebury Road, Danbury, Connecticut 06810 ("UCC"), and
PRAXAIR, INC. (formerly known as UNION CARBIDE INDUSTRIAL GASES
INC.), a Delaware corporation having offices at 39 Old Ridgebury
Road, Danbury, Connecticut 06817 ("Praxair"),
W I T N E S S E T H:
WHEREAS, by Danbury Lease Agreement dated as of January 1,
1989, as modified by First Amendment of Lease dated as of June 1,
1989, Second Amendment of Lease dated as of October 24, 1990,
Third Amendment to Carbide Center Lease dated as of June 4, 1992,
Fourth Amendment to Carbide Center Lease dated as of July 1, 1992
and Fifth Amendment to Carbide Center Lease of even date herewith
(collectively, the "Lease"), UCC has leased to Praxair certain
office space in the building known as Carbide Center, Danbury,
Connecticut, as more particularly identified in the Lease (the
"Demised Premises") for the lease period stated therein ("Lease
Period"); and
WHEREAS, pursuant to the Danbury Lease-Related Services
Agreement dated as of June 4, 1992 (the "DLRS"), UCC furnishes to
Praxair certain services as more particularly identified therein
(the "Services"); and
WHEREAS, the parties wish to amend the DLRS to add certain
additional Services;
NOW, THEREFORE, in consideration of the DLRS and the mutual
undertakings set forth herein, UCC and Praxair hereby amend Annex
A of the DLRS, as follows:
1. Part II of Annex A shall be amended effective as of
August 1, 1994, so that the provisions concerning Mailroom
Services shall read as follows:
(a) Mailroom Services shall consist of the following:
non-exclusive right to use N-O mailroom and loading
dock area of the Carbide Center between 7 a.m. and
5 p.m., Monday through Friday, except building
holidays, for shipments and deliveries of mail and
packages via United States Postal Service and
commercial courier services.
(b) The Fee for Mailroom Services included in the CCSA
Services shall equal the following amount with
respect to each MS Period (as defined below):
1.3 (8504 dL x CCL
_________
1,198,380
where:
d = number of days in such MS Period divided by 365
L = UCIG Lease Rate during such MS Period
CCL: = space leased by Praxair under the Lease (currently
106,816 square feet) during such MS Period
An "MS Period" shall begin on the day following the end
of the previous MS Period (except for the first MS Period, which
shall begin on August 1, 1994) and shall end on any day on which
the value of L changes.
The Fee for the MS Services shall be payable on each day
on which, and by the same payment mechanism as that by which, an
installment of Base Rent is payable under the Lease.
Through December 31, 1997, the following monthly charges
shall be added to the Fee and payable in the following amounts
during the respective calendar years as set forth below:
Period Monthly Charges
1994 $3,333.33
1995 $2,500.00
1996 $1,666.66
1997 $ 833.33
2. Effective July 1, 1994, Part VI as set forth below shall
be added to Annex A:
Part VI - Medical and Fitness Center Allowance
Services Provided ("MF Services"). Personnel of Praxair
and its subsidiaries and affiliates shall have the right to use
the Medical Department located in P2 of Carbide Center (consisting
of 6,150 square feet) and the Fitness Center located in N-0
(Basement) of Carbide Center (consisting of 12,941 square feet),
subject to execution of a suitable agreement with any third party
provider operating either such facility or UCC&P, if it operates
either facility.
Fee. In addition to any amounts payable to the provider
of medical or fitness services, the Fee for the MF Services shall
equal the following amount with respect to each MF Period (as
defined below):
[6,150 + .4 (12,941)] dL X CCL + SA
_________
1,198,380
where:
d = number of days in such MF Period divided by 365
L = UCIG Lease Rate during such MF Period
CCL = space leased by Praxair under the Lease (currently
106,816 square feet) during such MF Period
SA = effective area of the Carbide Center space for
which Praxair is liable to pay Fees under Parts I
through V of this Annex A excluding the mailroom/
loading dock area (currently 66,016 square feet)
during such MF Period
An "MF Period" shall begin on the day following the end
of the previous MF Period (except for the first MF Period, which
shall begin on July 1, 1994) and shall end on any day on which the
value of L changes.
The Fee for the MF Services shall be payable on each day
on which, and by the same payment mechanism as that by which, an
installment of Base Rent is payable under the Lease.
3. Except as otherwise provided herein, the DLRS shall
remain in full force and effect.
IN WITNESS WHEREOF, UCC and Praxair have executed this
Amendment by their duly authorized officers as of the day and year
first above written.
UNION CARBIDE CORPORATION
By: Robert F.X. Fusaro
Attorney-in-Fact
PRAXAIR, INC.
By: David H. Chaifetz
Vice President
Exhibit 10.13.4
THIRD AMENDMENT TO THE 1984
UNION CARBIDE STOCK OPTION PLAN
The 1984 Union Carbide Stock Option Plan (the "Plan") is
hereby amended as follows:
1. The second sentence of the second paragraph of
Section 5.4 of the Plan is hereby amended to read as follows:
"In the case of a participant's death, an option
may be exercised at any time during the remaining
term of the option, and, in the case of a
participant's termination of employment other
than for cause under subclause (iii) of the previous
sentence, an option may be exercised only within
three years after such termination."
2. Section 9.1 of the Plan is amended by adding the
following at the end thereof:
"Provided, however, that the Share Exchange provided
for in the Plan of Exchange with UCC Holdings, Inc.,
shall not be considered a Change in Control for the
purposes of this Plan."
3. The amendments set forth herein shall be effective
June 1, 1989.
Signed this 9th day of August, 1989.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Attest:
Exhibit 10.14.2
FIRST AMENDMENT TO THE 1988
UNION CARBIDE LONG-TERM INCENTIVE PLAN
The 1988 Union Carbide Long-Term Incentive Plan (the "Plan")
is hereby amended as follows:
1. The second paragraph of Section 5.3 of the Plan is
hereby amended by substituting the following for the first
sentence thereof:
"An option is only exercisable by
a participant while the participant is
in active employment with the Corporation
except (i) in the case of a participant's
death or Retirement, (ii) during a
three-year period commencing on the date
of a participant's termination of employment
by the Corporation other than for cause,
but only to the extent permitted under
Section 5.5, (iii) during a three-year period
commencing on the date of termination,
by the participant or the Corporation, of
employment after a change in Control of the
Corporation unless such termination of
employment is for cause, but only to the
extent permitted under Section 5.5, or
(iv) if the Committee decides that it is
in the best interest of the Corporation
to permit individual exceptions."
2. Section 11.1 of the Plan is amended by adding the
following at the end thereof:
"Provided, however, that the Share
Exchange provided for in the Plan of
exchange with UCC Holdings, Inc., shall
not be considered a Change of Control
for the purposes of this Plan."
3. The amendments set forth herein shall be effective as
of June 1 1989.
Signed this 9th day of August, 1989.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Attest:
Exhibit 10.14.3
SECOND AMENDMENT TO THE 1988
UNION CARBIDE LONG-TERM INCENTIVE PLAN
The 1988 Union Carbide Long-Term Incentive Plan (the "Plan")
is hereby amended as follows:
1. The first paragraph of Section 5.3 of the Plan is
hereby amended by deleting the phrase ", but only to the extent
permitted under Section 5.5" at the end thereof.
2. The second paragraph of Section 5.3 of the Plan is
hereby amended to read as follows:
"An option is only exercisable by a participant
while the participant is in active employment with the
Corporation except (i) in the case of a participant's
death or Retirement, (ii) during a three-year period
commencing on the date of a participant's termination of
employment by the Corporation other than for cause,
(iii) during a three-year period commencing on the date
of termination, by the participant or the Corporation, of
employment after a Change in Control of the Corporation,
unless such termination of employment is for cause, or
(iv) if the Committee decides that it is in the best
interest of the Corporation to permit individual
exceptions. An option may not be exercised pursuant to
this paragraph after the expiration date of the option."
3. Section 5.5 of the Plan is hereby deleted, and Sections
5.6 through 5.8 are hereby redesignated as Sections 5.5 through
5.7, respectively.
4. Section 6.4 of the Plan is hereby amended by deleting
the last sentence thereof.
5. Section 11.1(ii) of the Plan is hereby amended by
substituting "20%" for "35%" whenever "35%" appears therein.
6. Section 11.7 of the Plan is hereby amended by deleting
the last sentence thereof, and by substituting "20%" for "35%"
whenever "35%" appears therein.
7. The amendments set forth herein shall be effective as
of August 1, 1989.
Signed this 9th day of August, 1989.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Attest:
Exhibit 10.18.2
AMENDMENT TO THE
EQUALIZATION BENEFIT PLAN
FOR PARTICIPANTS OF THE
RETIREMENT PROGRAM PLAN FOR
EMPLOYEES OF UNION CARBIDE CORPORATION
AND ITS
PARTICIPATING SUBSIDIARY COMPANIES
The Equalization Benefit Plan for Participants of the
Retirement Program Plan for Employees of Union Carbide
Corporation and its Participating Subsidiary Companies (the
"Plan") is hereby amended as follows:
1. The following is added after the first sentence in the
first paragraph of Article II of the Plan:
"Notwithstanding the preceding sentence, for
employees retiring after January 1, 1994, such
employees may elect, in the calendar year in which the
last amounts included in average monthly compensation
are determined, that their payments under the Plan
shall be made either (i) in a lump sum as of January 1
of the calendar year following such election, or (ii)
in substantially equal installments over a period of
at least 2 but not more than 5 years commencing as of
that date. The lump sum payment or installment
payments described in the preceding sentence shall be
calculated using (A) a discount rate equal to the
average of 10 and 20 year Aaa municipal bonds as
published by Moody's or a similar rating service for
the third month prior to the month payments commence,
and (B) a mortality table determined by the
administrative committee for the Plan. The
administrative committee shall determine the
procedures for such elections and the time and method
of payment for payments in accordance with the
preceding two sentences."
2. The amendment set forth herein shall be effective as
of January 1, 1994.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Exhibit 10.19.3
THIRD AMENDMENT TO THE
UNION CARBIDE CORPORATION
SUPPLEMENTAL RETIREMENT INCOME PLAN
The Union Carbide Corporation Supplemental Retirement Income
Plan (the "Plan") is hereby amended as follows:
1. A new Section 5 is hereby added to Article IV of the
Plan to read as follows:
"Section 5. Notwithstanding the provisions of Section
1 of this Article IV, for employees retiring after
January 1, 1994, such employees may elect, in the
calendar year in which the last amounts included in
average monthly compensation are determined, that their
payments under the Plan shall be made either (i) in
a lump sum as of January 1 of the calendar year
following such election, or (ii) in substantially equal
installments over a period of at least 2 but not more
than 5 years commencing as of that date. The lump sum
payment or installment payments described in the
preceding sentence shall be calculated using (A) a
discount rate equal to the average of 10 and 20 year
Aaa municipal bonds as published by Moody's or a
similar rating service for the third month prior to
the month payments commence, and (B) a mortality table
determined by the administrative committee for the
Plan. The administrative committee shall determine
the procedures for such elections and the time and
method of payment for payments in accordance with
this Section 5. For eligible employees who make the
election described in this Section 5, the provisions
of Sections 1, 2 and 3 of this Article IV shall not
apply."
2. The amendment set forth herein shall be effective as
of January 1, 1994.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
EXHIBIT 10.21.1
July 21, 1992
Mr. R. Van Mynen
P2-607
Dear Ron:
The Board of Directors (the "Board") of Union Carbide
Corporation (the "Corporation") recognizes that the possibility of
a change in control of the Corporation exists, as is the case with
many publicly held corporations, and the uncertainty and questions
which it may raise among management may result in the departure or
distraction of management personnel to the detriment of the
Corporation and its stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including
yourself, to their assigned duties without distraction in the face
of potentially disturbing circumstances arising from a possible
change in control of the Corporation. The Board has also
determined that it is in the best interests of the Corporation and
its stockholders to ensure your continued availability to the
Corporation in the event of a potential change in control of the
Corporation.
In order to induce you to remain in the employ of the
Corporation and in consideration of your agreement set forth in
Paragraph 2 hereof, the Corporation agrees that you shall receive
the severance benefits set forth in this letter agreement
("Agreement") in the event your employment with the Corporation is
terminated subsequent to a change in control under the
circumstances described below.
1. Definitions.
a. "Change in Control" of the Corporation shall be deemed to
occur if any of the following circumstances shall occur:
(i) if a change in control of the Corporation would be
required to be reported in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Act"), whether or not the
Corporation is then subject to such reporting requirement;
(ii) there shall be consummated (x) any consolidation
or merger of the Corporation in which the Corporation is not
the continuing or surviving corporation or pursuant to which
shares of the Corporation's Common Stock would be converted
into cash, securities or other property, other than a merger
of the Corporation in which the holders of the Corporation's
Common Stock immediately prior to the merger have the same
proportion and ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all,
of the assets of the Corporation, provided, that the
divestiture of less than substantially all of the assets of
the Corporation in one transaction or a series of related
transactions, whether effected by sale, lease, exchange,
spin-off, sale of the stock or merger of a subsidiary or
otherwise, shall not constitute a Change in Control;
(iii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Act (x) becomes the
"beneficial owner" as defined in Rule 13d-3 under the Act of
more than 20% of the then outstanding voting securities of
the Corporation, otherwise than through a transaction or
transactions arranged by, or consummated with the prior
approval of, the Board, or (y) acquires by proxy or otherwise
the right to vote for the election of directors, for any
merger or consolidation of the Corporation or for any other
matter or question more than 20% of the then outstanding
voting securities of the Corporation, otherwise than through
an arrangement or arrangements consummated with the prior
approval of the Board;
(iv) if during any period of twenty-four consecutive
months (not including any period prior to the date of this
Agreement), Present Directors and/or New Directors cease for
any reason to constitute a majority of the Board. For
purposes of the preceding sentence, "Present Directors" shall
mean individuals who at the beginning of such consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean any director whose election by the
Board or whose nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds of
the Directors then still in office who were Present Directors
or New Directors.
b. "Date of Termination" shall mean:
(i) in case employment is terminated for Total
Disability, thirty (30) days after Notice of Termination is
given (provided that you shall not have returned to the full-
time performance of your duties during such thirty (30) day
period), and
(ii) in all other cases, the date specified in the
Notice of Termination (which shall not be less than thirty
(30) nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given),
(iii) provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving the
Notice advises the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally resolved, either by
mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been
perfected); provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable
diligence.
c. "Total Disability" shall mean total and permanent
physical or mental disability to perform any work for compensation
in any occupation or position. Any question as to the existence of
your Total Disability upon which you and the Corporation cannot
agree shall be determined by a qualified physician not employed by
the Corporation and selected by you (or, if you are unable to make
such selection, it shall be made by any adult member of your
immediate family), and approved by the Corporation. The
determination of such physician made in writing to the Corporation
and to you shall be final and conclusive for all purposes of this
Agreement.
d. "Good Reason for Resignation" shall mean, without your
express written consent, any of the following:
(i) a change in your status or position with the
Corporation which in your reasonable judgment does not
represent a promotion from your status or position
immediately prior to the Change in Control, or the assignment
to you of any duties or responsibilities which in your
reasonable judgment are inconsistent with your status as an
employee of the Corporation in effect immediately prior to
the Change in Control, it being understood that any of the
foregoing in connection with termination of your employment
for Cause, Retirement, or Total Disability shall not
constitute Good Reason for Resignation;
(ii) a reduction by the Corporation in the annual rate
of your base salary as in effect immediately prior to the
date of a Change of Control or as the same may be increased
from time to time thereafter, or the Corporation's failure to
increase the annual rate of your base salary in an amount at
least equal to the average percentage increase in base salary
for all officers of the Corporation in the preceding 12
months;
(iii) the relocation of the Corporation's principal
executive offices to a location more than thirty-five miles
from Danbury, Connecticut or the Corporation's requiring you
to be based anywhere other than the Corporation's principal
executive offices (or, if you were not based at the
Corporation's principal executive offices immediately prior
to a Change in Control, the Corporation's requiring you to be
based anywhere other than where your office is located
immediately prior to such Change in Control) except for
required travel on the Corporation's business to an extent
substantially consistent with your business travel
obligations immediately prior to a Change in Control;
(iv) the failure by the Corporation to continue in
effect any compensation plan in which you participate as in
effect immediately prior to the Change in Control, including
but not limited to the Retirement Program, the Savings
Program and the Incentive Compensation Plans, or any
substitute plans adopted prior to the Change in Control,
unless an arrangement satisfactory to you (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Corporation to
continue your participation therein on at least as favorable
a basis, both in terms of the amount of benefits provided and
the level of your participation relative to other
participants, as existed immediately prior to the Change in
Control;
(v) the failure by the Corporation to continue to
provide you with benefits at least as favorable as those
enjoyed by you under any of the Corporation's pre-retirement
and post-retirement life insurance, medical, health and
accident, and disability plans or any other plan, program or
policy of the Corporation intended to benefit employees in
which you were participating immediately prior to the Change
in Control, the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such
benefits or deprive you of any material fringe benefit
enjoyed by you immediately prior to the Change in Control, or
the failure by the Corporation to provide you with the number
of annual paid vacation days to which you were annually
entitled immediately prior to the Change in Control;
(vi) the failure of the Corporation to obtain a
satisfactory agreement from any Successor (as defined in
Paragraph 5a hereof) to assume and agree to perform this
Agreement, as contemplated in Paragraph 5a hereof; or
(vii) any purported termination of your employment which
is not effected pursuant to a Notice of Termination
satisfying the requirements hereof; for purposes of this
Agreement, no such purported termination shall be effective
for any purpose except to constitute a Good Reason for
Resignation.
e. "Incentive Compensation Plans" shall mean:
(i) the 1989 Bonus Plan
(ii) the 1988 Long-Term Incentive Plan
(iii) the 1984 UCC Cash Bonus Plan
(iv) the 1983 UCC Bonus Deferral Program
(v) the 1984 UCC Bonus Deferral Plan
(vi) the 1984 UCC Stock Option Plan
(vii) the 1979 UCC Incentive Compensation Plan, and
(viii) dividend equivalents under the 1959 UCC Incentive
Plan
f. "Potential Change in Control of the Corporation" shall be
deemed to have occurred if:
(i) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(ii) any person (including any individual, corporation,
partnership, group, association or other "person", as such
term is used in Section 14(d) of the Act, including the
Corporation) publicly announces an intention to take actions
which if consummated would constitute a Change in Control;
(iii) any person as defined above becomes the beneficial
owner, directly or indirectly, of securities of the
Corporation representing 9.5 percent or more of the combined
voting power of the Corporation's then outstanding
securities; or
(iv) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control
of the Corporation has occurred.
g. "Notice of Termination" shall mean a written notice as
provided in Paragraph 9 hereof.
h. "Retirement" shall mean (1) voluntary retirement before
your mandatory retirement age with an immediate, nonactuarially-
reduced pension under the Corporation's Retirement Program
(termination of your employment by you before your mandatory
retirement age with Good Reason for Resignation shall not be
deemed a Retirement for purposes of this Agreement even though you
are eligible for and elect to receive an immediate,
nonactuarially-reduced pension under the Corporation's Retirement
Program) or (2) termination in accordance with any retirement
arrangement other than under the Corporation's Retirement Program,
which is established with your consent with respect to you or (3)
mandatory retirement under the Corporation's Retirement Program.
i. "Retirement Program" shall mean:
(i) the Retirement Program Plan for Employees of Union
Carbide Corporation and its Participating Subsidiaries;
(ii) the Equalization Benefit Plan for Participants of
The Retirement Program Plan; and
(iii) the Supplemental Retirement Income Plan.
j. "Savings Program" shall mean:
(i) the Savings Plan for Employees of Union Carbide
Corporation and Participating Subsidiary Companies; and
(ii) the 401(k) Opportunity Plan for Salaried Employees
of Union Carbide Corporation.
k. "Termination for Cause" shall mean termination of your
employment upon:
(i) your willful and continued failure to substantially
perform your duties with the Corporation (other than any such
failure resulting from your Total Disability or any such
actual or anticipated failure resulting from your resignation
with Good Reason for Resignation) after a written demand for
substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your
duties, or
(ii) your willfully engaging in conduct demonstrably
and materially injurious to the Corporation, monetarily or
otherwise,
but only so long as there shall have been delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less
than three-quarters (3/4) of the entire membership of the Board at
a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set
forth and specifying the particulars thereof in detail.
For purposes of this Paragraph 1k, no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that
your action or omission was in the best interest of the
Corporation. Any act or failure to act based upon authority given
pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Corporation shall be conclusively
presumed to be done or omitted to be done by you in good faith and
in the best interests of the Corporation.
2. Agreement to Remain Employed. You agree that, subject to the
terms and conditions of this Agreement, you will remain in the
employ of the Corporation and continue to render the services
contemplated in the recitals to this Agreement (except for Total
Disability or Retirement or resignation with Good Reason for
Resignation) for a period of six (6) months from the date of this
Agreement. If a Potential Change in Control of the Corporation
occurs during the term of this Agreement, you will remain in the
employ of the Corporation and continue to render such services for
a period of six (6) months after the occurrence of each such
Potential Change in Control of the Corporation occurring prior to
the occurrence of a Change in Control.
3. Compensation Upon Termination or While Disabled. Following a
Change in Control of the Corporation you shall be entitled to the
following benefits:
a. Termination Other Than for Cause, Retirement, Death or
Total Disability; Termination By Your Resignation with Good Reason
for Resignation. If your employment by the Corporation shall be
terminated subsequent to the Change in Control and during the term
of this Agreement (a) by the Corporation other than for Cause,
Retirement, Death or Disability or (b) by you for Good Reason for
Resignation, then you shall be entitled to the benefits provided
below, without regard to any contrary provision of any plan:
(i) Accrued Salary. The Corporation shall pay you, in a
lump sum in cash, not later than the fifth day following the
Date of Termination your full base salary and vacation pay
accrued through the Date of Termination at the rate in effect
at the time the Notice of Termination is given (or at the
rate in effect immediately prior to a Change in Control, if
such amounts were higher).
(ii) Accrued Incentive Compensation. If the Date of
Termination is after a Bonus Year, but before Incentive
Compensation for said Bonus Year has been paid, the
Corporation shall pay you as Incentive Compensation for that
Bonus Year, the greater of (x) the amount of Incentive
Compensation awarded or determined to be awarded to you by
the Board for that Bonus Year, or (y) an amount that bears
the same ratio to your total base salary in said Bonus Year
as the total of all Incentive Compensation paid to
participants in the Incentive Compensation Program for said
Bonus Year bears to the total of all base salaries paid to
said participants in said Bonus Year, such payment to you to
be made at the same time the Corporation pays Incentive
Compensation for said Bonus Year under the applicable
Incentive Compensation Program. In addition, if the Date of
Termination is other than the first day of a Bonus Year, the
Corporation shall pay you, as Incentive Compensation for the
Bonus Year in which the Date of Termination occurs, the
greater of (x) the amount of incentive compensation awarded
or determined to be awarded to you by the Board for that
Bonus Year, or (y) an amount that bears the same ratio to
your total base salary in said Bonus Year as the total of all
Incentive Compensation paid to participants in the Incentive
Program for said Bonus Year bears to the total of all base
salaries paid to said participants in said Bonus Year, such
payment to you to be made at the same time the Corporation
pays Incentive Compensation for said Bonus Year under the
applicable Incentive Compensation Program. If there is more
than one Incentive Compensation Program, your accrued
Incentive Compensation under each Program shall be determined
individually for that Program. For the purpose of this
Paragraph 3(a)(ii), "Incentive Compensation Program" means
any of the Incentive Compensation Plans defined in Paragraph
1e and any other plan or program for the payment of
incentive compensation, bonus, benefits or awards for which
you were, or your position was, eligible to participate;
"Incentive Compensation" means any compensation, bonus,
benefit or award paid or payable under an Incentive
Compensation Program; "Bonus Year" means a calendar year of
an Incentive Compensation Program, and "Board" means the
Board of Directors of the Corporation, any committee of the
Board of Directors or any person or group designated by the
Board of Directors to determine the amount of Incentive
Compensation payable under an Incentive Compensation Program.
(iii) Insurance Coverage. The Corporation shall
arrange to provide you with life, disability, accident and
health insurance benefits substantially similar to those
which you are receiving or entitled to receive immediately
prior to the Change in Control of the Corporation. Such
insurance benefits shall be provided to you for the longer of
(x) twenty-four (24) months after such Date of Termination or
(y) the period during which such insurance benefits would
have been provided to you under the applicable life
insurance, medical, health and accident and disability
insurance plans of the Corporation in effect immediately
prior to the Change in Control of the Corporation.
(iv) Retirement Benefits. The Corporation shall pay you,
at the time you are entitled to be paid a retirement pension
under the Retirement Program, a retirement pension equal to
the greater of (x) an amount computed in accordance with the
terms of the Retirement Program in effect immediately prior
to the Change in Control of the Corporation and as if those
terms were in effect on the Date of Termination, or (y) an
amount computed in accordance with the terms of the
Retirement Program in effect immediately prior to the Date of
Termination, in either case less the amount of retirement
pension actually to be paid to you under the Retirement
Program. In computing the amounts of your retirement pension
under clauses (x) and (y) of this Paragraph 3a(iv), to the
extent such benefits are payable under the tax qualified
Retirement Program Plan for Employees of Union Carbide
Corporation and its Participating Subsidiaries, three years
shall be added to your actual age and to your actual Company
Service Credit under the Retirement Program Plan for
Employees of Union Carbide Corporation and its Participating
Subsidiaries so that your retirement pension under clauses
(x) and (y) will be the amount it would have been if you had
been three years older than you actually were, and had three
years more Company Service Credit than you actually had, on
the Date of Termination.
(v) Severance Payment. The Corporation shall pay as
severance pay to you, not later than the fifth day following
the Date of Termination, a lump sum severance payment (the
"Severance Payment") equal to 2.99 times the average of the
annual compensation which was payable to you by the
Corporation (or any corporation affiliated with the
Corporation within the meaning of section 1504 of the
Internal Revenue Code of 1954, as amended ("Code")) and
includible in your gross income for Federal income tax
purposes for the five calendar years (the "Base Period")
preceding the calendar year in which a Change in Control of
the Corporation occurred. The Severance Payment shall be
reduced pursuant to Paragraph 3a(vi) hereof to the extent the
Corporation could not properly deduct amounts paid pursuant
to Paragraph 3a(i) through 3a(iv) hereof or otherwise
pursuant to section 280G of the Code. For purposes hereunder,
the average annual compensation shall be determined in
accordance with proposed, temporary or final regulations
promulgated under section 280G(d) of the Code. Compensation
payable to you by the Corporation (or an affiliate) shall
include every type and form of compensation includible in
your gross income in respect of your employment by the
Corporation (or an affiliate), including but not limited to
compensation income recognized as a result of your exercise
of stock options or sale of the stock so acquired, bonuses,
dividend equivalents, fringe benefits, relocation payments,
and stock appreciation rights, except to the extent otherwise
provided in proposed, temporary or final regulations
promulgated under section 280G(d) of the Code. For purposes
of Paragraphs 3a(v) and 3a(vi) only, a "Change in control of
the Corporation" shall have the meaning set forth in section
280G(d) of the Code and any proposed, temporary or final
regulations promulgated thereunder.
(vi) Reduction in Severance Payment. The Severance
Payment shall be reduced but not below zero by the amount of
any other payment or the value of any benefit received or to
be received by you contingent upon a Change in Control of the
Corporation (whether payable pursuant to the terms of this
Agreement, any other plan, agreement or arrangement with the
Corporation or an affiliate) unless (1) you shall have
effectively waived your receipt or enjoyment of such payment
or benefit prior to the date of payment of the Severance
Payment, or (2) in the opinion of Messrs. Kelley Drye &
Warren, which shall be binding upon the Corporation and upon
you, such other payment or benefit plus the Severance Payment
(in its full amount or as partially reduced hereunder, as the
case may be) would be properly deductible by the Corporation
without restriction pursuant to Code section 280G. The value
of any non-cash benefit or any deferred cash payment shall
promptly be determined by the Corporation's independent
auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
(vii) Repayment of excess payment. If it is established
pursuant to a final determination of a court or an Internal
Revenue Service proceeding that, notwithstanding the good
faith of you and the Corporation in applying the terms of
this Paragraph 3a, the aggregate payments hereunder to or for
your benefit would result in any portion of such payments not
being deductible by the Corporation or its affiliates by
reason of section 280G of the Code, then you agree to pay the
Corporation upon demand an amount equal to the sum of (1) the
excess of the aggregate payments hereunder paid to or for
your benefit over the aggregate payments hereunder that would
have been paid to or for your benefit without any portion of
such payments not being deductible by reason of section 280G
of the Code; and (2) interest on the amount set forth in
clause (1) of this sentence at the applicable Federal rate
(as defined in section 1274(d) of the Code) from the date of
your receipt of such excess until the date of such payment.
No amount shall be payable by you hereunder if and to the
extent that in the opinion of Messrs. Kelley Drye & Warren
such repayment would not reduce the amount of payments to you
which are considered nondeductible by the Corporation
pursuant to Code section 280G.
(viii) No duty to mitigate. You shall not be required to
mitigate the amount of any payment provided for in this
Paragraph 3 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit as provided for be
reduced by any compensation earned by you as the result of
employment by another employer or by retirement benefits
after the Date of Termination, or otherwise except as
specifically provided herein.
b. Payments While Disabled. During any period prior to the
Date of Termination and during the term of this Agreement that you
are unable to perform your full-time duties with the Corporation,
whether as a result of your Total Disability or as a result of a
physical or mental disability that is not total or is not
permanent and therefore is not a Total Disability, you shall
continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all other
compensation and benefits that are payable under the Corporation's
disability benefit plans. After the Date of Termination, your
benefits shall be determined in accordance with the Corporation's
Retirement Program, insurance and other applicable programs. The
compensation and benefits, other than salary, payable pursuant to
this Paragraph 3b shall be the greater of (x) the amounts computed
under the Retirement Program, disability benefit plans, insurance
and other applicable programs in effect immediately prior to a
Change in Control of the Corporation, and (y) the amounts computed
under the Retirement Program, disability benefit plans, insurance
and other applicable programs in effect at the time the
compensation and benefits are paid.
c. Payments if Terminated for Cause, or by You Except With
Good Reason. If your employment shall be terminated by the
Corporation for Cause or by you other than with Good Reason for
Resignation, the Corporation shall pay you your full base salary
then in effect through the Date of Termination, at the rate in
effect at the time Notice of Termination is given plus any
benefits or awards which have been earned or become payable but
which have not yet been paid to you. Thereafter the Corporation
shall have no further obligation to you under this Agreement.
d. After Retirement or Death. If your employment shall be
terminated by your Retirement, or by reason of your death, your
benefits shall be determined in accordance with the Corporation's
retirement and insurance programs then in effect.
4. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1992;
provided, however, that commencing on January 1, 1993 and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Corporation or
you shall have given notice that it or you do not wish to extend
this Agreement; provided, further, that notwithstanding any such
notice by the Corporation or you not to extend, if a Change in
Control shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a
period of twenty-four (24) months beyond the term in effect
immediately before such Change in Control. This Agreement shall
terminate if your employment is terminated by you or the
Corporation prior to a Change in Control.
5. Successors; Binding Agreement.
a. Successors of the Corporation. The Corporation will
require any Successor to all or substantially all of the business
and/or assets of the Corporation to expressly assume and agree, by
an agreement in form and substance satisfactory to you, to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. Failure of the Corporation to obtain such assent
at least five business days prior to the time a person becomes a
Successor (or where the Corporation does not have at least five
business days advance notice that a person may become a Successor,
within three business days after having notice that such person
may become or has become a Successor) shall constitute Good Reason
for Resignation by you and, if a Change in Control of the
Corporation has occurred or thereafter occurs, shall entitle you
immediately to the benefits provided in Paragraph 3a hereof upon
delivery by you of a Notice of Termination which the Corporation,
by executing this Agreement hereby assents to. For purposes of
this Agreement, "Successor" shall mean any person that obtains or
succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Corporation's
business directly, by merger or consolidation, or indirectly, by
purchase of voting securities of the Corporation, by acquisition
of rights to vote voting securities of the Corporation or
otherwise, including but not limited to any person or group that
acquires the beneficial ownership or voting rights described in
Paragraph 1a(iii) and any person or group required to be
identified in a Current Report on Form 8-K described in Paragraph
1a(i).
b. Your Successor. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any
amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Relationship to Other Agreements. To the extent that any
provision of any other agreement between the Corporation or any of
its subsidiaries and you shall limit, qualify or be inconsistent
with any provision of this Agreement, then for purposes of this
Agreement, while the same shall remain in force, the provision of
this Agreement shall control and such provision of such other
agreement shall be deemed to have been superseded, and to be of no
force or effect, as if such other agreement had been formally
amended to the extent necessary to accomplish such purpose.
7. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
8. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
9. Notice. Any purported termination by the Corporation or by
you following a Change in Control shall be communicated to the
other party by a Notice of Termination. A Notice of Termination
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of your employment under the provision so indicated. For the
purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page
of this Agreement, provided that all notices to the Corporation
shall be directed to the attention of the Board with a copy to the
Secretary of the Corporation, or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon receipt.
10. Fees and Expenses. The Corporation shall pay all legal fees
and related expenses incurred by you as a result of your
termination following a Change in Control or by you in seeking to
obtain or enforce any right or benefit provided by this Agreement
(including all fees and expenses, if any, incurred in contesting
or disputing any such termination or incurred by you in seeking
advice in connection therewith).
11. Survival. The respective obligations of, and benefits
afforded to, the Corporation and you as provided in Paragraphs 3,
5, 6 and 10 of this Agreement shall survive termination of this
Agreement.
12. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No waiver
by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Corporation the enclosed
copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
UNION CARBIDE CORPORATION
Robert D. Kennedy
Chairman of the Board and
Chief Executive Officer
Agreed to this 12th day
of August, 1992
EXHIBIT 10.21.2
September 24, 1993
R. Van Mynen
P2-607
Re: Amendment of Severance Compensation Agreement
Dear Ron:
Pursuant to paragraph 12 of Severance Compensation Agreement
("Agreement") between you and Union Carbide Corporation
("Corporation"), dated as of July 21, 1992, the Corporation and
you now agree to amend the Agreement as follows:
1. The Agreement is amended by adding the following
sentence at the end of Paragraph 4:
"Notwithstanding the foregoing, the Corporation may
terminate this Agreement at any time by giving you
at least five (5) days prior written notice, provided a
change in control has not occurred as of the date
notice of termination is given."
This amendment to the Agreement shall be effective as of the
date of this letter and as hereby amended the Agreement shall
continue in full force and effect.
If this letter sets forth our Agreement on the subject matter
discussed above, kindly sign and return the enclosed copy to the
Corporation. If you fail to sign and return this letter by
September 30, 1993, this letter shall constitute notice pursuant
to Paragraph 4 of the Agreement that the Corporation does not wish
to extend the Agreement beyond January 1, 1994.
Sincerely,
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Title: Vice President,
Human Resources
Agreed and accepted this
28th day of September, 1993
R. Van Mynen
EXHIBIT 10.24.1
UNION CARBIDE CORPORATION
BENEFITS PROTECTION TRUST
TABLE OF CONTENTS
ARTICLE PAGE
FIRST: Definitions 2
SECOND: Creation of Trust 6
THIRD: Payments from the Trust 11
FOURTH: Management of Trust Assets 14
FIFTH: Administrative Powers 24
SIXTH: Insurance and Annuity Contracts 25
SEVENTH: Taxes, Expenses and Compensation of Trustee 28
EIGHTH: General Duties of Trustee and Investment
Director 30
NINTH: Indemnification 35
TENTH: No Duty To Advance Funds 35
ELEVENTH: Accounts 36
TWELFTH: Administration of the Plans; Communications 37
THIRTEENTH: Resignation or Removal of Trustee 39
FOURTEENTH: Amendment of Agreement; Termination of Trust 41
FIFTEENTH: Prohibition of Diversion 44
SIXTEENTH: Prohibition of Assignment of Interest 45
SEVENTEENTH: Affiliates 45
EIGHTEENTH: Miscellaneous 46
BENEFITS PROTECTION TRUST AGREEMENT
THIS AGREEMENT, made as of the 1st day of August 1989, by
and between UNION CARBIDE CORPORATION, a corporation organized
and existing under the laws of the State of New York (hereinafter
referred to as the "Company"), and MANUFACTURERS HANOVER TRUST
COMPANY, a corporation organized and existing under the laws of
the State of New York (hereinafter referred to as the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Company has adopted the plans listed on
Schedule 1 (hereinafter referred to as defined in Schedule 1 or
collectively as the "Plans") and may adopt or enter into other
such Plans as will be listed from time to time on Schedule 1 and
may, from time to time, amend, modify or terminate any such Plan
in accordance with its terms; and
WHEREAS, the Company has adopted the plans, programs, and
policies listed on Schedule 2 (hereinafter referred to
collectively as the "Protected Plans") and may adopt or enter
into other such Protected Plans as will be listed from time to
time on Schedule 2 and may, from time to time, amend, modify, or
terminate any such Protected Plan in accordance with its terms;
and
WHEREAS, the Company desires to establish the Benefits
Protection Trust (hereinafter referred to as the "Trust") in
order to ensure that its employees, the employees of its
Participating Subsidiaries, and their beneficiaries will receive
the benefits which the Company is obligated to provide for them
or which they reasonably anticipate receiving pursuant to the
Protected Plans; and
WHEREAS, the Trust is intended to be a "grantor trust" with
the corpus and income of the Trust treated as assets and income
of the Company for federal income tax purposes pursuant to
Sections 671 through 678 of the Internal Revenue Code of 1986
(the "Code"), as amended; and
WHEREAS, the Company intends that the assets of the Trust
will be subject to the claims of creditors of the Company as
provided in Article FIFTEENTH; and
WHEREAS, the Company intends that the existence of the Trust
will not alter the characterization of the Plans as "unfunded"
and will not be construed to provide taxable income to any
participant under the Plans prior to actual payment of benefits
thereunder; and
WHEREAS, the Trustee is not a party to the Plans and makes
no representations with respect thereto, and all representations
and recitals with respect to the Plans shall be deemed to be
those of the Company;
NOW, THEREFORE, the Company and the Trustee agree as
follows:
FIRST: Definitions.
(a) Any term that is referenced in the Plans shall have in
this Agreement the same meaning ascribed to it in the Plans,
unless the context clearly indicates a different meaning.
(b) For purposes of this Agreement, an Unfriendly Change In
Control shall be deemed to occur if:
(1) a change in control of the Company would be
required to be reported in response to item 1(a) of the current
Report of Form 8-K, as in effect on the date hereof, pursuant to
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement;
(2) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares
of the Company's common stock would be converted into cash,
securities or other property, other than a merger of the Company
in which the holders of the Company's Common Stock immediately
prior to the merger have the same proportion and ownership of
common stock of the surviving corporation immediately after the
merger, or (B) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, provided, that
the divestiture of less than substantially all of the assets of
the Company in one transaction or a series of related
transactions, whether effected by sale, lease, exchange, spin-
off, sale of the stock or merger of a subsidiary or otherwise,
shall not constitute an Unfriendly Change in Control;
(3) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act (A) becomes the
"beneficial owner" as defined in Rule 13d-3 under the Exchange
Act of more than 20% of the then outstanding voting securities of
the Company, otherwise than through a transaction or transactions
arranged by, or consummated with the prior approval of, the Board
of Directors of the Company, or (B) acquires by proxy or
otherwise the right to vote for the election of directors, for
any merger or consolidation of the Company or for any other
matter or question more than 20% of the then outstanding voting
securities of the Company, otherwise than through an arrangement
or arrangements consummated with the prior approval of the Board
of Directors of the Company; or
(4) during any period of twenty-four consecutive
months (not including any period prior to the adoption of this
Agreement), Present Directors and/or New Directors cease for any
reason to constitute a majority of the Board of Directors of the
Company. For purposes of this Agreement, "Present Directors"
shall mean individuals who at the beginning of such consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean any director whose election by the Board of
Directors of the Company or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-
thirds of the Directors then still in office who were Present
Directors or New Directors.
Notwithstanding the foregoing, an Unfriendly Change of
Control shall not be deemed to occur pursuant to Subparagraph
(2), above, solely because twenty percent (20%) or more of the
combined voting power of the Company's then outstanding
securities is acquired by one or more employee benefit plans
maintained by the Company.
Provided, however, that a transaction or transactions
described in Subparagraphs (b)(1), (b)(2), or (b)(3) of this
Article FIRST arranged by, or consummated with the prior approval
of, a majority of the Present Directors and New Directors, shall
not be deemed an Unfriendly Change in Control if a majority of
the Present Directors and New Directors certify to the Trustee
that such transaction or transactions should not be deemed an
Unfriendly Change in Control.
The Company shall notify the Trustee in writing of the
occurrence of any event described in subparagraphs (b)(1) through
(b)(4) above, as soon as practicable after the Company first
learns of such event. The Trustee may rely upon such notice from
the Company in performing any of its obligations or taking any
discretionary action under this Agreement which is dependent upon
an Unfriendly Change in Control having occurred, provided,
however, that in the absence of such notice, the Trustee may rely
on its own determination, including opinion of counsel (who may
be counsel to the Company or the Trustee), that an Unfriendly
Change in Control has occurred, unless such a determination
arises out of the Trustee's gross negligence or willful
misconduct. The Trustee may also request that the Company
furnish evidence to determine or to enable the Trustee to
determine, whether an Unfriendly Change in Control has occurred.
The Trustee's determination whether an Unfriendly Change in
Control has occurred shall be binding and conclusive on all
Participants.
(c) "Threatened Change in Control" shall mean each of the
following events (but no event other than the following events),
except as otherwise provided below:
(1) Any persons as defined in Paragraph (b) above,
without the prior approval of a majority of the Present Directors
(A) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing ten percent (10%) or more
of the combined voting power of the Company's then outstanding
voting securities, or (B) initiates a tender offer to acquire
securities of the Company representing twenty percent (20%) or
more of the combined voting power of the Company's then
outstanding voting securities; or
(2) The Board of Directors of the Company notifies the
Trustee in writing that a Threatened Change in Control exists.
Notwithstanding the foregoing, a Threatened Change in
Control shall not be deemed to occur pursuant to Subparagraph (1)
above solely because ten percent (10%) or more of the combined
voting power of the Company's then outstanding voting securities
is acquired by one or more employee benefit plans maintained by
the Company.
The Company shall notify the Trustee in writing of the
occurrence of any event described in subparagraph (c)(1) above as
soon as practicable after the Company first learns of such event.
The Trustee may rely upon such notice from the Company in
performing any of its obligations or taking any discretionary
action under this Agreement which is dependent upon a Threatened
Change in Control having occurred, provided, however, that in the
absence of such notice, the Trustee may rely on its own
determination, including opinion of counsel (who may be counsel
to the Company or the Trustee), that a Threatened Change in
Control has occurred, unless such a determination arises out of
the Trustee's gross negligence or willful misconduct. The
Trustee may also request that the Company furnish evidence to
determine or to enable the Trustee to determine, whether a
Threatened Change in Control has occurred. The Trustee's
determination whether a Threatened Change in Control has occurred
shall be binding and conclusive on all Participants.
(d) "Threatened Change in Control Period" shall mean the
period beginning on the date a Threatened Change of Control
occurs and ending on the earliest of
(1) If the Threatened Change in Control was caused by
an event described in Subparagraph (c)(1), on the date first
subsequent to the date on which the person referred to therein
does not own securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding voting securities, having terminated any tender offer
instituted by him; or
(2) If the Threatened Change in Control shall be
deemed to have occurred by reason of the notice described in
Subparagraph (c)(2), on the date that a majority of the Present
Directors and New Directors of the Board of Directors of the
Company shall have notified the Trustee in writing that the
Threatened Change in Control has terminated; or
(e) The date the Unfriendly Change in Control occurs.
SECOND: Creation of Trust. (a) The Company hereby
establishes with the Trustee and the Trustee hereby accepts a
trust consisting of the following property (subject to the rights
of the Company to withdraw such property pursuant to Paragraph
(f) of this Article SECOND):
(1) such cash or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time as contributions under the Equalization Plan, together with
the earnings, income, additions and appreciation thereon and
thereto (all of which is hereinafter called the "Equalization
Account");
(2) such cash and other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time as contributions under the Supplemental Retirement Income
Plan, together with the earnings, income, additions and
appreciation thereon and thereto (all of which is hereinafter
referred to as the "SRIP Account");
(3) such cash or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time as contributions under the 1983 Bonus Deferral Plan,
together with the earnings, income, additions and appreciation
thereon and thereto (all of which is hereinafter called the "1983
Bonus Deferral Account");
(4) such cash or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time as contributions under the 1984 Bonus Deferral Plan,
together with the earnings, income, additions and appreciation
thereon and thereto (all of which is hereinafter called the "1984
Bonus Deferral Account");
(5) such cash or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time as contributions under the Key International Management
Plan, together with the earnings, income, additions and
appreciation thereon and thereto (all of which is hereinafter
called the "KIMP Account");
(6) such cash or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from time to
time to be used to satisfy future liabilities of the Company with
regard to the Severance Compensation Agreements of the Company,
together with the earnings, income, additions and appreciation
thereon and thereto (all of which is hereinafter called the
"Severance Compensation Agreement Account"); and
(7) cash in the amount of 1.5 million dollars
($1,500,000), together with the earnings thereon, and realized
and unrealized gains (net of any losses) attributable thereto,
(all of which is hereinafter called the "Benefits Protection
Account"). Neither the cash nor any other property held in the
Benefits Protection Account shall be available for payment of
benefits to participants and beneficiaries under the Plans.
(b) The Company may contribute to any Account an
irrevocable letter of credit (hereinafter referred to as a
"L/C"). The following provisions shall be applicable to any such
L/C:
(1) the L/C shall expire no sooner than two (2) years
from the date of issuance,
(2) the Company shall continue to maintain such L/C in
effect until it is replaced by cash or another irrevocable L/C or
the Company withdraws such L/C pursuant to Paragraph (f) of this
Article SECOND or this Agreement terminates, whichever occurs
first,
(3) the Company shall renew or replace such L/C at
least thirty (30) days before its expiration for an additional
period of one (1) year,
(4) if such L/C, or any renewal thereof, is not
renewed or replaced by a L/C delivered to the Trustee at least
thirty (30) days before the expiration of the predecessor L/C,
the Trustee may draw down the full amount of such L/C and hold
the proceeds pursuant to the terms of this Agreement,
(5) the Trustee may also draw down on such L/C at any
time the Trustee determines the proceeds of such L/C are
necessary to allow the Trustee to fulfill its obligations under
this Agreement,
(6) the proceeds of such L/C shall be available to the
Trustee upon the Trustee's presentation of its sight draft,
(7) the Company may, at any time, replace such L/C
with another irrevocable L/C having substantially similar terms,
or with an equal amount of cash, or any combination thereof,
(8) any L/C shall be issued by a bank (including the
Trustee) with assets in excess of $2 billion and net worth in
excess of $100 million, shall be reasonably acceptable to the
Trustee, and shall be in a form as shall be reasonably acceptable
to the Trustee.
(c) The Trustee, for investment purposes only, may
commingle all Trust assets and treat them as a single fund, but
the records of the Trustee at all times shall show the
percentages of the Trust allocable to the Equalization Account,
the SRIP Account, the 1983 Bonus Deferral Account, the 1984 Bonus
Deferral Account, the KIMP Account, the Severance Compensation
Agreement Account, the Benefits Protection Account and such other
Account(s) as may subsequently be established under this Trust
(herein referred to collectively as the "Accounts").
(d) The assets of the Accounts may be used to discharge
the obligations of the Company as follows:
(1) The assets of the Equalization Account may be used
to discharge the obligations of the Equalization Plan and, to the
extent the assets of the SRIP Account are insufficient, the
obligations of the Supplemental Retirement Income Plan;
(2) The assets of the SRIP Account may be used to
discharge the obligations of the Supplemental Retirement Income
Plan and, to the extent the assets of the Equalization Account
are insufficient, the obligations of the Equalization Plan.
(3) The assets of the 1983 Bonus Deferral Account may
be used to discharge the obligations of the 1983 Bonus Deferral
Plan and, to the extent the assets of the 1984 Bonus Deferral
Account are insufficient, the obligations of the 1984 Bonus
Deferral Plan.
(4) The assets of the 1984 Bonus Deferral Account may
be used to discharge the obligations of the 1984 Bonus Deferral
Plan and, to the extent the assets of the 1983 Bonus Deferral
Account are insufficient, the obligations of the 1983 Bonus
Deferral Plan.
(5) The assets of the KIMP Account shall be used to
discharge the obligations of the Key International Management
Plan.
(6) The assets of the Severance Compensation Agreement
Account shall be used to discharge the obligations of the Company
under the Severance Compensation Agreements.
(7) The assets of the Benefits Protection Account may
be used as set forth in Paragraph (c) of Article EIGHTH, and
Article SEVENTH.
(8) After an Unfriendly Change in Control occurs, the
assets of each Account, upon the termination of the Plan under
which such Account was established, and the satisfaction of all
liabilities with regard to such terminated Plan pursuant to
Paragraph (d) of Article FOURTEENTH, shall be distributed among
such remaining Account(s), other than the Benefits Protection
Account, that the Trustee determines may not have sufficient
assets to pay all future liabilities relating to such Account(s).
(e) The Company and the Trustee agree that the Trust
created herein shall not be revocable by the Company or by any
successor thereto during a Threatened Change in Control Period or
after an Unfriendly Change in Control, and is intended to be a
grantor trust under the provisions of Sections 671 through 678 of
the Internal Revenue Code of 1986, as amended.
(f) The Company may, from time to time, add to or withdraw
from the assets of the Trust, but subject to the termination
provisions of Article FOURTEENTH hereof, such withdrawal may not
reduce the property in the Benefits Protection Account of the
Trust, including any L/C, below 1.5 million dollars ($1,500,000).
The Company may add funds to the Trust at any time and shall
designate the Account to which such funds shall be credited. Any
such additional funds shall also be available to pay the fees and
expenses of the Trustee if the amounts transferred pursuant to
the Benefits Protection Account are exhausted. Notwithstanding
the foregoing, the Company shall not make any withdrawal from the
Trust during a Threatened Change in Control Period or after an
Unfriendly Change in Control until all liabilities of the Company
under the Plans are satisfied and all of the purposes of this
Agreement are fulfilled.
THIRD: Payments from the Trust. (a) Subject to Paragraph
(f) of Article SECOND hereof, Paragraph (b) of this Article THIRD
and Paragraph (b) of Article FIFTEENTH hereof, the Trustee, from
time to time upon receipt of direction from the Company prior to
an Unfriendly Change in Control (other than during a Threatened
Change in Control Period), shall make payments from the Trust, as
specified in such direction to such persons, in such manner and
in such amounts as the Company shall direct, and amounts paid
pursuant to such direction (or in accordance with Article SEVENTH
hereof) thereafter no longer shall constitute a part of the
Trust.
(b) The Company may, from time to time, prior to an
Unfriendly Change in Control, furnish the Trustee with certain
information regarding the participants and beneficiaries under
the Plans and the determination of the benefits under the Plans
(hereinafter referred to as "Participants Data"). The Trustee
shall be entitled to rely on the accuracy of the Participant Data
provided by the Company prior to an Unfriendly Change in Control,
and shall have no duty to verify the accuracy thereof. The
Company shall, during a Threatened Change in Control Period, and
after an Unfriendly Change in Control occurs, furnish the Trustee
with Participant Data at least once each Plan Year. Such
Participant Data shall include (1) names, addresses, dates of
birth, and social security numbers of each participant and
beneficiary in the Plans; (2) the amount and form of benefits
under each of the Plans of each participant and beneficiary if
such participant would retire or die as of either the last day of
such Plan Year or the last day of the Plan Year in which such
Participant attained age 62; (3) earnings history, compensation
(cash and deferred) and bonus history of each participant; (4)
amounts payable from the Retirement Program Plan for Employees of
Union Carbide Corporation and its Participating Subsidiary
Companies on behalf of each participant; (5) a schedule of the
estimated yearly cash payments under the Plans; and (6) any other
information regarding the Plan which the Trustee may reasonably
request or which the Company may deem necessary.
During a Threatened Change in Control Period or after an
Unfriendly Change in Control and notwithstanding any other
provisions of this Agreement, the Trustee shall, without
direction from the Company, to the extent funds are available in
the Trust for such purpose, make payments to participants and
beneficiaries in such manner and in such amounts as the Trustee
shall determine they are entitled to be paid under the Plans
based on the most recent Participant Data furnished to the
Trustee by the Company prior to an Unfriendly Change in Control
and any supplemental information furnished to the Trustee by a
participant or beneficiary upon which the Trustee may reasonably
rely in making such determination. The Trustee may make such
reasonable inquiry of the Company as is necessary to determine
whether any amounts that would otherwise be payable under this
Agreement have previously been paid by the Company, and may
reasonably rely on any information provided by the Company with
regard to such payment. A determination by the Trustee with
regard to a Participant's entitlement to payments under the terms
of this Agreement shall be binding as to all Participants and the
Company.
(c) In the event it shall be determined prior to an
Unfriendly Change in Control that the participants and/or
beneficiaries of the Plans are subject to any tax under the terms
of the Trust created hereunder, then the Trustee, upon receipt of
direction from the Company, shall make payments from the Trust to
such persons, in such manner and in such amounts as the Company
shall direct, for purposes of (1) paying the amount of Federal,
State and Local tax and interest and any penalties thereon which
such participants and/or beneficiaries may incur arising out of
such determination or (2) distributing the interests of
participants and beneficiaries in the Trust. In the event such
a determination is made after an Unfriendly Change in Control
occurs, then each participant or beneficiary who is subject to
such tax, may direct the Trustee, in writing, to make payments
from the Trust for either of the purposes set forth in section
(1) or (2) of the preceding sentence. The Trustee shall not make
the payments for the purposes set forth in the first sentence of
this Paragraph (c) without such written direction.
(d) Payments to participants and beneficiaries pursuant to
Paragraphs (b) and (c) of this Article THIRD shall be made by the
Trustee to the extent that Trust funds for such purposes are
sufficient to allow such payments. Subject to Paragraph (d) of
Article SECOND, in any month in which the Trustee determines that
a particular Account in the Trust does not have sufficient funds
to provide for the payment of all amounts otherwise payable to
participants and beneficiaries in such month under a particular
Plan, the amount otherwise payable to each such participant or
beneficiary under such Plan during such month shall be multiplied
by a fraction, the numerator of which is the amount of funds then
available for the payment of benefits under such Plan and the
denominator of which is the total of the benefits payable prior
to such reduction during such month to all participants and
beneficiaries under such Plan.
(e) After an Unfriendly Change in Control occurs the
Company shall make such contributions to the Trust created
hereunder as shall be necessary to ensure the assets of the Trust
shall at all times be sufficient to discharge the Company's
obligations under the Plans.
FOURTH: Management of Trust Assets. (a) Subject to
Paragraph (b) of this Article FOURTH, the Trustee, prior to an
Unfriendly Change in Control, shall have exclusive authority and
discretion to manage and control the Trust assets, and pursuant
to such authority and discretion, may exercise, from time to time
and at any time, the power:
(1) To invest and reinvest the Trust, without distinction
between principal and income, in shares of stock (whether common
or preferred) or other evidences of ownership, bonds, debentures,
notes or other evidences of indebtedness, unsecured or secured by
mortgages on real or personal property wherever situated
(including any part interest in a bond and mortgage or note and
mortgage whether insured or uninsured) and other property, or
part interest in property, real or personal, foreign or domestic,
whether or not productive of income or consisting of wasting
assets, and in order to reduce the rate of interest rate
fluctuations, contracts, as either buyer or seller, for the
future delivery of United States Treasury securities and
comparable Federal-Government-backed securities;
(2) To sell, convey, redeem, exchange, grant options for
the purchase or exchange of, or otherwise dispose of, any real or
personal property, at public or private sale, for cash or upon
credit, with or without security, without obligation on the part
of any person dealing with the Trustee to see to the application
of the proceeds of or to inquire into the validity, expediency or
propriety of any such disposition;
(3) To manage, operate, repair and improve, and mortgage
or lease for any length of time any real property held in the
Trust; to renew or extend any mortgage, upon any terms the
Trustee may deem expedient; to agree to reduction of the rate of
interest or any other modification in the terms of any mortgage
or of any guarantee pertaining to it; to enforce any covenant or
condition of any mortgage or guarantee or to waive any default in
the performance thereof; to exercise and enforce any right of
foreclosure; to bid in property on foreclosure; to take a deed in
lieu of foreclosure with or without paying consideration therefor
and in connection therewith to release the obligation on the bond
secured by the mortgage; and to exercise and enforce in any
action, suit or proceeding at law or in equity any rights or
remedies in respect of any mortgage or guarantee;
(4) To exercise, personally or by general or limited
proxy, the right to vote any shares of stock, bonds or other
securities held in the Trust; to delegate discretionary voting
power to trustees of a voting trust for any period of time; and
to exercise, personally or by power of attorney, any other right
appurtenant to any securities or other property of the Trust;
(5) To join in or oppose any reorganization,
recapitalization, consolidation, merger or liquidation, or any
plan therefor, or any lease, mortgage or sale of the property of
any organization the securities of which are held in the Trust;
to pay from the Trust any assessments, charges or compensation
specified in any plan of reorganization, recapitalization,
consolidation, merger or liquidation; to deposit any property
with any committee or depositary; and to retain any property
allotted to the Trust in any reorganization, recapitalization,
consolidation, merger or liquidation;
(6) To exercise or sell any conversion or subscription or
other rights appurtenant to any stock, security or other property
held in the Trust;
(7) To borrow from any lender (including the Trustee in
its individual capacity) money, in any amount and upon any
reasonable terms and conditions, for purposes of this Agreement,
and to pledge or mortgage any property held in the Trust to
secure the repayment of any such loan;
(8) To compromise, settle or arbitrate any claim, debt, or
obligation of or against the Trust; to enforce or abstain from
enforcing any right, claim, debt or obligation; and to abandon
any property determined by it to be worthless;
(9) To make loans of securities held in the Trust to
registered brokers and dealers upon such terms and conditions as
are permitted by applicable law and regulations, and in each
instance to permit the securities so lent to be registered in the
name of the borrower or a nominee of the borrower, provided that
in each instance the loan is adequately secured and neither the
borrower nor any affiliate of the borrower has discretionary
authority or control with respect to the assets of the Trust
involved in the transaction or renders investment advice with
respect to those assets; and
(10) To invest and reinvest any property in the Trust in
any other form or type of investment not specifically mentioned
in this Paragraph (a) of Article FOURTH, so long as such form or
type of investment is a form or type of investment approved by
the Principal Financial Officer of the Company, or such other
officer designated by the Company, for the investment of assets
of the Trust.
(b) (1) (A) The Principal Financial Officer of the
Company, or such other officer designated by the Company, at any
time and from time to time may direct the Trustee to segregate
one or more specified portions of the Trust into a separate
investment account or accounts (each hereinafter called a
"Segregated Investment Account"), and may appoint and designate
an Investment Director to direct the Trustee in the management of
the assets of each such Segregated Investment Account
(hereinafter called "that Investment Director's Segregated
Investment Account").
(B) Any Investment Director appointed by the
Principal Financial Officer of the Company may be either an
officer or employee of the Company, a subsidiary or affiliate of
the Company, or an Investment Manager who is not an officer or
employee of the Company. Any Investment Manager so appointed
must be either (i) an investment adviser registered as such under
the Investment Advisers Act; or (ii) a bank, as defined in that
Act; or (iii) an insurance company qualified to perform services
in the management, acquisition or disposition of the assets of
the Trust under the laws of more than one State. The Trustee
until notified in writing to the contrary shall be fully
protected in relying upon any written notice of the appointment
of an Investment Director furnished to it by the Company. In the
event of any vacancy in the office of Investment Director, the
Trustee shall be deemed to be the Investment Director of that
Investment Director's Segregated Investment Account until an
Investment Director shall have been duly appointed to direct the
Trustee in the management of the assets of that Investment
Director's Segregated Investment Account; and in such event until
an Investment Director shall have been so appointed and
qualified, references herein to the Trustee's acting in respect
of that Investment Director's Segregated Investment Account
pursuant to direction from the Investment Director shall be
deemed to authorize the Trustee to act on its own discretion in
managing and controlling the assets of that Investment Director's
Segregated Investment Account, and Paragraphs (4) and (5) of this
Paragraph (b) shall have no effect and shall be disregarded.
(2) Any Investment Director appointed pursuant to
Paragraph (b) (1) of this Article FOURTH shall have exclusive
authority and discretion to manage and control the assets of that
Investment Director's Segregated Investment Account, and pursuant
to such authority and discretion may direct the Trustee from time
to time and at any time:
(A) To invest and reinvest that Investment
Director's Segregated Investment Account, without distinction
between principal and income, in shares of stock (whether common
or preferred) or other evidences of ownership, bonds, debentures,
notes or other evidences of indebtedness, unsecured or secured by
mortgages on real or personal property wherever situated
(including any part interest in a bond and mortgage or note and
mortgage whether insured or uninsured) and other property, or
part interest in property, real or personal, foreign or domestic,
whether or not productive of income or consisting of wasting
assets, and in order to reduce the risk of interest rate
fluctuations, contracts, as either buyer or seller, for the
future delivery of United States Treasury securities and
comparable Federal Government-backed securities; provided,
however, that the Trustee, upon specific directions in writing
from that Investment Director, shall invest and reinvest some or
all of the assets of that Investment Director's Segregated
Investment Account in qualifying securities issued by the Company
or by an affiliate of the Company, to the extent permitted by the
Employee Retirement Income Security Act of 1974, unless the
Trustee shall deem such directed investment or reinvestment to be
inconsistent with the provisions of Paragraph (a) of Article
EIGHTH and that the Trustee may retain any such securities
acquired for that Investment Director's Segregated Investment
Account at the direction of that Investment Director until that
Investment Director directs the Trustee to dispose of them; but
no direction of any Investment Director to sell any securities
issued by the Company or by an affiliate of the Company shall be
binding if it would require the Trustee to violate any law
respecting the public distribution of securities, and, in any
event, without limiting the generality of the provisions of
Article NINTH, the Company agrees, to the extent permitted by
law, to indemnify the Trustee and hold it harmless from and
against any claim or liability that may be asserted against it,
otherwise than on account of the Trustee's breach of his own
duties, by reason of the Trustee's investing in, or reinvesting
in or selling such securities in accordance with any direction
from any Investment Director or by reason of the Trustee's
failure to sell any such securities in the absence of any
direction from that Investment Director to sell them; and
(B) To perform acts similar to those authorized to
the Trustee in Subparagraphs (2) through (10) of Paragraph (a) of
this Article FOURTH.
(3) In addition, each Investment Director from time
to time and at any time may delegate to the Trustee discretionary
authority to invest and reinvest funds of that Investment
Director's Segregated Investment Account in debt securities
(including obligations of the Government of the United States)
payable on demand or having maturities not exceeding one year or
in interests in any trust fund that has been or shall be created
and maintained by the Trustee as trustee for the collective
short-term investment of funds, the instrument creating such
trust fund, together with any amendments, modifications or
supplements thereof, being hereby effective when and as such
investments are made, incorporated in and made a part of this
Agreement as fully and to all intents and purposes as if set
forth herein at length.
(4) The Trustee shall exercise in respect of each
Investment Director's Segregated Investment Account the powers
set forth in Paragraph (b) (2) of this Article FOURTH only when
and to the extent directed in writing by that Investment
Director. Each Investment Director, from time to time and at any
time, may issue orders for the purchase or sale of securities
directly to a broker or dealer, and for such purpose the Trustee
will upon request execute and deliver to that Investment Director
one or more trading authorizations. Written notification of the
issuance of each such order shall be given promptly to the
Trustee by that Investment Director, and the execution of each
such order shall be confirmed by the broker to that Investment
Director and to the Trustee. Such notification shall be
authority to the Trustee to receive securities purchased against
payment therefor and to deliver securities sold against receipt
of the proceeds therefrom, as the case may be.
(5) Unless the Trustee participates knowingly in,
or knowingly undertakes to conceal, an act or omission of any
Investment Director, knowing such act or omission to be a breach
of the fiduciary responsibility of that Investment Director with
respect to the Trust, or enables such a breach to occur through
the Trustee's failure to comply with the Trustee's own duties,
the Trustee shall not be liable for any act or omission of any
Investment Director, and shall not be under any obligation to
invest or otherwise manage the assets of the Trust that are
subject to the management of any Investment Director. Without
limiting the generality of the foregoing, the Trustee shall not
be liable by reason of its taking or refraining from taking at
the direction of any Investment Director any action in respect of
that Investment Director's Segregated Fund, pursuant to this
Paragraph (b), or pursuant to a notification of an order to
purchase or sell securities for the account of any Investment
Director's Segregated Investment Account issued by that
Investment Director, nor shall the Trustee be liable by reason of
its refraining from taking any action in respect of any
Investment Director's Segregated Investment Account because of
the failure of that Investment Director to give such direction or
order; the Trustee shall be under no duty to question or to make
inquiries as to any direction or order or failure to give
direction or order by any Investment Director; and the Trustee
shall be under no duty to make any review of investments acquired
for any Investment Manager's Segregated Investment Account at the
direction or order of that Investment Manager and shall be under
no duty at any time to make any recommendation with respect to
disposing of or continuing to retain any such investment.
(6) Without limiting the generality of the
provisions of Article NINTH, the Company agrees, to the extent
permitted by law, to indemnify the Trustee and hold it harmless
from and against any claim or liability that may be asserted
against it, otherwise than on account of the Trustee's breach of
his own duties, by reason of the Trustee's taking or refraining
from taking any action in accordance with this Paragraph (b),
including, without limiting the generality of the foregoing, any
claim or liability that may be asserted against the Trustee on
account of failure to receive securities purchased, or failure to
deliver securities sold, pursuant to orders issued by an
Investment Director directly to a broker or dealer.
(c) After an Unfriendly Change in Control occurs and
subject to Article SIXTH hereof, the Trustee shall have the
exclusive authority and discretion to manage and control the
Trust assets, and may appoint Investment Managers (as defined in
Paragraph (b) (1) (A) of this Article FOURTH) including
affiliates of the Company or the Trustee to manage the investment
of the Trust assets. Pursuant to such authority and discretion,
the Trustee, or any investment manager appointed pursuant to this
Paragraph (c), may exercise, from time to time and at any time,
the power to hold or dispose of any assets held by the Trust on
the date an Unfriendly Change in Control occurs, and shall invest
and reinvest the Trust, without distinction between principal and
income, in an immunized or dedicated portfolio of bonds,
debentures, equipment or collateral trust certificates, notes or
other evidences of indebtedness, unsecured or secured by
mortgages on real or personal property wherever situated
(including any part interest in a bond and mortgage or note and
mortgage whether insured or uninsured) and any portfolio of other
property, or part interest in property, real or personal, foreign
or domestic, such that the rates of return and maturity dates of
the instruments of such portfolio may reasonably be expected to
yield assets of the Trust sufficient to discharge the Company's
obligations under the Plans as set forth in the most recent
Participant Data (including, without limitation, the information
specified in clause (5) of Paragraph (b) of Article THIRD hereof)
furnished to the Trustee prior to such Unfriendly Change in
Control.
FIFTH: Administrative Powers. The Trustee shall have and
in its sole and absolute discretion may exercise from time to
time and at any time the following administrative powers and
authority with respect to the Trust:
(a) To hold property of the Trust in its own name or in
the name of a nominee or nominees, without disclosure of the
Trust, or in bearer form so that it will pass by delivery, but no
such holding shall relieve the Trustee of its responsibility for
the safe custody and disposition of the Trust in accordance with
the provisions of this Agreement; the Trustee's books and records
shall at all times show that such property is part of the Trust;
and the Trustee shall be absolutely liable for any loss
occasioned by the acts of its nominee or nominees with respect to
securities registered in the name of the nominee or nominees;
(b) To continue to hold any property of the Trust
whether or not productive of income; to reserve from investment
and keep unproductive of income, without liability for interest,
cash temporarily awaiting investment and such cash as it deems
advisable or as the Company from time to time may specify prior
to an Unfriendly Change in Control in order to meet the
administrative expenses of the Trust or anticipated distributions
therefrom;
(c) To organize and incorporate under the laws of any
state it may deem advisable one or more corporations (and to
acquire an interest in any such corporation that it may have
organized and incorporated) for the purpose of acquiring and
holding title to any property, interests or rights that the
Trustee is authorized to acquire under Article FOURTH hereof;
(d) To employ in the management of the Trust suitable
agents, without liability for any loss occasioned by any such
agents selected by the Trustee with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims;
(e) To make, execute and deliver, as Trustee, any deeds,
conveyances, leases, mortgages, contracts, waivers or other
instruments in writing that the Trustee may deem necessary or
desirable in the exercise of its powers under this Agreement; and
(f) To do all other acts that the Trustee may deem
necessary or proper to carry out any of the powers set forth in
Articles FOURTH, FIFTH, and SIXTH hereof or otherwise in the best
interests of the Trust.
SIXTH: Insurance and Annuity Contracts. (a) The Trustee,
upon written direction of the Company prior to an Unfriendly
Change in Control, shall pay from the Trust such sums to such
insurance company or companies as. the Company may direct for
the purpose of procuring participating or nonparticipating
insurance and/or annuity contracts for the Trust (hereinafter in
Article SIXTH referred to as "Contracts"). The Company shall
prepare, or cause to be prepared in such form as it shall
prescribe, the application for any Contract to be applied for.
The Trustee shall receive and hold in the Trust, subject to the
provisions hereinafter set forth in this Article SIXTH, all
Contracts so obtained.
(b) The Trustee shall be the complete and absolute owner
of Contracts held in the Trust and, upon written direction of the
Company prior to an Unfriendly Change in Control, shall have the
power, without the consent of any other person, to exercise any
and all of the rights, options or privileges that belong to the
absolute owner of any Contract held in the Trust or that are
granted by the terms of any such Contract or by the terms of this
Agreement. Prior to an Unfriendly Change in Control, the Trustee
shall have no discretion with respect to the exercise of any of
the foregoing powers or to take any other action permitted by any
Contract held in the Trust, but shall exercise such powers or
take such action only upon the written direction of the Company
and the Trustee shall have no duty to exercise any of such powers
or to take any such action unless and until it shall have
received such direction. The Trustee, upon the written direction
of the Company prior to an Unfriendly Change in Control, shall
deliver any Contract held in the Trust to such person or persons
as may be specified in the direction.
(c) The Trustee shall hold in the Trust the proceeds of
any sale, assignment or surrender of any Contract held in the
Trust and any and all dividends and other payments of any kind
received in respect of any Contract held in the Trust.
(d) Upon the written direction of the Company prior to
an Unfriendly Change in Control, the Trustee shall pay from the
Trust premiums, assessments, dues, charges and interest, if any,
upon any Contract held in the Trust. The Trustee shall have no
duty to make any such payment unless and until it shall have
received such direction. After an Unfriendly Change in Control,
the Trustee shall pay from the Trust premiums, assessments, dues,
charges and interest, if any, upon any Contract held in the
Trust, without direction from the Company.
(e) No insurance company that may issue any Contract or
Contracts held in the Trust shall be deemed to be a party to this
Agreement for any purpose, or to be responsible in any way for
the validity of this Agreement or to have any liability under
this Agreement other than as stated in each Contract that it may
issue. Any insurance company may deal with the Trustee as sole
owner of any Contract issued by it and held in the Trust, without
inquiry as to the authority of the Trustee to act, and may accept
and rely upon any written notice, instruction, direction,
certificate or other communication from the Trustee believed by
it to be genuine and to be signed by an officer of the Trustee
and shall incur no liability or responsibility for so doing. Any
sums paid out by any insurance company under any of the terms of
a Contract issued by it and held in the Trust either to the
Trustee, or, in accordance with its direction, to any other
person or persons designated as payees in such Contract shall be
a full and complete discharge of the liability to pay such sums,
and the insurance company shall have no obligation to look to the
disposition of any sums so paid. No insurance company shall be
required to look into the terms of this Agreement, to question
any action of the Trustee or to see that any action of the
Trustee is authorized by the terms of this Agreement.
(f) Anything contained herein to the contrary
notwithstanding, neither the Company nor the Trustee shall be
liable for the refusal of any insurance company to issue or
change any Contract or Contracts or to take any other action
requested by the Trustee; nor for the form, genuineness,
validity, sufficiency or effect of any Contract or Contracts held
in the Trust; nor for the act of any person or persons that may
render any such Contract or Contracts null and void; nor for the
failure of any insurance company to pay the proceeds and avails
of any such Contract or Contracts as and when the same shall
become due and payable; nor for any delay in payment resulting
from any provision contained in any such Contract or Contracts;
nor for the fact that for any reason whatsoever (other than their
own negligence or willful misconduct) any Contract or Contracts
shall lapse or otherwise become uncollectible.
(g) After an Unfriendly Change in Control, the Trustee
shall exercise any of the powers set forth in this Article SIXTH
without direction from the Company, including the power to
negotiate for and purchase Contracts the rates of return and
maturity dates of which may reasonably be expected to yield
assets of the Trust sufficient to discharge any or all of the
obligations of the Company under the Plans.
SEVENTH: Taxes, Expenses and Compensation of Trustee.
(a) The Company shall pay any Federal, State, Local or
other taxes imposed or levied with respect to the corpus and/or
income of the Trust or any part thereof under existing or future
laws, and the Company, in its discretion, or the Trustee, in its
discretion, may contest the validity or amount of any tax,
assessment, claim or demand respecting the Trust or any part
thereof. The Trustee shall deduct any payroll taxes required to
be withheld with respect to any payments made pursuant to the
Trust.
(b) The Trustee, without direction from the Company,
shall pay from the Trust the reasonable and necessary expenses
and compensation of counsel and all other reasonable and
necessary expenses of managing and administering the Trust that
are not paid by the Company including, but not limited to,
Participant record keeping expenses, investment management fees,
computer time charges, data retrieval and input costs, and
charges for time expended by personnel of the Trustee in
fulfilling the Trustee's duties.
(c) The Company shall pay to the Trustee from time to
time such reasonable compensation for its services as trustee as
is specified in Schedule 3 or as subsequently agreed to by the
Company and the Trustee, but until paid, such compensation and
reimbursement for expenses incurred by the Trustee pursuant to
this Article SEVENTH shall constitute a charge upon the Trust,
such charge to have priority over any payments due participants
under the Plans. Notwithstanding the foregoing, in the event the
initial three-year term of this Agreement or any renewal term
ends during a Threatened Change in Control Period, or after an
Unfriendly Change in Control, the Trustee's compensation for each
twelve-month period beginning upon termination of such initial or
renewal term shall be adjusted for any increases in the cost of
living by multiplying the rate of compensation at the end of such
initial or renewal term by a fraction (but not less than one)1
the numerator of which is the monthly average for such twelve-
month period of the Consumer Price Index for the New York City
Standard Metropolitan Statistical Area, as published by the
Bureau of Labor Statistics, and the denominator of which is the
monthly average of said Consumer Price Index for the last twelve
months of the initial term, or the last renewal term, if any. If
the Consumer Price Index referred to in the preceding sentence is
hereafter discontinued or revised so that the computation of the
adjustment cannot be made in the manner hereinabove provided,
then such other index then published by the United States
Government, or an agency or department thereof, as shall most
closely approximate the Consumer Price Index in effect on the
date hereof, shall be used to make such adjustment. Any such
adjustment shall be billed when computed as an additional fee in
respect of the twelve-month period to which it relates and shall
be payable within thirty (30) days of the date billed, and the
Trustee's compensation, as so adjusted, shall become the minimum
fee for the next succeeding twelve-month period.
(d) After an Unfriendly Change in Control, the Trustee
shall bill the Company directly, on a monthly basis, for all
expenses described in Paragraph (b) of this Article SEVENTH and
all fees described in Paragraph (c) thereof which amounts shall
be immediately due and payable except as otherwise provided in
Paragraph (c). If such amounts are not paid by the Company
within thirty (30) days of the billing date, the Trustee may pay
such amounts from the Benefits Protection Account. The Trustee
may commence legal action to recover any amount not paid within
thirty (30) days of the billing date, and shall be obligated to
commence such an action if the Company's failure to pay causes a
reduction below $1,500,000 in the assets of the Trust
attributable to the Benefits Protection Account.
EIGHTH: General Duties of Trustee and Investment Director.
(a) Subject to Article FIFTEENTH hereof, the Trustee, any
Investment Director appointed pursuant to Paragraph (b) of
Article FOURTH, and any Investment Manager appointed pursuant to
Paragraph (c) of Article FOURTH, shall discharge their duties
under this Agreement solely in the interest of the participants
in the Plans and their beneficiaries and (1) for the exclusive
purpose of providing benefits to such participants and their
beneficiaries and defraying reasonable expenses of administering
the Plans; and (2) with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and with like
aims; and (3) by diversifying the investments of the Trust so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; but the duties
and obligations of the Trustee and any Investment Director shall
be limited to those expressly imposed upon them by this Agreement
notwithstanding any reference herein to the Plans or the
Protected Plans.
(b) The Trustee may consult with counsel, who may be
counsel for the Company or for the Trustee in its individual
capacity, and shall not be deemed imprudent by reason of its
taking or refraining from taking any action in accordance with
the opinion of counsel.
(c) (1) Within thirty (30) days after an Unfriendly
Change in Control, the Company shall notify participants and
beneficiaries of the Protected Plans in writing of the Trustee's
availability to aid them in pursuing any claims they may have
against the Company under the terms of those of the Protected
Plans under which they are covered. The Company shall provide
such notice by using the same method used by Department of Labor
29 C. F. R. Section 2520. 104b-1(b)(1) as now in effect
without regard to subsequent amendments. If the Company fails to
do so, the Trustee shall provide such notification by placing an
advertisement in one newspaper of general circulation in each of
the ten locations in which the largest number of employees are
located as communicated by the Company to the Trustee prior to an
Unfriendly Change in Control.
(2) If, after an Unfriendly Change of Control, a
participant or beneficiary of a Protected Plan notifies the
Trustee that the Company (or insurance company, contract
administrator or any other party, if applicable) has refused to
pay a claim asserted by the participant or beneficiary under any
of the Protected Plans, and the Trustee determines that the
assets held in the Accounts are not available to pay such claim,
then, unless the Trustee shall determine that the claim has no
basis in law and fact (in which case the Trustee shall notify the
participant or beneficiary of such determination and shall take
no further action with respect to the claim), the Trustee:
(A) will promptly attempt to negotiate with the
Company (or insurance company, contract administrator or other
party, if applicable) to obtain payment, settlement, or other
disposition of the claim, subject to the consent of the
participant or beneficiary;
(B) will if (i) negotiations fail after sixty (60)
days of their commencement to result in a payment, settlement or
other disposition agreeable to the participant or beneficiary
(hereafter referred to in this Paragraph (c) of Article EIGHTH as
the "Plaintiff"), (ii) the Trustee at any time reasonably
believes further negotiations not to be in the Plaintiff's best
interest, or (iii) any applicable statute of limitations would
otherwise expire within sixty (60) days, upon the receipt of
written authorization from the Plaintiff in substantially the
form attached as Exhibit A hereto, institute and maintain legal
proceedings (the "Litigation") against the Company or other
appropriate person or entity to recover on the claim on behalf of
the Plaintiff; and
(C) may, subject to the written consent of the
Plaintiff, settle or discontinue the Litigation. The Trustee
shall direct the course of the Litigation and shall keep the
Plaintiff informed of the progress of the Litigation as the
Trustee deems appropriate, but no less frequently than quarterly.
If, during the Litigation,
(i) the Plaintiff directs in writing that the
Litigation on behalf of the Plaintiff be settled or discontinued,
the Trustee shall take all appropriate action to follow such
direction, provided that the written direction specifies the
terms and conditions of the settlement or discontinuance, and
further provided that the Plaintiff, if requested by the Trustee,
shall execute and deliver to the Trustee a document in a form
acceptable to the Trustee releasing and holding harmless the
Trustee from any liability resulting from the Trustees following
such direction; or
(ii) the Plaintiff refuses to consent to the
settlement or other disposition of the Litigation on terms
recommended in writing by the Trustee, the Trustee may proceed,
in its sole and absolute discretion, to take such action as it
deems appropriate in the Litigation, including settlement or
discontinuance of the Litigation, provided that the Trustee shall
afford the Plaintiff at least fourteen (14) days' advance notice
of any decision to settle or otherwise discontinue the
Litigation, subject to the provisions of the following sentence.
If, at any time, the Plaintiff (x) revokes in writing (in
substantially the form attached as Exhibit B hereto) the
authorization of the Trustee to proceed on his behalf and
delivers such writing to the Trustee and (y) appoints his own
counsel and so notifies the Trustee in writing, whose fees and
expenses are not to be paid by the Trust and who shall appear in
the Litigation on behalf of the Plaintiff in lieu of counsel
retained by the Trustee, then the Trustee shall not be authorized
to proceed in the Litigation on behalf of the Plaintiff.
Thereafter, the Trustee shall have no obligation to proceed
further on behalf of such Plaintiff or to pay any costs or
expenses incurred in the Litigation after the date of the
delivery of such writing.
The Trustee is empowered to retain, at the expense of the
Trust, counsel and other appropriate experts, including actuaries
and accountants, to aid it in making any determination under this
Paragraph (c) of Article EIGHTH and in determining whether to
pursue or settle any Litigation. The Trustee shall have the
discretion to determine the form and nature that any Litigation
against the Company or other appropriate person or entity shall
take, and the procedural rules and laws applicable to such
Litigation shall supersede any inconsistent provision of this
Agreement.
(3) Subparagraph (c)(2) shall be inapplicable in
respect of any Litigation involving the payment of benefits under
any Plan in which the Trustee is named a defendant. Any
Plaintiff in an action in which the Trustee is named a defendant
shall engage his own counsel, whose fees and expenses shall be
paid by the Plaintiff, provided, however, that the Trustee shall
pay out of the assets of the Benefits Protection Account of the
Trust any legal fees and costs awarded to the Plaintiff by a
court in such Litigation pursuant to Section 502 (g) (1) of
ERISA.
(4) In the event the Trustee determines that the
claim of a participant or beneficiary has no basis in law or fact
and such participant or beneficiary pursues such claim against
the Company, then the Trustee shall reimburse the participant or
beneficiary out of the assets of the Benefits Protection Account
of the Trust for any reasonable legal fees and other reasonable
costs incurred in pursuing such claim if such participant or
beneficiary obtains a settlement or final judgment of a court of
competent jurisdiction under which the participant or beneficiary
is to receive not less than 50% of the amount originally claimed
to the Trustee as the amount owed by the Company.
(5) With respect to claims by holders of Severance
Compensation Agreements, such holders may elect to pursue their
own claim (with counsel of their choice) or to have the Trustee
pursue such claim. In the event such holders elect to pursue
their own claims, the Trustee shall promptly reimburse such
holders for all attorneys fees and other expenses incurred to the
extent the Company does not pay such amounts as provided in the
Severance Compensation Agreements.
(d) The Company may designate, prior to an
Unfriendly Change in Control, counsel to be retained by the
Trustee at the expense of the Trust after an Unfriendly Change in
Control, to enforce the rights of participants and beneficiaries
to benefits under the Protected Plans, as described above. If
the designated counsel declines to provide representation, or the
Trustee is not satisfied with the quality of representation
provided, the Trustee may, from time to time, dismiss the
designated firm or any successor and engage another qualified law
firm for this purpose including the same law firm which
represents the Trustee with respect to its responsibilities as
Trustee under this Agreement. The Company may not dismiss or
engage such counsel or cause the Trustee to engage or dismiss
such counsel after an Unfriendly Change in Control.
NINTH: Indemnification. The Company agrees, to the extent
permitted by law, to indemnify and hold the Trustee harmless from
and against any liability that it may incur in the administration
of the Trust, unless arising from the Trustee's own gross
negligence or willful breach of the provisions of its obligations
under this Agreement. The Trustee shall not be required to give
any bond or any other security for the faithful performance of
its duties under this Agreement, except as required by law.
TENTH: No Duty To Advance Funds. The Trustee shall have no
obligation to advance its own funds for the purposes of
fulfilling its responsibilities under this Agreement, and its
obligation to incur expenses shall at all times be limited to
amounts in the Trust available to be applied toward such
expenses.
ELEVENTH: Accounts. (a) (1) The Trustee shall keep
accurate and detailed accounts of all its receipts, investments
and disbursements under this Agreement on a calendar year basis,
accounting for each Account on a separate basis. Such person or
persons as the Company shall designate shall be allowed to
inspect the books of account relating to the Trust upon request
at any reasonable time during the regular business hours of the
Trustee.
(2) Within 120 days after the close of each
calendar year, the Trustee shall transmit to the Company, and
certify the accuracy of, a written statement of the assets and
liabilities of the Trust, showing the current value of each asset
at that date, and a written account of all the Trustee's
transactions relating to the Trust during the period from the
last previous accounting to the close of that year. The report
of any such valuation shall not constitute a representation by
the Trustee that the amounts reported as fair market values would
actually be realized upon the liquidation of the Trust. For
the purposes of this Subparagraph, the date of the Trustee's
resignation or removal as provided in Article THIRTEENTH hereof
or the date of termination of the Trust as provided in Article
FOURTEENTH hereof shall be deemed to be the close of a year.
(3) Unless the Company shall have filed with the
Trustee written exceptions or objections to any such statement
and account within 60 days after receipt thereof, the Company
shall be deemed to have approved such statement and account; and
in such case or upon the written approval by the Company of any
such statement and account, the Trustee shall be forever released
and discharged with respect to all matters and things contained
in such statement and account as though it had been settled by
decree of a court of competent jurisdiction in an action or
proceeding to which the Company and all persons having any
beneficial interest in the Trust were parties.
(b) Nothing contained in this Agreement or in the Plans
shall deprive the Trustee of the right to have a judicial
settlement of its accounts. In any proceeding for a judicial
settlement of the Trustee's accounts or for instructions in
connection with the Trust, the only other necessary party thereto
in addition to the Trustee shall be the Company. If the Trustee
so elects, it may bring in as a party or parties defendant any
other person or persons. No person interested in the Trust,
other than the Company, shall have a right to compel an
accounting, judicial or otherwise, by the Trustee, and each such
person shall be bound by all accountings by the Trustee to the
Company, as herein provided, as if the account had been settled
by decree of a court of competent jurisdiction in an action or
proceeding to which such person was a party.
TWELFTH: Administration of the Plans; Communications. (a)
The Company shall administer the Plans as provided therein and
subject to Paragraph (b) of Article THIRD and Paragraph (c) of
Article EIGHTH hereof, or subject to any other delegation by the
Company and assumption by the Trustee of the duties of
administering the Plans, the Trustee shall not be responsible in
any respect for administering the Plans nor shall the Trustee be
responsible for the adequacy of the Trust to meet and discharge
all payments and liabilities under the Plans. The Trustee shall
be fully protected in relying upon any written notice,
instruction, direction or other communication signed by an
officer of the Company who is authorized to execute and deliver,
in the name and on behalf of the Company, documents or
instruments relating to the Trust (hereinafter an "Authorized
Officer"). The Company, from time to time, shall furnish the
Trustee with the names and specimen signatures of the Authorized
Officers and shall promptly notify the Trustee of the termination
of office of any Authorized Officer and the appointment of a
successor thereto. Until notified to the contrary, the Trustee
shall be fully protected in relying upon the most recent list of
Authorized Officers furnished to it by the Company.
(b) Any action required by any provision of this
Agreement to be taken by the Board of Directors of the Company
shall be evidenced by a resolution of such Board of Directors
certified to the Trustee by the Secretary or an Assistant
Secretary of the Company under its corporate seal, and the
Trustee shall be fully protected in relying upon any resolution
so certified to it. Unless other evidence with respect thereto
has been specifically prescribed in this Agreement, any other
action of the Company under any provision of this Agreement,
including any approval of or exceptions to the Trustee's
accounts, shall be evidenced by a certificate signed by an
authorized officer, and the Trustee shall be fully protected in
relying upon such certificate. The Trustee may accept a
certificate signed by an authorized officer as proof of any fact
or matter that it deems necessary or desirable to have
established in the administration of the Trust (unless other
evidence of such fact or matter is expressly prescribed herein),
and the Trustee shall be fully protected in relying upon the
statements in the certificate.
(c) The Trustee shall be entitled conclusively to
rely upon any written notice, instruction, direction, certificate
or other communication believed by it to be genuine and to be
signed by an authorized officer, and the Trustee shall be under
no duty to make investigation or inquiry as to the truth or
accuracy of any statement contained therein.
(d) Until written notice is given to the contrary,
communications to the Trustee shall be sent to it at its office
at 450 West 33rd Street, New York, New York 10001; communications
to the Company shall be sent to it at its office at 39 Old
Ridgebury Road, Danbury, Connecticut 06817.
THIRTEENTH: Resignation or Removal of Trustee. (a) The
Trustee may resign at any time other than during a Threatened
Change in Control Period or after an Unfriendly Change in Control
upon 60 days' written notice to the Company or such shorter
period as is acceptable to the Company. During a Threatened
Change in Control Period or after an Unfriendly Change in
Control, the Trustee may resign only under one of the following
circumstances:
(1) The Trustee is no longer in the business, or is
actively in the process of removing itself from the business, of
acting as trustee for employee benefit plans.
(2) The Trustee determines that a conflict of
interest exists which would prohibit it from fulfilling its
duties under this Agreement in an ethically proper manner, and a
law firm (appointed by the President of the Association of the
Bar of the City of New York, or by the American Arbitration
Association, if the President of the Association of the Bar of
the City of New York fails to so appoint within thirty days of a
request for such appointment, or notifies the Trustee that it is
unable to make such appointment) concurs with the Trustee. The
Trustee shall use its best efforts to avoid the creation of such
a conflict. The decision of such law firm shall be binding, but
may be appealed in the same manner, and under the same
conditions, as if it were made by an arbitrator. All costs
incurred by the Trustee in connection with obtaining or appealing
such a decision shall be reimbursable expenses pursuant to
Article SEVENTH hereof.
(3) The assets of the Trust have been exhausted or
are insufficient to pay accrued and reasonably anticipated fees
and expenses of the Trustee hereunder, the Company has refused
voluntarily to pay the Trustee's accrued fees and expenses as
required pursuant to Paragraph (d) of Article SEVENTH and the
Trustee has been unsuccessful in obtaining a court order
requiring the Company to make such payments or has been unable to
collect on a judgment for such fees and expenses.
Notwithstanding the above, the Trustee may resign for
reasons set forth in (1) or (2) only if it has obtained the
agreement of a bank with assets in excess of $2 billion and net
worth in excess of $100 million to replace it as trustee under
the terms of this Agreement. The decision rendered under (ii),
if that is the reason for the Trustee's resignation, may
expressly excuse the Trustee from this requirement. In any
event, the Trustee shall continue to be custodian of the Trust
assets until the new trustee is in place, and the Trustee shall
be entitled to expenses and fees through the later of the
effective date of its resignation as Trustee and the end of its
custodianship of the Trust assets.
(b) The Company, by action of its Board of
Directors, may, other than during a Threatened Change in Control
Period, remove the Trustee before an Unfriendly Change in
Control, upon 60 days' written notice to the Trustee, or upon
shorter notice if acceptable to the Trustees but in either event,
if the removal occurs during the first three years of this
Agreement, the Company shall pay to the Trustee all fees (but not
expenses) which would have been due the Trustee for the remainder
of such initial three-year period. If the removal occurs after
the first three years of this Agreement, the Company shall pay to
the Trustee all fees (but not expenses) which would have been due
the Trustee through the next one-year anniversary of the
effective date of this Agreement. The Company may not remove the
Trustee during a Threatened Change in Control Period or after an
Unfriendly Change in Control. In the event it resigns or is
removed, the Trustee shall have a right to have its accounts
settled as provided in Article ELEVENTH hereof.
(c) Each successor trustee shall have the powers
and duties conferred upon the Trustee in this Agreement, and the
term "Trustee" as used in this Agreement shall be deemed to
include any successor trustee. Upon designation or appointment
of a successor trustee, the Trustee shall transfer and deliver
the Trust to the successor trustee, reserving such sums as the
Trustee shall deem necessary to defray its expenses in settling
its accounts, to pay any of its compensation due and unpaid and
to discharge any obligation of the Trust for which the Trustee
may be liable. If the sums so reserved are not sufficient for
these purposes, the Trustee shall be entitled to recover the
amount of any deficiency from either the Company or the successor
trustee, or both. When the Trust shall have been transferred and
delivered to the successor trustee and the accounts of the
Trustee have been settled as provided in Article ELEVENTH hereof,
the Trustee shall be released and discharged from all further
accountability or liability for the Trust and shall not be
responsible in any way for the further disposition of the Trust
or any part thereof.
FOURTEENTH: Amendment of Agreement; Termination of Trust.
(a) Subject to Paragraph (b) of this Article FOURTEENTH, the
Company expressly reserves the right at any time to amend or
terminate this Agreement and the Trust created thereby to any
extent that it may deem advisable. No amendment shall be made
without the Trustee's consent thereto in writing if, and to the
extent that, the effect of such amendment is to increase the
Trustee's responsibilities hereunder. Such proposed amendment
shall be delivered to the Trustee as a written instrument of
amendment, duly executed and acknowledged by the Company and
accompanied by a certified copy of a resolution of the Board of
Directors of the Company authorizing such amendment. The Company
also shall deliver to the Trustee a copy of any modifications or
amendments to the Plans. The Trustee's consent shall not be
required for the termination of the Trust or its removal as
Trustee.
(b) Notwithstanding any other provisions of this
Agreement, the provisions of this Agreement and the Trust created
thereby may not be amended after the date an Unfriendly Change in
Control occurs without the written consent of a majority in
number of participants and beneficiaries. The Trustee may
request that the Company furnish evidence to establish that such
a majority in number of participants and beneficiaries have
granted written consent to such an amendment. The Trustee, after
an Unfriendly Change in Control, upon written advice of counsel,
may amend the provisions of this Agreement to the extent required
by applicable law. The Company reserves the right to amend or
eliminate this Paragraph (b) of Article FOURTEENTH prior to the
date of an Unfriendly Change in Control.
(c) In the event the Company terminates the Trust
prior to the occurrence of an Unfriendly Change in Control, other
than during a Threatened Change in Control Period, the Trustee
(subject to the provisions of Paragraph (d) of Article THIRD and
Article FIFTEENTH hereof and reserving such sums as the Trustee
shall deem necessary in settling its accounts and to discharge
any obligation of the Trust for which the Trustee may be liable)
shall distribute all remaining assets of the Trust in accordance
with the written directions of the Company.
(d) In case any one or all of the Equalization
Plan, the Supplemental Retirement Income Plan, the 1983 Bonus
Deferral Plan, the 1984 Bonus Deferral Plan and the Key
International Management Plan is terminated in whole or in part
after an Unfriendly Change in Control occurs, then the Trustee,
subject to the provisions of Paragraph (d) of Article THIRD, and
Article FIFTEENTH hereof, and reserving such sums as the Trustee
shall deem necessary in settling its accounts and to discharge
any obligation of the Trust for which the Trustee may be liable)
shall apply or distribute the Account established with regard to
such Plan pursuant to Paragraph (a) of Article SECOND, in such
manner and in such amounts as the Trustee shall determine based
upon the most recent Participant Data (as defined in Paragraph
(b) of Article THIRD hereof) forwarded by the Company to the
Trustee prior to such Unfriendly Change in Control and any
supplemental information furnished to the Trustee by a
participant or beneficiary upon which the Trustee may reasonably
rely in making such a determination. After satisfying all
liabilities with regard to such terminated Plan, from the Account
established with regard to such Plan, the Trustee shall
distribute the remaining assets in such Account in accordance
with Paragraph (c)(8) of Article SECOND. Subject to Paragraph
(b) of Article FIFTEENTH, in the event of an Unfriendly Change in
Control, the Trust shall continue in effect until the later of
the fifth one year anniversary of the date on which an Unfriendly
Change in Control occurs or the date upon which all of the
participants' and beneficiaries' benefits under all of the Plans
have been paid or otherwise provided for. Upon termination of
the Trust, the Trustee shall have a right to have its account
settled as provided in Article ELEVENTH hereof. Any assets
remaining in the Trust after payment or provision for all
benefits payable under the Plans, and after the Trustee has
reserved such sums as it deems necessary for the payment of its
expenses and fees hereunder shall be paid in accordance with the
written directions of the Company. When the Trust assets shall
have been so applied or distributed and the accounts of the
Trustee shall have been so settled, the Trustee shall be released
and discharged from all further accountability or liability
respecting the Trust.
FIFTEENTH: Prohibition of Diversion. (a) Except as
provided in Paragraph (b) below, at no time prior to the
satisfaction of all liabilities with respect to the beneficiaries
under this Trust shall any part of the corpus and/or income of
the Trust be used for, or diverted to, purposes other than for
the exclusive benefit of such beneficiaries and the assets of the
Trust shall never inure to the benefit of the Company and shall
be held for the exclusive purposes of providing benefits to
participants in the Plans and their beneficiaries and defraying
reasonable expenses of administering the Plans or performing any
of the Trustee's duties under this Agreement.
(b) Notwithstanding any provision of this Agreement
to the contrary, the assets of the Trust shall at all times be
subject to claims of the creditors of the Company. In the event
that (1) a final judicial determination is entered that the
Company is unable to pay its debts as such debts mature or (2)
there shall have been filed by or against the Company in any
court or other tribunal either of the United States or of any
State or of any other authority now or hereafter exercising
jurisdiction, a petition in bankruptcy or insolvency proceedings
or for reorganization or for the appointment of a receiver or
trustee of all or substantially all of the Company's property
under the present or any future Federal bankruptcy code or any
other present or future applicable Federal, State or other
bankruptcy or insolvency statute or law, then the Trustee shall
not make payments from the Trust to any participant or
beneficiary, but under either of such circumstances, the Trustee
shall deliver any property held in the Trust only as a court or
other tribunal of competent jurisdiction may direct to satisfy
the claims of the Company's creditors. The Trustee shall resume
payments under the terms of the Trust only after determining that
the Company is not insolvent or after receiving a judicial
decision to that effect. The Principal Financial Officer of the
Company, or an officer of the Company with duties similar to
those of a Principal Financial Officer, and the Board of
Directors of the Company shall have the duty to inform the
Trustee of the insolvency of the Company. The Trustee is
empowered to retain, at the expense of the Trust, counsel and
other appropriate experts, including accountants, to aid it in
making any determination with regard to the Company's insolvency
under this Paragraph (b) of Article FIFTEENTH.
SIXTEENTH: Prohibition of Assignment of Interest. No
interest, right or claim in or to any part of the Trust or any
payment therefrom shall be assignable, transferable or subject to
sale, mortgage, pledge, hypothecation, commutation, anticipation,
garnishment, attachment, execution or levy of any kind, and the
Trustee shall not recognize any attempt to assign, transfer,
sell, mortgage, pledge, hypothecate, commute or anticipate the
same, except to the extent required by law.
SEVENTEENTH: Affiliates. Any corporation that, directly or
through one or more intermediaries, controls, is controlled by or
is under common control with the Company may adopt and become a
party to this Agreement by delivering to the Trustee an
instrument in writing, duly executed and acknowledged, adopting
and assuming jointly and severally the obligations of the Company
under this Agreement and constituting and appointing the Company
to be the agent and attorney in fact of such corporation for the
purposes of giving or receiving notices, instructions, directions
and other communications to or from the Trustee and approving the
accounts of the Trustee, accompanied by duly certified copies of
resolutions of the Board of Directors of such corporation
adopting the Plans and approving and authorizing execution,
acknowledgment and delivery of such instrument and a duly
certified copy of a resolution of the Board of Directors of the
Company approving and consenting to the same. Notwithstanding
the foregoing, no Affiliate may become a party to this Agreement
after an Unfriendly or Threatened Change in Control.
EIGHTEENTH: Miscellaneous. (a) This Agreement shall be
interpreted, construed and enforced, and the trust hereby created
shall be administered, in accordance with the laws of the United
States and of the State of New York. Nothing in this Agreement
shall be construed to subject either the Trust created hereunder
or the Plans to the Employee Retirement Income Security Act of
1974, as amended.
(b) The titles to Articles of this Agreement are
placed herein for convenience of reference only, and the
Agreement is not to be construed by reference thereto.
(c) This Agreement shall bind and inure to the
benefit of the successors and assigns of the Company and the
Trustee, respectively and the Plans.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but
all of which together shall constitute but one instrument, which
may be sufficiently evidenced by any counterpart.
(e) If any provision of this Agreement is
determined to be invalid or unenforceable the remaining
provisions shall not for that reason alone also be determined to
be invalid or unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their respective names by their duly
authorized officers under their corporate seals as of the day and
year first above written.
UNION CARBIDE CORPORATION
By
ATTEST:
Secretary
MANUFACTURERS HANOVER TRUST
COMPANY
By
ATTEST:
Trust Officer
EXHIBIT A
Authorization Pursuant to
Paragraph (c) of Article EIGHTH of
Union Carbide Corporation Benefits Protection Trust
TO: Manufacturers Hanover Trust Company
This is to authorize the Manufacturers Hanover Trust
Company, as Trustee of the Union Carbide Corporation Benefits
Protection Trust (the "Trust"), to institute and maintain legal
proceedings against the Company (as defined in the Trust) or
other appropriate person or entity to assert the following claim
on my behalf: [nature of claim]. The Trustee shall have the
powers and be subject to the procedures set forth in Paragraph
(c) of Article EIGHTH of the Trust.
Any proceedings by the Trustee under this authorization may
be initiated in my name as a plaintiff (or as a member of a
class) or in the name of the Trustee, or both, as the Trustee
determines is necessary or appropriate at the time proceedings
are commenced.
Participant
EXHIBIT B
Revocation of Authorization
Pursuant to Paragraph (c) of Article EIGHTH of
Union Carbide Corporation Benefits Protection Trust
To: Manufacturers Hanover Trust Company
This is to notify you that I revoke any prior authorization
I have given to you as Trustee of the Union Carbide Corporation
Benefits Protection Trust (the "Trust") to maintain legal
proceedings against the Company (as defined in the Trust) or
other appropriate person or entity to assert the following claim
on my behalf: [nature of claim].
I understand that this Revocation of Authorization is
conditioned upon, and shall not be effective until, the
appointment by me of my own counsel and the appearance of that
counsel in any legal proceeding on my behalf in lieu of counsel
retained by the Trustee. I understand further that, upon the
occurrence of these conditions, the Trustee shall have no
obligation to proceed further on my behalf, or to pay any costs
or expenses incurred after the delivery of this Revocation of
Authorization.
Participant
STATE OF CONNECTICUT )
: SS. :
COUNTY OF )
On this _____ day of ____________, 1989, before me
personally came ________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
___________________, and that he is _________________ of UNION
CARBIDE CORPORATION, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; and that he signed his name
thereto by like order.
STATE OF NEW YORK )
: SS. :
COUNTY OF NEW YORK )
On this ____ day of______________, 1989, before me
personally came _________________, to me known, who, being by me
duly sworn, did depose and say that he resides at
________________, and that he is a Vice President of
MANUFACTURERS HANOVER TRUST COMPANY, one of the corporations
described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said
instruments is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
SCHEDULE 1
1. The Equalization Benefit Plan for Participants of the
Retirement Program Plan for Employees of Union Carbide
Corporation and Its Participating Subsidiary Companies
(hereinafter, together with all amendments thereto from time to
time in effect, referred to as the "Equalization Plan").
2. The Supplemental Retirement Income Plan (hereinafter,
together with all amendments thereto from time to time in effect,
referred to as the "Supplemental Retirement Income Plan").
3. The 1983 Union Carbide Bonus Deferral Program
(hereinafter, together with all amendments thereto from time to
time in effect, referred to as the "1983 Bonus Deferral Plan").
4. The 1984 Union Carbide Bonus Deferral Program
(hereinafter, together with all amendments thereto from time to
time in effect, referred to as the "1984 Bonus Deferral Plan").
5. The Benefit Plan for Designated Key International
Management Employees (hereinafter, together with all amendments
thereto from time to time in effect, referred to as the "Key
International Management Plan").
6. All outstanding severance compensation agreements of
the Company as approved by the Board of Directors of the Company
(hereinafter, together with all amendments thereto from time to
time in effect, referred to as "Severance Compensation
Agreements").
SCHEDULE 2
1. The Equalization Benefit Plan for Participants of the
Retirement Program Plan for Employees of Union Carbide
Corporation and It's Participating Subsidiary Companies.
2. The Supplemental Retirement Income Plan.
3. The 1983 Union Carbide Bonus Deferral Program.
4. The 1984 Union Carbide Bonus Deferral Program.
5. The Benefit Plan for Designated Key International
Management Employees.
6. All outstanding severance compensation agreements of
the Company as approved by the Board of Directors of the Company.
7. Special Severance Protection Program.
SCHEDULE 3
TRUSTEE'S FEES
Prior to Unfriendly Change in Control $ 55,000 Annually
Subsequent to Unfriendly Change in Control $200,000 Annually
Exhibit 10.24.3
FIRST AMENDMENT
TO THE UNION CARBIDE CORPORATION
BENEFITS PROTECTION TRUST
The Union Carbide Corporation Benefits Protections Trust
(the "Trust") is hereby amended as follows:
1. Schedule 1 of the Trust is amended by adding the
following sentences at the end thereof:
"7. The Union Carbide Corporation Compensation
Deferral Program (hereinafter, together with
all amendments thereto from time to time in
effect, referred to as the "Compensation
Deferral Program").
8. The Union Carbide Corporation Excess Long
Term Disability Plan (hereinafter, together
with all amendments thereto from time to time
in effect, referred to as the "Excess LTD
Plan")."
2. Schedule 2 of the Trust is amended by adding the
following sentences at the end thereof:
"7. Compensation Deferral Program.
8. Excess LTD Plan."
3. The amendment set forth herein shall be effective as
of January 1, 1994.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
CHEMICAL BANK
By: Geoffrey Tripp
EXHIBIT 10.25
February 24, 1988:
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized to
purchase annuities from an insurance company to be
selected by the Chief Financial Officer to cover
current accrued benefits for retired employees who are
participants in either the Equalization Benefit Plan
("EBP") or Supplemental Retirement Income Plan ("SRIP")
and to cover only EBP benefits for active employees
(with additional annuities to be purchased upon such
employees' retirement to provide SRIP benefits and
additional annuities to be purchased from time to time
to cover EBP benefits which hereafter accrue); and be
it further
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized to
withdraw funds currently in the Grantor Trust
established in connection with the EBP and the SRIP;
and be it further
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized to
amend Article Thirteenth of the Grantor Trust Agreement
with Manufacturers Hanover Trust Company to allow the
withdrawal of funds by the Corporation; and be it
further
RESOLVED, that the proper officers of the
Corporation be, and they hereby are, authorized to
make cash payments to participants, in amounts to be
determined by the Chief Financial Officer, to enable
such participants to meet their tax obligations created
by the purchase of annuities; and be it further
RESOLVED, that the proper officers of this
Corporation be, and they hereby are, authorized to
execute or cause to be executed such documents and
other writings, and to take or do or cause to be taken
or done such other actions or things, as may be
necessary or desirable to effectuate the purposes and
intent of the foregoing resolutions.
EXHIBIT 10.26
June 28, 1989:
RESOLVED, that the proper officers of the Corporation be,
and they hereby are, authorized to purchase an annuity from an
insurance company to provide benefits for active employees under
the Supplemental Retirement Income Program resulting from the
$200,000 (as indexed) limit on pensionable compensation under the
Retirement Program Plan; and be it further
RESOLVED, that the proper officers of this Corporation be,
and they hereby are, authorized to execute or cause to be executed
such documents and other writings, and to take or do or cause to be
taken or done such other actions or things, as may be necessary or
desirable to effectuate the purposes and intent of the foregoing
resolution.
EXHIBIT 10.27
UNION CARBIDE CORPORATION
NON-EMPLOYEE DIRECTORS'
RETIREMENT PLAN
TABLE OF CONTENTS
Section Title Page
1 Purpose 1
2 Definitions 1
3 Administration 2
4 Participation 2
5 Retirement Benefits 3
6 Death Benefits 5
7 Amendment, Suspensions
or Termination 5
8 General 5
UNION CARBIDE CORPORATION
NON-EMPLOYEE DIRECTORS'
RETIREMENT PLAN
Section 1: Purpose. The purpose of the Union Carbide
Corporation Non-Employee Directors' Retirement Plan (hereinafter
referred to as the "Plan") is to provide an additional incentive
for Non-Employee Directors to continue in service to the
Corporation and to attract future Non-Employee Directors to the
Corporation.
Section 2: Definitions. Unless the context clearly
requires a different meaning, the following words shall have the
following meanings when used herein.
(a) "Annual Basic Benefit" means the benefit described
in Section 5.2.
(b) "Benefit Period" means the period described in
Section 5.3.
(c) "Board" means the Board of Directors of the
Corporation.
(d) "Corporation" means Union Carbide Corporation.
(e) "Disability" means a disability of such a nature
that it prevents a Director from performing his or her duties as
a Director for the Corporation.
(f) "Effective Date" means January 1, 1991.
(g) "Non-Employee Director" or "Director" means a member
or former member of the Board who is not considered as an
employee by the Corporation or any Subsidiary.
(h) "Plan Year" means the calendar year.
(i) "Retainer" means the annual base fee as adjusted
from time to time, paid to members of the Board as compensation
for their service. Such term excludes (in addition to any other
excludable amounts) (i) any additional fees paid for attendance
at any meeting of the Board or a committee thereof, or chairing
any committee, (ii) any stock awards paid to a Director, and
(iii) any reimbursement of expenses paid to a Director.
(j) "Subsidiary" means any corporation of which more
than 50% of the voting stock is owned directly or indirectly by
the Corporation.
(k) "Surviving Spouse Benefit" means the benefit, if
any, payable under Section 5.4.
(l) "Year of Service" means a Plan Year or any calendar
year prior to the Effective Date during which a Non-Employee
Director served as a member of the Board throughout the entirety
of such year. Only years as a Non-Employee Director shall count
as Years of Service for purposes of this Plan.
Section 3: Administration. This Plan shall be administered
by the Nominating Committee (hereinafter referred to as the
"Committee") of the Board of Directors or such other committee as
the Board shall designate. The Committee shall have full
discretionary authority to interpret the Plan, establish
administrative regulations to further the purpose of the Plan and
take any other action necessary to the proper operation of the
Plan. All decisions and acts of the Committee shall be final and
binding upon all Participants.
Section 4: Participation. Each non-employee who is a
Non-Employee Director of the Corporation on the Effective Date of
the Plan or who thereafter becomes a Non-Employee Director of the
Corporation shall be a Participant in the Plan (herein referred
to as a "Participant").
Section 5: Annual Basic Benefits.
5.1. Eligibility. To receive an Annual Basic Benefit
under the Plan, a Non-Employee Director must: (1) have completed
at least five (5) Years of Service as a Non-Employee Director;
and (2) no longer serve as a Non-Employee Director of the
Corporation.
5.2. Amount of Benefits. The annual amount of a
Non-Employee Director's Annual Basic Benefit shall equal
one-hundred percent (100%) of the Retainer in effect at the time
the Non-Employee Director terminates service as a Non-Employee
Director.
5.3 Benefit Period. A Non-Employee Director's Benefit
Period shall be his or her life expectancy and shall commence at
the later of (i) age 65, or (ii) termination of service with the
Corporation.
5.4 Surviving Spouse Benefit. Upon the death of a
Non-Employee Director prior to termination of service with the
Corporation, and provided the Non-Employee Director had completed
five (5) Years of Service as a Non-Employee Director, a benefit
equal to fifty percent (50%) of the Retainer in effect at the
time the Non-Employee Director dies shall be paid to his or her
surviving spouse, if any, for a period of ten (10) years. There
shall be no benefits payable on behalf of a Non-Employee Director
or any beneficiary subsequent to his or her death if such
Non-Employee Director has no surviving spouse.
5.5 Payment of Benefit. Within thirty (30) days after
a Non-Employee Director becomes eligible for benefits under the
Plan, the Corporation shall pay such Non-Employee Director a lump
sum payment equal to the then net present value of the Annual
Basic Benefit for the Benefit Period.
The Surviving Spouse Benefit payable in accordance with
Section 5.4 shall be paid to the surviving spouse within thirty
(30) days of the date of the Non-Employee Director's death, in a
lump sum payment equal to the then net present value of the
Surviving Spouse Benefit.
5.6 Net Present Value. For purposes of Section 5.5,
net present value shall be determined using (i) the discount rate
of interest established by the Pension Benefit Guaranty
Corporation as in effect thirty (30) days prior to the time of
distribution of the Non-Employee Director's retirement benefit or
the Surviving Spouse Benefit, as applicable, and (ii) the 1983
Group Annuity Mortality Table.
5.7. Disability or Death. If any Non-Employee
Director terminates service as a Non-Employee Director before
completing five (5) Years of Service as a result of a Disability
or death, notwithstanding the requirements of Section 5.1, the
Committee may authorize a benefit to be paid to such Non-Employee
Director or the surviving spouse under this Plan.
Section 6: Assignment and Alienation of Benefits. No
retirement benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, transfer, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate,
sell, assign, transfer, pledge, encumber, or charge the same
shall be void. No rights or benefits hereunder shall in any
manner be liable for or be subject to the debts, contracts,
liabilities, engagements, or torts of the person entitled to such
benefit and, to the extent permitted by law, the rights of any
Non-Employee Director shall not be subject in any manner to
attachment or other legal process for the debts of such
Non-Employee Director.
Section 7: Amendment, Suspensions or Termination. The
Board of Directors may amend, suspend or terminate the Plan at
any time; provided, however, that no such termination of the Plan
shall alter or impair the rights of a Non-Employee Director to
receive a benefit under the Plan if such Non-Employee Director
would be eligible to receive a benefit at the time of termination
but for the Director's continuing to serve as a Non-Employee
Director at the time of such Plan termination.
Section 8: General
8.1. Nothing in the Plan shall be deemed to confer
upon any Non-Employee Director any right to continued service as
director of the Corporation or any Subsidiary or affect any right
of the Corporation or a Subsidiary, acting through their Board of
Directors or otherwise, to terminate or otherwise affect the
service of such Non-Employee Director.
8.2. The Plan shall be interpreted in accordance with,
and the enforcement of the Plan shall be governed by, the laws of
the State of New York.
8.3. All costs and expenses incurred in the operation
and administration of this Plan shall be borne by the
Corporation.
8.4. This Plan is intended to be administered as an
unfunded employee benefit plan established and maintained
primarily for the purpose of providing deferred compensation for
a select group of Management or highly compensated employees
within the meaning of Section 201(2) of the Employee Retirement
Income Security Act of 1974, as amended.
EXHIBIT 10.28
1994 UNION CARBIDE
LONG-TERM INCENTIVE PLAN
1994 UNION CARBIDE LONG-TERM INCENTIVE PLAN
Section 1: Purpose. The purpose of the 1994 Union Carbide Long-
Term Incentive Plan (hereinafter referred to as the "Plan") is to
(a) advance the interests of Union Carbide Corporation (the
"Corporation") and its stockholders by providing incentives and
rewards to those employees who are in a position to contribute to
the long-term growth and profitability of the Corporation; (b)
assist the Corporation and its subsidiaries and affiliates in
attracting, retaining, and motivating highly qualified employees
for the successful conduct of their business; and (c) make the
Corporation's compensation program competitive with those of
other major employers.
Section 2: Definitions.
2.1 A "Change in Control of the Corporation" shall be
deemed to occur in the event that any of the following
circumstances have occurred:
(i) if a change in control of the Corporation
would be required to be reported in response
to Item 1(a) of the Current Report on Form 8-
K as in effect on the date hereof, pursuant
to Sections 13 or 15(d) of the Exchange Act,
whether or not the Corporation is then
subject to such reporting requirement;
(ii) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act (x) becomes the "beneficial owner", as
defined in rule 13d-3 under the Exchange Act,
of more than 20% of the then outstanding
voting securities of the Corporation,
otherwise than through a transaction or
transactions arranged by, or consummated with
the prior approval of, the Board or (y)
acquires by proxy or otherwise the right to
vote for the election of directors, for any
merger or consolidation of the Corporation or
for any other matter or question, more than
20% of the then outstanding voting securities
of the Corporation, otherwise than through an
arrangement or arrangements consummated with
the prior approval of the Board;
(iii) if during any period of twenty-four
consecutive months (not including any period
prior to the adoption of this section),
Present Directors and/or New Directors cease
for any reason to constitute a majority of
the Board;
For purposes of this subsection (iii),
"Present Directors" shall mean individuals
who at the beginning of such consecutive
twenty-four month period were members of the
Board and "New Directors" shall mean any
director whose election by the Board or whose
nomination for election by the Corporation's
stockholders was approved by a vote of at
least two-thirds of the Directors then still
in office who were Present Directors or New
Directors; or
(iv) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange
Act that is the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act of 20%
or more of the then outstanding voting
securities of the Corporation commences
soliciting proxies.
2.2: "Code" means the Internal Revenue Code of 1986, as now
or hereafter amended.
2.3: "Employee" means all employees of the Corporation or
of a subsidiary or affiliate of the Corporation participating in
the Plan, including officers of the Corporation, as well as
officers of the Corporation who are also directors of the
Corporation. However, an individual who is a member of the
Committee shall not be an "employee" for purposes of this Plan.
2.4: "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.5: "Exercise Payment" is a payment upon the exercise of a
stock option of an amount determined by the Committee in its
discretion, which amount shall not be greater than 60% of the
excess of the Market Price over the option price of the stock
acquired upon the exercise of the option.
2.6: "Incentive Stock Option" means any stock option
granted pursuant to this Plan which is designated as such by the
Committee and which complies with Section 422 of the Code.
2.7: "Market Price" is the mean of the high and low prices
of the common stock of the Corporation as reported in the New
York Stock Exchange-Composite Transactions on the date the option
or stock appreciation right is exercised (or on the next
preceding day such stock was traded on a stock exchange included
in the New York Stock Exchange-Composite Transactions if it was
not traded on any such exchange on the date the option or stock
appreciation right is exercised), except that in the case of a
stock appreciation right that is exercised for cash during the
first three days of the ten-day period set forth in Section 7.5,
"Market Price" is the highest daily closing price of the common
stock of the Corporation as reported in the New York Stock
Exchange-Composite Transactions during such ten-day period.
Notwithstanding the foregoing provisions, if a stock appreciation
right is exercised during the 60-day period commencing on the
date of a Change in Control of the Corporation, the Market Price
for purposes of determining the stock appreciation shall be the
highest of (1) the market price of the common stock of the
Corporation, as determined under the preceding sentence; (2) the
highest market price of a share of the common stock of the
Corporation during the period commencing on the ninetieth day
preceding the date of exercise of the stock appreciation right
and ending on the date of exercise of the stock appreciation
right; (3) the highest price per share of common stock of the
Corporation shown on Schedule 13D or an amendment thereto filed
pursuant to Section 13(d) of the Securities Exchange Act of 1934
by any person holding 20% of the combined voting power of the
Corporation's then outstanding voting securities; or (4) the
highest price paid or to be paid per share of common stock of the
Corporation pursuant to a tender or exchange offer as determined
by the Committee.
2.8: "Non-Qualified Stock Option" means any stock option
granted pursuant to this Plan which is not an Incentive Stock
Option.
2.9: "Retirement" shall mean retirement from employment by
the Corporation or a subsidiary or affiliate with the right to
receive immediately a non-actuarially reduced pension under the
Corporation's Retirement Program.
2.10: "Restricted Stock" means stock of the Corporation
subject to restrictions on the transfer of such stock, conditions
of forfeitability of such stock, or any other limitations or
restrictions as determined by the Committee.
2.11: "Stock Appreciation" shall be based on the excess of
the Market Price of the common stock over the option price of the
related option stock, as determined by the Committee.
Section 3: Participation. The Participants in the Plan
("Participants") shall be those Employees serving in a
managerial, administrative, or professional position who are
selected to participate in the Plan by the Committee of the Board
of Directors of the Corporation named to administer the Plan
pursuant to Section 4.
Section 4: Administration. The Plan shall be administered and
interpreted by a Committee of three or more members of the Board
of Directors (hereinafter referred to as the "Committee")
appointed by the Board. Members of the Committee are not
eligible to participate in the Plan and no member may have been
eligible for selection as a person to whom stock may be allocated
or to whom stock options or stock appreciation rights may be
granted pursuant to the Plan or any other plan of the Corporation
or any of its affiliates within one year prior to serving on the
Committee. All decisions and acts of the Committee shall be
final and binding upon all Participants. The Committee shall:
(i) determine the number and types of awards to be made under the
Plan; (ii) select the awards to be made to Participants; (iii)
set the option price, the number of options to be awarded, and
the number of shares to be awarded out of the total number of
shares available for award; (iv) delegate to the Chief Executive
Officer of the Corporation the right to allocate awards among
Employees who are not officers or directors of the Corporation
within the meaning of the Exchange Act, such delegation to be
subject to such terms and conditions as the Committee in its
discretion shall determine; (v) establish administrative
regulations to further the purpose of the Plan; and (vi) take any
other action desirable or necessary to interpret, construe or
implement properly the provisions of the Plan.
Section 5: Awards. Awards under this Plan may be in any of the
following forms (or a combination thereof): (i) stock option
awards; (ii) stock appreciation rights; (iii) exercise payment
rights; (iv) grants of stock or Restricted Stock; or (v)
performance awards. Except as otherwise defined herein, "stock"
shall mean the common stock, $1.00 par value, of the Corporation.
All awards shall be made pursuant to award agreements between the
Participant and the Corporation. The agreements shall be in such
form as the Committee approves from time to time.
a. Maximum Amount Available. The total number of shares of
stock (including Restricted Stock, if any) optioned or granted
under this Plan during the term of the Plan shall not exceed
7,500,000 shares. No Participant may be granted, in the
aggregate, awards which would result in the Participant receiving
more than 10% of the maximum number of shares available for award
under the Plan. Solely for the purpose of computing the total
number of shares of stock optioned or granted under this Plan,
there shall not be counted any shares which have been forfeited
and any shares covered by an option which, prior to such
computation, has terminated in accordance with its terms or has
been canceled by the Participant or the Corporation.
b. Adjustment in the Event of Recapitalization, etc.
In the event of any change in the outstanding shares of the
Corporation by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, combination or exchange
of shares or other similar corporate change or in the event of
any special distribution to the stockholders, the Committee shall
make such equitable adjustments in the number of shares and
prices per share applicable to options then outstanding and in
the number of shares which are available thereafter for Stock
Option Awards or other awards, both under the Plan as a whole and
with respect to individuals, as the Committee determines are
necessary and appropriate. Any such adjustment shall be
conclusive and binding for all purposes of the Plan.
Section 6: Stock Options.
6.1: The Corporation may award options to purchase common
stock or Restricted Stock of the Corporation (hereinafter
referred to as "Stock Option Awards") to such Participants as the
Committee, or the Chief Executive Officer of the Corporation, if
the Committee in its discretion delegates the right to allocate
awards pursuant to Section 4, authorizes and under such terms as
the Committee establishes. The Committee shall determine with
respect to each Stock Option Award and designate in the grant
whether a Participant is to receive an Incentive Stock Option or
a Non-Qualified Stock Option.
6.2: The option price of each share of stock subject to a
Stock Option Award shall be specified in the grant, but in no
event shall the exercise price be less than the closing price of
the common stock of the Corporation on the date the award is
authorized as reported in the New York Stock Exchange-Composite
Transactions. If the Participant to whom an Incentive Stock
Option is granted owns, at the time of the grant, more than ten
percent (10%) of the combined voting power of the Participant's
employer or a parent or subsidiary of the employer, the option
price of each share of stock subject to such grant shall be not
less than one hundred ten percent (110%) of the closing price
described in the preceding sentence.
6.3: A stock option by its terms shall not be transferable
by the Participant other than by will or the laws of descent and
distribution, and, during the Participant's lifetime, will be
exercisable only by the Participant. A stock option by its terms
also shall be of no more than 10 years' duration, except that an
Incentive Stock Option granted to a Participant who, at the time
of the grant, owns stock representing more than ten percent (10%)
of the combined voting power of the Participant's employer or a
parent or subsidiary of the employer shall be by its terms be of
no more than five (5) years' duration. A stock option by its
terms shall be exercisable only after the earliest of: (i) such
period of time as the Committee shall determine and specify in
the grant, but in no event less than one year following the date
of grant of such award; (ii) the Participant's death; or (iii) a
Change in Control of the Corporation.
An option is only exercisable by a Participant while the
Participant is in active employment with the Corporation, or its
subsidiary, except (i) in the case of a Participant's death,
Retirement or disability; (ii) during a three-year period
commencing on the date of a Participant's termination of
employment by the Corporation other than for cause; (iii) during
a three-year period commencing on the date of termination, by the
Participant or the Corporation, of employment after a Change in
Control of the Corporation, unless such termination of employment
is for cause; or (iv) if the Committee decides that it is in the
best interest of the Corporation to permit individual exceptions.
An option may not be exercised pursuant to this paragraph after
the expiration date of the option.
6.4: An option may be exercised with respect to part or all
of the shares subject to the option by giving written notice to
the Corporation of the exercise of the option. The option price
for the shares for which an option is exercised shall be paid on
or within ten business days after the date of exercise in cash,
in whole shares of common stock of the Corporation owned by the
Participant prior to exercising the option, or in a combination
of cash and such shares of common stock. The value of any share
of common stock delivered in payment of the option price shall be
its Market Price on the date the option is exercised.
6.5: The Committee may, in its discretion, grant to
Participants holding stock options the right to receive with
respect to each share covered by an option payments of amounts
equal to the regular cash dividends paid to holders of the
Company's common stock during the period that the option is
outstanding (such payments are hereinafter referred to as
"Dividend Payments").
6.6: The aggregate fair market value of all shares of stock
with respect to which Incentive Stock Options are exercisable for
the first time by a Participant in any one calendar year, under
this Plan or any other stock option plan maintained by the
Corporation (or by any subsidiary or parent of the Corporation),
shall not exceed $100,000. The fair market value of such shares
of stock shall be the mean of the high and low prices of the
common stock of the Corporation as reported in the New York Stock
Exchange - Composite Transactions on the date the related stock
option is granted (or on the next preceding day such stock was
traded on a stock exchange included in the New York Stock
Exchange - Composite Transactions if it was not traded on any
such exchange on the date the related stock option is granted).
Section 7: Stock Appreciation Rights.
7.1: The Committee may, in its discretion, grant stock
appreciation rights to Participants who have received a Stock
Option Award. The stock appreciation rights may relate to such
number of shares, not exceeding the number of shares that the
Participant may acquire upon exercise of a related stock option,
as the Committee determines in its discretion. Upon exercise of
a stock option by a Participant, the stock appreciation rights
relating to the shares covered by such exercise shall terminate.
Upon termination or expiration of a stock option, any unexercised
stock appreciation rights related to that option shall also
terminate. Upon exercise of stock appreciation rights, such
rights and the related option to the extent of an equal number of
shares shall terminate.
7.2: The Committee at its discretion may revoke at any time
any unexercised stock appreciation rights granted to a
Participant under this Plan, without compensation to such
Participant. Revocation of a Participant's stock appreciation
rights under this section shall not affect any related stock
options granted to the Participant under this Plan.
7.3: Upon a Participant's exercise of some or all of the
Participant's stock appreciation rights, the Participant shall
receive an amount equal to the value of the Stock Appreciation
for the number of rights exercised, payable in cash, common
stock, Restricted Stock, or a combination thereof, at the
discretion of the Committee.
7.4: The Committee shall have the discretion either to
determine the form in which payment of a stock appreciation right
will be made, or to consent to or disapprove the election of the
Participant to receive cash in full or partial settlement of the
right. Such consent or disapproval may be given at any time
before or after the election to which it relates.
Notwithstanding the foregoing provision, if a Participant
exercises a stock appreciation right during the 60-day period
commencing on the date of a Change in Control of the Corporation,
the form of payment of such stock appreciation right shall be
cash, provided that such stock appreciation right was granted as
least six months prior to the date of exercise, and shall be
common stock if such stock appreciation right was granted six
months or less prior to the date of the exercise.
7.5: Except in the case of a stock appreciation right that
was granted at least six months prior to exercise and is
exercised for cash during the 60-day period commencing on the
date of the Change in Control of the Corporation, any election by
the Participant to receive cash in full or partial settlement of
the stock appreciation right, as well as any exercise by the
Participant of the Participant's stock appreciation right for
such cash, shall be made only during the period beginning on the
third business day following the date of release of the quarterly
or annual summary statements of sales and earnings and ending on
the twelfth business day following such date.
7.6: Settlement for exercised stock appreciation rights may
be deferred by the Committee in its discretion to such date and
under such terms and conditions as the Committee may determine.
7.7: A stock appreciation right is only exercisable and
transferable during the period when the stock option to which it
is related is also exercisable and transferable, respectively.
If the Participant is a person subject to Section 16 of the
Exchange Act, the election to exercise the stock appreciation
right may not be exercised within six months after the grant of
the option, unless otherwise permitted by law.
Section 8: Exercise Payments.
8.1: The Committee may, in its discretion, grant to
Participants holding stock options the right to receive Exercise
Payments relating to such number of shares covered by the
Participant's stock options as the Committee determines in its
discretion. Exercise Payments shall be reduced by the total
amount which may have been received as Dividend Payments pursuant
to Section 6.5 with respect to the stock option that is being
exercised.
8.2: At the discretion of the Committee, the Exercise
Payment may be made in cash, common stock, Restricted Stock, or a
combination thereof; provided, however, Exercise Payments may be
made in cash to Participants subject to Section 16(b) of the
Exchange Act only if they exercise the related stock option
during a period beginning on the third business day following the
date of release of the quarterly or annual summary statements of
sales and earnings and ending on the twelfth business day
following such date. Exercise Payments shall be paid within 20
business days following the exercise of a related stock option;
provided, however, that payment may be deferred by the Committee
in its discretion to such date and under such terms and
conditions as the Committee may determine.
8.3: Exercise Payments shall be paid only upon the exercise
of related stock options which are exercised by the Participant
while an active Employee; provided, however, that in the case of
a Participant's death, Exercise Payments will be paid if the
related stock options are exercised within nine months after
death, but before the expiration of the stock option's term.
In the case of a Participant's Retirement, any exercise
payments awarded to the Participant will be paid if the stock
options are exercised within the later of (i) three months after
Retirement or (ii) three months after such options became
exercisable, but before the expiration of the term of the stock
option.
Section 9: Grants of Stock.
9.1: The Committee may grant, either alone or in addition
to other awards granted under the Plan, shares of stock or
Restricted Stock to such Participants as the Committee, or the
Chief Executive Officer of the Corporation, if the Committee in
its discretion delegates the right to allocate awards pursuant to
Section 4, authorizes and under such terms as the Committee
establishes. The Committee, in its discretion, may also make a
cash payment to a Participant granted shares of stock or
Restricted Stock under the Plan to allow such Participant to
satisfy tax obligations arising out of receipt of the stock or
Restricted Stock.
9.2: The Committee from time to time may authorize a
Participant to elect within 60 days of the receipt of the
variable compensation payment paid by the Corporation to the
Participant to deposit with the Corporation shares of common
stock of the Corporation owned by the Participant with a value on
the date of deposit not exceeding twenty-five percent (25%) of
the variable compensation payment, and receive a matching grant
of an equal number of shares of Restricted Stock subject to the
following terms and conditions:
(i) A Participant may designate shares of
common stock of the Corporation (exclusive of
ESOP Stock) held for the Participant's
account in the Savings Program for Employees
of Union Carbide Corporation and
Participating Subsidiary Companies (the
"Savings Plan") in lieu of depositing shares
of stock owned by the Participant.
(ii) The Restricted Stock shall be issued
and registered in the name of the Participant
but shall be held in the custody of the
Corporation until the Restricted Stock
becomes non-forfeitable;
(iii) The Restricted Stock shall not be
transferable until the earlier of (a) three
years from the date of grant and (b) the date
the Restricted Stock becomes non-forfeitable;
(iv) The Restricted Stock shall be forfeited
by the Participant if the shares of common
stock deposited with the Corporation (or
designated pursuant to (i) above) do not
remain deposited with the Corporation or so
designated for three years from the date of
grant; provided, however, that such stock may
be withdrawn without any resulting forfeiture
upon the Participant's separation from
service by reason of death, disability,
Retirement or termination by the Corporation
without cause if such separation from service
occurs within the three year period;
(v) The Restricted Stock shall be forfeited
by the Participant if the Participant
separates from service with the Corporation
during the three year period from the date of
grant. However, if a Participant separates
from service on account of death, disability,
or termination by the Corporation without
cause, the Restricted Stock shall become
nonforfeitable at the time of such separation
from service. If the Participant separates
from service on account of Retirement, the
Restricted Stock shall become nonforfeitable
at the expiration of three years from the
date of grant, provided the Participant
complies with clause (iv) above.
(vi) Dividends paid on the stock held in the
Participant's Savings Plan accounts and
utilized for the purpose of obtaining the
Restricted Stock grant under this Section 9.2
shall be paid according to the terms of the
Savings Plan;
(vii) Dividends paid on the stock deposited
with the Corporation during the three-year
period from the date of grant shall be
distributed to the Participant, or, at the
Participant's election, reinvested in the
Union Carbide Dividend Reinvestment and Stock
Purchase Plan; and
(viii) Dividends paid on the Restricted
Stock during the three year period from the
date of grant shall be held in the custody of
the Corporation and reinvested on the
Participant's behalf in common stock of the
Corporation at its market value at the time
of purchase; provided, however, that the
stock so purchased shall be forfeited by the
Participant if the Restricted Stock to which
the dividends relate is forfeited.
This provision does not limit the Committee's authority
under Section 9.1 to grant Restricted Stock to Participants under
different terms than those described in this Section 9.2.
Section 10: Performance Awards.
10.1: The Committee may grant, either alone or in addition
to other awards granted under the Plan, awards of stock and other
awards that are valued in whole or in part by reference to, or
are otherwise based on, the market value of the common stock,
Restricted Stock or other securities of the Corporation
("Performance Awards") to such Participants as the Committee, or
the Chief Executive Officer of the Corporation, if the Committee
in its discretion delegates the right to allocate awards pursuant
to Section 4, authorizes and under such terms as the Committee
establishes. Performance Awards may be paid in common stock,
Restricted Stock or other securities of the Company, cash or any
other form of property as the Committee shall determine.
Performance Awards shall entitle the Participant to receive an
award if the measures of performance established by the Committee
are met. The measures of performance shall be established by the
Committee in its absolute discretion.
10.2: The Committee shall determine the times at which
Performance Awards are to be made and all conditions of such
awards.
10.3: The Participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares received
pursuant to this Section 10 prior to the date on which any
applicable restriction or performance period established by the
Committee lapses.
Section 11: General Provisions.
11.1: Any assignment or transfer of any awards without the
written consent of the Corporation shall be null and void.
11.2: Nothing contained herein shall require the Corporation
to segregate any monies from its general funds, or to create any
trusts, or to make any special deposits for any immediate or
deferred amounts payable to any Participant for any year.
11.3: Participation in this Plan shall not affect the
Corporation's right to discharge a Participant.
11.4: Restricted Stock may not be sold or transferred by
the Participant until any restrictions that have been established
by the Committee have lapsed.
11.5: The Participant shall have, with respect to
Restricted Stock, all of the rights of a stockholder of the
Corporation, including the right to vote the shares and the right
to receive any dividends, unless the Committee shall otherwise
determine.
11.6: Upon a Participant's termination of employment during
the period any restrictions are in effect, all Restricted Stock
shall be forfeited without compensation to the Participant unless
the Committee decides that it is in the best interest of the
Corporation to permit individual exceptions.
Section 12: Amendment, Suspension, or Termination.
12.1: The Board of Directors may suspend, terminate, or
amend the Plan, including but not limited to such amendments as
may be necessary or desirable resulting from changes in the
federal income tax laws and other applicable laws, but may not,
without approval by the holders of a majority of all outstanding
shares entitled to vote on the subject at a meeting of
stockholders of the Corporation, increase the total number of
shares of stock that may be optioned or granted under this Plan.
12.2: This Plan is intended to comply with the requirements
of Rule 16b-3 under the Exchange Act, as applicable during the
term of the Plan. Should the requirements of Rule 16b-3 change,
the Board of Directors may amend this Plan to comply with the
requirements of that rule or its successor provision or
provisions.
Section 13: Effective Date and Duration of the Plan.
This Plan shall be effective following approval by the
stockholders of the Corporation. No award shall be granted under
this Plan subsequent to the date of the meeting of shareholders
of the Corporation in 1997.
Exhibit 10.29
UNION CARBIDE COMPENSATION DEFERRAL PROGRAM
UNION CARBIDE COMPENSATION DEFERRAL PROGRAM
ARTICLE I
PURPOSE
1.1 The purpose of this Program is to (i) allow
Eligible Employees under the Variable Compensation Plans to defer
a portion or all of their Variable Compensation, (ii) allow
Eligible Employees to defer a portion of their base salary, (iii)
allow Eligible Employees to defer a portion or all of their lump
sum payments otherwise payable from the SRIP and/or Equalization
Plan, and (iv) restore to Eligible Employees a portion of their
matching contribution under the Savings Program which is limited
by restrictions imposed under Section 401(a)(17) of the Code.
1.2 This Program shall be effective for amounts
payable on or after January 1, 1995.
ARTICLE II
DEFINITIONS
2.1 "Administrative Committee" means the
Administrative Committee of the Retirement Program Plan for
Employees of Union Carbide Corporation and its Participating
Subsidiary Companies and certain Non-Qualified Employee Benefit
Plans of Union Carbide Corporation.
2.2 "Aggregate Compensation" means the sum of a
Participant's Compensation and Deferred Compensation.
2.3 "Annual Plan" means the 1994 Union Carbide
Variable Compensation Plan or such successor plan thereto
maintained by the Corporation.
2.4 "Applicable Equity Investment Fund Rate" means the
difference between the value of each of the applicable investment
funds under the Savings Program elected by a Participant under
Section 8.2 of this Program: Balanced Fund, Equity Income Fund,
Equity Indexed Fund and Equity Growth Fund, determined on a fund
by fund basis, as of (i) the later of the Date of Deferral or the
effective date of a Participant's election under Section 8.2(c),
and (ii) the relevant valuation date for determining the amount
of earnings of such investment fund in accordance with Section 8.
Such value shall include any hypothetical dividends and
hypothetical capital gains distributions paid on such investment
fund during the period for which the Applicable Equity Investment
Fund Rate is being determined, as if such hypothetical dividends
or hypothetical capital gains distributions are reinvested when
payable in additional shares of such fund. The value of a
respective investment fund for purposes of this Section 2.4,
shall mean the net asset value of such investment fund as
reported by such fund.
2.5 "Beneficiary" means the person, persons or estate
entitled (as determined under Article 7) to receive payment under
this Program following a Participant's death.
2.6 "Change in Control" means the occurrence of any of
the following:
(1) A change in control of the Corporation would be
required to be reported in response to item 1(a) of the current
Report of Form 8-K, as in effect on the date hereof, pursuant to
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), whether or not the Corporation is
then subject to such reporting requirement;
(2) there shall be consummated (A) any
consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or
pursuant to which shares of the Corporation's common stock would
be converted into cash, securities or other property, other than
a merger of the Corporation in which the holders of the
Corporation's common stock immediately prior to the merger have
the same proportion and ownership of common stock of the
surviving corporation immediately after the merger, or (B) any
sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Corporation, provided, that the divestiture of
less than substantially all of the assets of the Corporation in
one transaction or a series of related transactions, whether
effected by sale, lease, exchange, spin-off, sale of the stock or
merger of a subsidiary or otherwise, shall not constitute a
Change in Control;
(3) any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act (A) becomes the
"beneficial owner" as defined in Rule 13d-3 under the Exchange
Act of more than 20% of the then outstanding voting securities of
the Corporation, otherwise than through a transaction or
transactions arranged by, or consummated with the prior approval
of, the board of directors of the Corporation, or (B) acquires by
proxy or otherwise the right to vote for the election of
directors, for any merger or consolidation of the Corporation or
for any other matter or question more than 20% of the then
outstanding voting securities of the Corporation, otherwise than
through an arrangement or arrangements consummated with the prior
approval of the board of directors of the Corporation;
(4) during any period of twenty-four consecutive months,
Present Directors and/or New Directors cease for any reason to
constitute a majority of the Board of Directors of the
Corporation. For purposes of this Agreement, "Present Directors"
shall mean individuals who at the beginning of such consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean any director whose election by the Board of
Directors of the Corporation or whose nomination for election by
the Corporation's stockholders was approved by a vote of at least
two-thirds of the Directors then still in office who were Present
Directors or New Directors.
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur pursuant to subparagraph (2), above, solely
because twenty percent (20%) or more of the combined voting power
of the Corporation's then outstanding securities is acquired by
one or more employee benefit plans maintained by the Corporation.
2.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.8 "Compensation Committee" means the Compensation
Committee of the Board of Directors of the Corporation.
2.9 "Compensation" means, solely for purposes of this
Program, a Participant's taxable base salary, taxable Variable
Compensation awarded under a Variable Compensation Plan and any
compensation that is deferred by the Participant to any other
plan maintained by the Corporation which satisfies the
requirements of Code Sections 125 or 401(k).
2.10 "Corporation" means Union Carbide Corporation, a
New York Corporation, any predecessor thereof and any successor
thereof by merger, consolidation or otherwise.
2.11 "Date of Deferral" means (i) with respect to
Variable Compensation, the date on which the Corporation issues
checks for Variable Compensation awards for a given Service Year,
(ii) with respect to base salary deferral, the date on which the
relevant salary would be paid, (iii) with respect to matching
contributions made by the Corporation pursuant to Section 5.4 of
this Program, December 31st and (iv) with respect to amounts
which would otherwise have been paid from the SRIP, or
Equalization Plan, the date on which lump sum amounts would have
otherwise been distributed in accordance with the terms of such
Plan.
2.12 "Deferred Compensation" means the amount of
Compensation deferred by a Participant under this Program
pursuant to Section 5.3 of this Program.
2.13 "Disability" means a Participant's total physical
or mental inability to perform any work for compensation or
profit in any occupation for which the Participant is reasonably
qualified by reason of training, education or ability, and which
inability is adjudged to be permanent, as determined by the
Administrative Committee or its designee.
2.14 "Eligible Employee" means (i) an individual who,
at the Date of Deferral, is employed in the United States by the
Corporation, or one of its subsidiaries that is participating in
this Program, and is a participant in the Annual Plan or the Mid-
Management Plan or is otherwise approved for participation in
this Program by the Compensation Committee.
2.15 "Equalization Plan" means the Equalization Benefit
Plan for Participants in the Retirement Program Plan for
Employees of Union Carbide Corporation and its Participating
Subsidiary Companies.
2.16 "Exchange Act" means the Securities Exchange Act
of 1934 as amended.
2.17 "Fixed Income Rate" means the rate of interest for
the Fixed Income Fund under the Savings Program, in effect from
time to time.
2.18 "Mid-Management Plan" means the 1994 Union Carbide
Mid-Management Variable Compensation Plan.
2.19 [Intentionally Omitted]
2.20 "Participant" means an Eligible Employee who (i)
elects in advance to defer a portion of his or her base salary in
accordance with Section 5.3 of this Program, (ii) elects in
advance to defer a portion or all of his or her variable
compensation for a given Service Year under one of the Variable
Compensation Plans in accordance with Section 5.2 of this
Program, if one were to be paid to such Participant for that
year, and who is in fact subsequently awarded Variable
Compensation for that year, payable during the following calendar
year on the Date of Deferral, (iii) elects in advance under this
Program to defer his or her lump sum distribution from the SRIP
or Equalization Plan or (iv) is a participant in the Savings
Program for a given calendar year and receives compensation (as
defined in Section 1.12 of the Savings Program) for such calendar
year in an amount which is in excess of the compensation which
may be considered under Section 1.12 of the Savings Program
because of the limitations imposed by Code Section 401(a)(17).
2.21 "Program" means this Union Carbide Compensation
Deferral Program.
2.22 "Retirement" means (a) for participants in the
Retirement Program, the date on which a Participant attains age
65 or is eligible for a non-actuarially reduced pension benefit
under the Retirement Program and actually retires from employment
with the Corporation and (b) for those employees who are not
participants in the Retirement Program, the date on which a
Participant attains age 65, attains age 62 with at least 10 years
of service or whose age and service totals at least 85 and
actually retires from employment with the Corporation.
2.23 "Retirement Program" means The Retirement Program
Plan for Employees of Union Carbide Corporation and its
Participating Subsidiary Companies.
2.24 "Savings Program" means The Savings Program for
Employees of Union Carbide Corporation and Participating
Subsidiary Companies.
2.25 "Service Year" means one of the calendar years on
and after 1994, as to which an election may be made in accordance
with Section 5, and in respect of which Variable Compensation may
be paid during the following calendar year on the Date of
Deferral.
2.26 "SRIP" means the Union Carbide Corporation
Supplemental Retirement Income Plan.
2.27 "UCC Discounted Stock Value Rate" means the UCC
Stock Value Rate except that the value of the Corporation's
common stock as of the Date of Deferral pursuant to which
earnings shall accrue at the UCC Stock Value Rate, shall be
determined as if purchased as a ten percent (10%) discount.
2.28 "UCC Stock Value Rate" means the difference
between the value of the Corporation's common stock as of the
later of (i) the Date of Deferral or the effective date of a
Participant's election under Section 8.2 pursuant to which
earnings shall accrue at the UCC Stock Value Rate and (ii) the
relevant date of determination of the amount of earnings in
accordance with Section 8(c) of this Program. Such value shall
include the value of any hypothetical dividends paid on the
common stock during the period for which the UCC Stock Value Rate
is being determined, as if such hypothetical dividends were
reinvested when payable (at a five percent (5%) discount) in
additional shares of the Corporation's common stock as determined
on the later of the Date of Deferral or the effective date of a
Participant's election under Section 8.2(c) pursuant to which
earnings shall accrue at the UCC Stock Value Rate. The value of
the Corporation's common stock for purposes of this Section 2.28,
shall mean the closing price of the stock on the New York Stock
Exchange - Composite Transaction on the relevant date of
determination.
2.29 "Unforeseen Emergency" means an event beyond the
control of the Participant that would result in severe financial
hardship to the Participant if early withdrawal of the
Participant's Variable Compensation deferral were not permitted.
Whether a Participant has an Unforeseen Emergency shall be
determined by the Committee, except if a Participant is subject
to Section 16 of the Exchange Act, the Compensation Committee
shall determine if such Participant has an Unforeseen Emergency.
2.30 "Variable Compensation" means any amounts awarded
in accordance with one of the Variable Compensation Plans.
2.31 "Variable Compensation Plans" means, collectively,
the Annual Plan, the Mid-Management Plan and any other variable
compensation plan authorized by the Compensation Committee to
participate in this Program.
ARTICLE III
ADMINISTRATION
3.1 Except as otherwise indicated, the Compensation
Committee shall supervise the administration and interpretation
of this Program, may establish administrative regulations to
further the purpose of this Program and shall take any other
action necessary to the proper operation of this Program. All
decisions and acts of the Compensation Committee shall be final
and binding upon all Participants, their Beneficiaries and all
other persons.
ARTICLE IV
ELIGIBILITY
4.1 To be eligible to participate in this Program for
a given year, a person must have become an Eligible Employee not
later than the day on or before the date which an Eligible
Employee must make the election provided for in Section 5 of this
Program for that year and be employed by the Corporation on the
Date of Deferral for that year.
ARTICLE V
DEFERRALS
5.1 During each of the years this Program is in
effect, Eligible Employees shall be informed of the opportunity
to participate in this Program. An Eligible Employee choosing to
participate in this Program must make an election to do so on or
before the date designated by the Administrative Committee and
otherwise in accordance with such procedures as may be
established by the Administrative Committee.
5.2 (a) While an election to defer Variable
Compensation under one of the Variable Compensation Plans shall
be irrevocable when made until the next scheduled annual election
period, participation in this Program with respect to Variable
Compensation shall become effective only on the Date of Deferral
and only if, on such date, the Eligible Employee receives an
award under one of the Variable Compensation Plans (or would have
received an award but for an election to defer under this
Program).
Variable Compensation awards, if any, for services performed
in calendar years 1994 and 1995, must be deferred during the 1994
annual election period. Variable Compensation awards, if any,
for services performed in calendar years 1996 and beyond, must be
deferred during the annual election period immediately preceding
the calendar year in which such services will be performed.
Notwithstanding the foregoing, an Eligible Employee who becomes
eligible to participate in this Program after January 1, 1995 may
elect to defer a Variable Compensation award during the calendar
year in which services will be performed; provided, however, he
or she makes an election to defer within 31 days after becoming
eligible to participate in this Program.
(b) An Eligible Employee must elect to defer his or her
base salary for services performed in calendar year 1995 during
the 1994 annual election period. Participation in this Program
shall become effective only on the Date of Deferral and only if,
on such date, the Eligible Employee remains employed with the
Corporation. Base salary for services performed in calendar
years 1996, and beyond, must be deferred during the annual
election period immediately preceding the calendar year in which
such services will be performed. A Participant may suspend his
or her election to defer his or her base salary at any time;
provided, however, that such Eligible Employee may not resume
deferrals of base salary until the following calendar year.
Notwithstanding the foregoing, an Eligible Employee who becomes
eligible to participate in this Program after January 1, 1995,
may elect to defer a portion of his or her base salary during the
calendar year in which services will be performed; provided he or
she makes an election to defer within 31 days after becoming
eligible to participate in this Program.
(c) A Participant must elect to defer lump sum payments
that he or she would otherwise receive in accordance with the
terms of the SRIP or Equalization Plan during the annual election
period immediately preceding the calendar year in which such
payments would otherwise be received.
5.3 (a) On or before the date designated by the
Administrative Committee and otherwise in accordance with such
procedures as may be established, a Participant may elect
voluntarily to defer (i) up to 100% of the Participant's award
under the Variable Compensation Plans (in 10% increments),
(ii) up to 25% of his or her base salary (in 5% increments),
and/or (iii) up to 100% of his or her lump sum payment from the
SRIP or Equalization Plan.
(b) A Participant must elect, during any applicable
calendar year, to defer in the aggregate a minimum of $2,000 of
his base salary, Variable Compensation, lump sum payment from the
SRIP or Equalization Plan in order to participate in this
Program. Notwithstanding any provision in this Program to the
contrary, if a Participant fails to defer at least $2,000 of his
base salary, Variable Compensation, lump sum payment from the
SRIP or Equalization Plan in any calendar year, the
Administrative Committee may, in its sole discretion, require
such Participant to irrevocably elect to defer a minimum of
$2,000 in the calendar year immediately following thereafter in
order to participate in this Program.
5.4 (a) The Corporation shall credit a Participant
with an amount equal to 75% of a Participant's deemed annual
contribution as determined under subsection (b) of this Section
5.4.
(b) A Participant's deemed annual contribution shall equal
A multiplied by B, where A and B are as follow:
A equals that portion of a Participant's
compensation (as defined in Section 1.12
of the Savings Program without regard to
Code Section 401(a)(17), and without regard to
any deferrals under this Program), which is
between $150,000 and $235,840 and is deferred
under this Program. Such $235,840 shall be
adjusted at the same time and in the same manner
as the limitation described in Code Section
415(d)(3) and such $150,000 shall be adjusted at
the same time and in the same manner as the
limitation described in Code Section 401(a)(17);
and
B equals the percentage of such Participant's
compensation (as defined under Section 1.12 of
the Savings Program) which has been contributed
to the Savings Program for the applicable
calendar year as a Basic Deduction pursuant to
Section 2.7.2 of the Savings Program.
(c) The Corporation shall credit each Participant with the
amount determined pursuant to subsection (a) of this Section 5.4,
in arrears, on each Deferral Date; provided that such Participant
remains eligible to participate in this Program and is employed
by the Corporation on the Deferral Date. Notwithstanding the
foregoing, the Corporation shall not credit a Participant with
the amount determined pursuant to subsection (a) of this Section
5.4 (as of the Participant's termination of employment) if the
Participant terminates employment with the Corporation during a
calendar year for any reason, except if the Participant's
employment is terminated by reason of death, Disability,
Retirement or termination by the Corporation other than for
cause.
ARTICLE VI
PAYMENTS TO PARTICIPANTS AND BENEFICIARIES
6.1 Time of Payment. (a) Subject to subsections
(b), (c) and (d) of this Section 6.1, a Participant shall begin
to receive payment of his or her deferrals, and any earnings
accruals credited under Section 8, during the January next
following his or her date of Retirement, or immediately upon his
or her other termination of employment.
(b) (i) Notwithstanding any provision in this Program to
the contrary, a Participant may elect to commence receipt of
payments of any amounts deferred upon a specific future payment
date which is at least five years after the Date of Deferral or
such shorter schedule as the Compensation Committee may
determine. Such payments must begin no later than the calendar
year in which the Participant attains age seventy and one half.
A Participant making such an election shall receive his or her
lump sum payment in the January next following his or her future
payment date or, if applicable, such Participant shall receive
installment payments in accordance with Section 6.2.
(ii) With respect to a Participant who has attained age 55
at the time of the election of his or her deferral, the five year
period described in subsection (i) shall instead be one year with
respect to deferrals of base salary or Variable Compensation.
(iii) A Participant is limited to two future fixed year
payments. The amounts paid out in such fixed year payments may
not exceed the sum of a Participant's deferral of base salary or
Variable Compensation under this Program.
(c) A Participant who has not yet terminated employment,
but has an Unforeseen Emergency, may receive any or all of his or
her Variable Compensation and base salary deferrals, excluding
any earning accruals credited to him or her pursuant to Section 8
of this Program; provided that the Participant may not receive an
amount greater than the amount necessary to meet the Unforeseen
Emergency and any amounts necessary to pay federal, state and
local income taxes or penalties reasonably anticipated to result
from a withdrawal under this Section 6.1. Earning accruals will
remain in the Program and continue to accrue earnings under
Article VIII until the payment date or dates described in Article
VI.
(d) Notwithstanding any provision in this Program to the
contrary, a Participant may, on the applicable Date of Deferral
or at any time thereafter prior to a Change in Control, elect to
receive payment of his or her entire account balance under this
Program at such time as the Board of Directors of the Corporation
determines that a Change in Control has occurred. Such payment
shall be made in a lump sum within 45 days after the Change in
Control.
6.2 Form of Payments. (a) A Participant may elect
to receive payments under this Program in annual or quarterly
installments. Such installments must commence as described in
Section 6.1, and must be completed by the calendar year in which
the Participant attains age 85.
(b) A Participant may elect to receive installment payments
either (i) annually during each January or (ii) quarterly,
commencing in the January that payment was otherwise due in
accordance with Section 6.1. If a Participant does not elect the
form of his or her installment payments, such installment
payments shall be made annually during each January.
(c) If a Participant does not elect the form of his or her
payments, such payments shall be made in a lump sum payment.
(d) A Participant may change the form of payment previously
elected only one time and subject to the following restrictions:
(i) such election is made in the calendar
year that the Participant terminates
employment, to be effective no earlier than
the following calendar year;
(ii) the election is subject to the consent of the
Administrative Committee.
(e) 1. If a Participant dies at any time prior to
receiving any portion of his or her account balance under this
Program, payment shall be made to the Participant's Beneficiary
as follows:
(A) If the Participant's Beneficiary is his or her
surviving spouse, such Participant's entire account balance under
this Program shall be paid as follows:
(i) ten annual installments or a shorter
schedule, if so elected by the surviving
spouse, or
(ii) a lump sum payment payable on or about the
January 1st following the Participant's death.
(B) If the Participant's Beneficiary is someone other
than his or her surviving spouse, such Participant's entire
account balance under this Program shall be paid in a lump sum
payment as soon as practical following the Participant's death.
2. If a Participant dies at any time after payment of
his or her account balance under this Program has begun, such
Participant's Beneficiary shall continue to receive payment of
the Participant's account in the same manner as the Participant
elected, or such shorter payment schedule as elected by the
Beneficiary.
(f) If any lump sum distribution otherwise payable under
this Program would be disallowed in any part as a deduction to
the Corporation in accordance with Section 162(m) (or a successor
Section) of the Internal Revenue Code, the Compensation Committee
may determine to distribute the amount of such benefit in
installments such that the Participant or Beneficiary shall
receive the maximum amount permissible in each installment and
still preserve the Corporation's full tax deduction.
6.3 Amount of Payment (a) If a Participant is
terminated by the Corporation for cause, he or she shall receive
the lesser of (A) any amounts he or she actually deferred under
Section 5, less any previous payments made or (B) his or her
account balance under this Program. Such payment shall be made
in a lump sum payment as soon as administratively practical
following the Participant's termination of employment; provided,
however, that such Participant will forfeit all Earnings Accruals
credited to him or her pursuant to Section 8.
(b) If a Participant voluntarily separates from employment
with the Corporation or retires under the Retirement Program with
an actuarially reduced pension, he or she shall receive a lump
sum payment equal to the lesser of (A) any amounts he or she
actually deferred under this Program, plus credits to his or her
account at the Fixed Income Rate from his or her Date of Deferral
less any previous payments made or (B) his or her account balance
under this Program. Such payments will be made as soon as
administratively practical after the Participant's termination of
employment.
(c) If a Participant terminates employment on account of
Retirement, Disability, death, or through action of the
Corporation taken without cause, such Participant (or
Beneficiary) shall be entitled to receive the full amount of his
or her account balance.
6.4 Payment in U.S. Dollars. All payments under this
Program shall be made in U.S. dollars.
6.5 Reduction of Payments. All payments under this
Program shall be reduced by any and all amounts that the
Corporation is required to withhold pursuant to applicable law.
ARTICLE VII
BENEFICIARIES
7.1 A Participant may at any time, and from time to
time, prior to his or her death designate one or more
Beneficiaries to receive any payments to be made following the
Participant's death. If no such designation is on file with the
Corporation at the time of a Participant's death, the
Participant's Beneficiary shall be the beneficiary or
beneficiaries named in the beneficiary designation most recently
filed by the Participant under the Corporation's Savings Program.
If a Participant has not effectively designated a beneficiary
under the Savings Program, or if no designated beneficiary has
survived the Participant, the Participant's Beneficiary shall be
the Participant's surviving spouse, or, if no spouse has survived
the Participant, the estate of the deceased Participant. If an
individual Beneficiary cannot be located for a period of one year
following the Participant's death, despite mail notification to
the Beneficiary's last known address, and if the Beneficiary has
not made a written claim for benefits within such period to the
Administrative Committee, the Beneficiary shall be treated as
having predeceased the Participant. The Administrative Committee
may require such proof of death and such evidence of the right of
any person to receive all or part of a deceased Participant
account balance, as the Administrative Committee may consider
appropriate. The Administrative Committee may rely upon any
direction by the legal representatives of the estate of a
deceased Participant, without liability to any other person.
ARTICLE VIII
EARNINGS ACCRUALS
8.1 Each Participant's account balance under this
Program shall be credited with earnings from the Date of Deferral
through the date such deferral is paid out or withdrawn pursuant
to Section 6. Earnings under this Section 8.1 shall accrue at
the rate elected in accordance with Section 8.2.
8.2 (a) Earnings accruing in accordance with Section
8.1 shall accrue at (i) the Fixed Income Rate, (ii) the UCC Stock
Value Rate, (iii) the UCC Discounted Stock Value Rate, (iv) the
Applicable Equity Investment Fund Rate or (v) a combination of
the four rates. An election to use the UCC Discounted Stock
Value Rate shall be effective for not less than one (1) year.
Notwithstanding the foregoing, if a Participant has elected under
Section 6.1 to receive payment of his or her account balance upon
termination of employment, and such Participant's employment is
terminated by the Corporation without cause, such Participant may
then receive a distribution based on the UCC Discounted Stock
Value Rate even if one (1) year has not yet passed since the
relevant Date of Deferral.
(b) Subject to subparagraph (c), a Participant shall
designate at the time of his or her election to defer any amounts
under this Program which accrual rate or rates shall apply to his
or her deferrals, including deferrals of matching contributions
made pursuant to Section 5.4; provided such elections must be in
whole percentage points. Such elections shall be effective as of
the Date of Deferral through the date such deferral is paid out
or withdrawn pursuant to Article 6.
(c) A Participant may, one time each calendar month, elect
to change the accrual rate under this Section 8.2 with respect to
any or all previous deferrals under this Program; provided,
however, that Participants may elect to utilize the UCC
Discounted Stock Value Rate with respect to future deferrals
only, and not for the reallocation of any prior deferrals.
Participants may utilize the UCC Stock Value Rate only for
reallocation of previous deferrals.
ARTICLE IX
GENERAL PROVISIONS
9.1 Prohibition of Assignment of Transfer. Any
assignment, hypothecation, pledge or transfer of a Participant's
or Beneficiary's right to receive payments under this Program
shall be null and void and shall be disregarded, except to the
extent required by law.
9.2 Program Not to Be Funded. The Corporation is not
required to, and will not, for the purpose of funding this
Program, segregate any monies from its general funds, create any
trusts, or make any special deposits, and the right of a
Participant or Beneficiary to receive a payment under this
Program shall be no greater than the right of an unsecured
general creditor of the Corporation.
9.3 Effect of Participation. Neither selection as a
Participant, nor an election to participate or participation in
this Program, shall entitle a Participant to receive awards under
the Variable Compensation Plans, SRIP or Equalization Plan or a
matching contribution under the Savings Program, or affect the
Corporation's right to discharge a Participant.
9.4 Communications To Be in Writing. All elections,
requests and communications to the Corporation from Participants
and Beneficiaries, and all communications to such persons from
the Corporation, shall be in writing, and in such form and
manner, and within such time, as the Corporation shall determine.
In lieu of the foregoing, the Corporation may install a
telephonic voice response system for such elections, requests and
communications.
9.5 Absence of Liability. No officer, director or
employee of the Corporation shall be personally liable for any
acts or omission to act under this Program or, except in
circumstances involving bad faith, for such officer's, director's
or employee's own act or omission to act.
9.6 Titles for Reference Only. The titles given
herein to sections and subsections are for reference only and are
not to be used to interpret the provisions of this Program.
9.7 New York Law To Govern. All questions pertaining
to the construction, regulation, validity and effect of the
provisions of this Program shall be determined in accordance with
New York law.
9.8 Amendment. The Compensation Committee may amend
this Program at any time, but no amendment may be adopted which
alters the payments due Participants or Beneficiaries, as of the
date of the amendment, or the times at which payments are due,
without the consent of each Participant affected by the amendment
and of each Beneficiary (of a then deceased Participant) affected
by the amendment. In addition, any amendment which does not
increase the Corporation's annual cost of any past or future
benefits under this Program by more than $500,000, change the
eligibility requirements, or impact the ability of officers to
utilize the UCC Discounted Stock Value Rate or the UCC Stock
Value Rate, may be authorized by the Administrative Committee.
9.9 Program Termination. The Compensation Committee
may terminate this Program for any reason and at any time. In
the event of such termination, the accounts of each Participant
or Beneficiary under this Program shall become immediately
payable in accordance with Section 6.1; provided that the
Compensation Committee, in its sole discretion, upon Program
termination or at any time thereafter, may decide to make lump
sum payments in lieu of annual payments.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
Exhibit 10.30
UNION CARBIDE CORPORATION
EXCESS LONG TERM DISABILITY PLAN
Effective January 1, 1994
EXCESS LONG TERM DISABILITY PLAN
ARTICLE I
General
This is an excess long term disability plan (the "Plan")
for participants in the Union Carbide Corporation Long Term
Disability Plan (the "LTD Plan"). The Plan has been established
to restore certain long term disability benefits to those
participants entitled to benefits under the LTD Plan, whose
benefits under the LTD Plan are, or will be, limited by the
restrictions on recognizable compensation imposed by Section
505(b)(7) of the Code. The Plan is completely separate from the
LTD Plan, is unfunded, and is not qualified for special tax
treatment under the Code.
ARTICLE II
Definitions
Section 1. "Benefit" means the amount payable under this
Plan as described in Article IV.
Section 2. "Code" means the Internal Revenue Code of 1986,
as amended from time to time.
Section 3. "Corporation" means Union Carbide Corporation
and such of its subsidiary companies as shall, from time to time,
participate in the LTD Plan.
Section 4. "Effective Date" means January 1, 1994.
Section 5. "LTD Plan" means the Union Carbide Corporation
Long Term Disability Plan.
Section 6. "Plan" means this Union Carbide Corporation
Excess Long Term Disability Plan and any amendments thereto.
Section 7. "VEBA" means the Union Carbide Corporation Long
Term Disability Plan Voluntary Employees' Beneficiary
Associations, which are used to fund benefits for the LTD Plan.
ARTICLE III
Eligibility
Section 1. An employee will be eligible to receive a Benefit
under the Plan, if, on or after the Effective Date, such employee
becomes entitled to benefits under the LTD Plan and the amount of
such employee's benefits under the LTD Plan are limited because
the employee's compensation exceeds the limits imposed on the
VEBA and LTD Plan in accordance with Section 505(b)(7) of the
Code.
ARTICLE IV
Amount of Benefit
Section 1. The monthly amount of Benefit payable to a
participant shall be the excess, if any, of
(a) the amount of such participant's monthly benefit
under the LTD Plan computed under the provisions of the LTD
Plan without regard to the limitations of Section 505(b)(7)
of the Code, but not exceeding $10,000 per month,
over
(b) the amount of such participant's monthly benefit
actually payable under the LTD Plan computed under the
provisions of the LTD Plan and subject to the limitations of
Section 505(b)(7) of the Code.
ARTICLE V
Payments
Section 1. Benefits shall be paid to a participant
commencing with the month in which benefit payments to such
participant commence under the LTD Plan, and shall cease or be
suspended at the same time the participant ceases to receive (or
has suspended) benefits under the LTD Plan.
Section 2. Benefits shall be paid in the same form, and
with the same adjustments and restrictions, as distributions to
the participant from the LTD Plan.
ARTICLE VI
Miscellaneous
Section 1. The Administrative Committee of the Retirement
Program Plan for Employees of Union Carbide Corporation and its
Participating Subsidiary Companies and Certain Non-Qualified
Employee Benefit Plans of Union Carbide Corporation shall be the
administrator of the Plan and shall be responsible for the
administration and operation of the Plan. The committee may
adopt such rules as it may deem necessary for the proper
administration of this Plan and its decision in all matters
involving the interpretation and application of the Plan shall be
final, conclusive, and binding.
Section 2. The Corporation may amend or terminate the Plan
at any time, but any such amendment or termination shall not
adversely affect the rights of any participant then receiving
Benefits under the Plan.
Section 3. Except to the extent required by law, no
assignment of the rights and interests of a participant or
survivor under the Plan shall be permitted, nor shall such rights
be subject to attachment or other legal process or debts.
Section 4. The rights of a participant shall be solely
those of an unsecured creditor of the Corporation. Any asset
acquired by the Corporation in connection with the obligations
assumed by it hereunder shall not be deemed to be held under any
trust for the benefit of a participant or to be security for the
performance of the obligations of the Corporation, but shall be,
and remain, a general, unpledged, unrestricted asset of the
Corporation.
Section 5. Nothing contained in this Plan and no action
taken pursuant to the provisions of this Plan shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and a participant.
Section 6. Nothing contained in the Plan shall give any
participant the right to continue in the employment of the
Corporation, or affect the right of the Corporation to discharge
a participant.
Section 7. The Plan shall be construed and governed in
accordance with the laws of the State of New York.
UNION CARBIDE CORPORATION
By: M.A. Kessinger
EXHIBIT 11
<TABLE>
UNION CARBIDE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE FOR THE FIVE YEARS ENDED DECEMBER 31, 1994
(In millions of dollars except per share amounts)
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Earnings Per Share - Primary
Income (loss) from continuing operations $ 389 $ 165 $ 119
Less: Preferred stock dividend 13 13 17
Net income (loss) from continuing operations
for primary income calculation 376 152 102
Income from discontinued operations - - 67
Cumulative effect of accounting changes - (97) (361)
Net income (loss) - common stockholders $ 376 $ 55 $ (192)
Weighted average number of common
and common equivalent shares applicable
to primary earnings per share calculation
Weighted average number of
shares outstanding 149,904,755 147,821,255 129,723,738
Dilutive effect of stock options 4,270,033 3,549,905 2,625,735
154,174,788 151,371,160 132,349,473
Earnings per share - primary
Income (loss) from continuing operations $ 2.44 $ 1.00 $ 0.76
Discontinued operations - - 0.51
Cumulative effect of accounting changes - (0.64) (2.73)
Net income (loss) - common stockholders $ 2.44 $ 0.36 $(1.46)
Earnings Per Share Assuming Full Dilution
Income (loss) from continuing operations $ 389 $ 165 $ 119
Plus: Interest on convertible debentures
(net of taxes) - 4 17
Less: Additional ESOP contribution resulting
from assumed conversion of preferred
stock 1 1 7
Income (loss) from continuing operations
for fully diluted income calculation 388 168 129
Income from discontinued operations - - 67
Cumulative effect of accounting changes - (97) (361)
Net income (loss) for fully diluted
income calculation $ 388 $ 71 $ (165)
Weighted average number of common
and common equivalent shares applicable to
fully diluted earnings per share calculation
Weighted average number of
shares outstanding 149,904,755 147,821,255 129,723,738
Dilutive effect of stock options 4,439,006 4,244,866 4,038,716
Shares issuable upon conversion of UCC
convertible debentures - 4,482,931 15,774,784
Shares issuable upon conversion of UCC
convertible preferred stock 16,542,644 16,796,109 14,655,935
170,886,405 173,345,161 164,193,173
Per share assuming full dilution
Income (loss) from continuing operations $ 2.27 $ 0.97 $ 0.78
Discontinued operations - - 0.41
Cumulative effect of accounting changes - (0.56) (2.20)
Net income (loss) $ 2.27 $ 0.41 * $(1.01)*
<CAPTION>
Year Ended December 31,
1991 1990
<S> <C> <C>
Earnings Per Share - Primary
Income (loss) from continuing operations $ (116) $ 188
Less: Preferred stock dividend 19 -
Net income (loss) from continuing operations
for primary income calculation (135) 188
Income from discontinued operations 107 120
Cumulative effect of accounting changes - -
Net income (loss) - common stockholders $ (28) $ 308
Weighted average number of common
and common equivalent shares applicable
to primary earnings per share calculation
Weighted average number of
shares outstanding 126,449,140 140,665,386
Dilutive effect of stock options 327,068 346,810
126,776,208 141,012,196
Earnings per share - primary
Income (loss) from continuing operations $(1.06) $ 1.34
Discontinued operations 0.84 0.85
Cumulative effect of accounting changes - -
Net income (loss) - common stockholders $(0.22) $ 2.19
Earnings Per Share Assuming Full Dilution
Income (loss) from continuing operations $ (116) $ 188
Plus: Interest on convertible debentures
(net of taxes) 17 17
Less: Additional ESOP contribution resulting
from assumed conversion of preferred
stock 4 -
Income (loss) from continuing operations
for fully diluted income calculation (103) 205
Income from discontinued operations 107 120
Cumulative effect of accounting changes - -
Net income (loss) for fully diluted
income calculation $ 4 $ 325
Weighted average number of common
and common equivalent shares applicable to
fully diluted earnings per share calculation
Weighted average number of
shares outstanding 126,449,140 140,665,386
Dilutive effect of stock options 392,058 346,810
Shares issuable upon conversion of UCC
convertible debentures 9,718,310 9,718,310
Shares issuable upon conversion of UCC
convertible preferred stock 15,116,167 1,905,065
151,675,675 152,635,571
Per share assuming full dilution
Income (loss) from continuing operations $(0.68) $ 1.34
Discontinued operations 0.71 0.79
Cumulative effect of accounting changes - -
Net income (loss) $ 0.03* $ 2.13
<FN>
* Fully diluted per share amounts are not presented in the consolidated statements
of income where amounts are antidilutive.
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE CORPORATION
Percentage
of Voting
State or Securities
Sovereign Owned By
Power of Immediate
Name of Company Incorporation Parent
Union Carbide Corporation (the "Corporation") New York - %
Subsidiaries included in the Consolidated Financial Statements except where
noted otherwise:
Amerchol Corporation Delaware 100.00
Catalysts, Adsorbents & Process Systems, Inc. Maryland 100.00
Prentiss Glycol Company Delaware 100.00
Seadrift Pipeline Corporation Delaware 100.00
UCAR Emulsion Systems International, Inc. Delaware 100.00
UCAR, Polimeros y Quimicos C.A. Ecuador 100.00
Umetco Minerals Corporation Delaware 100.00
Union Carbide Argentina S.A.I.C.S. Argentina 100.00
Union Carbide Asia Limited Hong Kong 100.00
Union Carbide (Guangdong Zhongshan)
Company Limited People's
Rep. of China 75.00
Union Carbide Asia Pacific, Inc. Delaware 100.00
Union Carbide Austria G.m.b.H. Austria 100.00
Union Carbide Benelux N.V. Belgium (1)
Union Carbide do Brasil S/A Brazil 100.00
Union Carbide Caribe Inc. Delaware 100.00
Union Carbide Canada Inc. Canada 100.00
Union Carbide Chemicals (Australia) Pty. Ltd. Australia 100.00
Union Carbide Chemicals Korea Limited Korea 100.00
Union Carbide Comercial, C.A. Venezuela 100.00
Union Carbide Deutchland G.m.b.H. Germany 100.00
Union Carbide Engineering and Hydrocarbons
Service Company, Inc. Delaware 100.00
Union Carbide Ethylene Oxide/Glycol Company Delaware 100.00
Union Carbide Eurofinance B.V. Netherlands 100.00
Union Carbide (Europe) S.A. Switzerland 100.00
Union Carbide Foreign Sales Corporation US Virgin Is. 100.00
Union Carbide Formosa Co., Ltd. Taiwan 100.00
Union Carbide France S.A. France 100.00
P.T. Union Carbide Indonesia Indonesia 100.00
Union Carbide Inter-America Inc. Delaware 100.00
Union Carbide Inter-America Inc. New Jersey 100.00
Union Carbide Investimentos e
Participacoes S/C Ltda. Brazil 100.00
Union Carbide Japan K.K. Japan 100.00
Union Carbide Limited England 100.00
Percentage
of Voting
State or Securities
Sovereign Owned By
Power of Immediate
Name of Company Incorporation Parent
Union Carbide Corporation. (Continued)
Union Carbide Middle East Limited Delaware 100.00
Union Carbide Pan America, Inc. Delaware 100.00
Union Carbide Philippines (Far East) Inc. Philippines 100.00
Union Carbide Quimicos y Plasticos,
S.A. de C.V. Mexico 100.00
Union Carbide Services Eastern Limited Hong Kong 100.00
Union Carbide Singapore Pte. Ltd. Singapore 100.00
Union Carbide South Africa
(Proprietary) Limited South Africa 100.00
Union Carbide Thailand Limited Thailand 100.00
Union Carbide Turkey, Inc. Delaware 100.00
Union Polymers Sdn. Bhd. Malaysia 60.00
Companies reported in the Consolidated Financial Statements on an Equity in
Net Assets Basis included:
Union Carbide Corporation (Continued)
Alberta & Orient Glycol Company Limited Canada 50.00
Aspen Polimeres France 50.00
Elektrode Maatskappy Van Suid Afrika
(Eiendoms) Beperk South Africa 25.00
Nippon Unicar Company Limited Japan 50.00
UCAR Carbon Canada Inc. Canada 25.00
UCAR International Inc. Delaware 25.00
UCAR Carbon France S.A. France 25.00
UCAR Carbon Navarra S.L. Spain 25.00
UCAR Carbon S.A. Brazil (2)
Union Showa K.K. Japan 50.00
* * * * * * * * * * * *
The names of the Corporation's other consolidated subsidiaries and companies
carried on an equity in net assets basis are not listed. These subsidiaries
and companies, if considered in the aggregate as a single subsidiary, would
not constitute a significant subsidiary. In addition, the Corporation has
investments in other subsidiaries and 20-to-50%-owned companies for which
financial statements are not submitted because all such subsidiaries and
companies, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
(1)99.83% of the voting securities of Union Carbide Benelux N.V. is owned by
Union Carbide Corporation; and 00.17% by Union Carbide (Europe) S.A.
(2)12.535% of the voting securities of UCAR Carbon S.A. is owned by Union
Carbide Corporation.
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Union Carbide Corporation
We consent to the incorporation by reference in each of the
Registration Statements of Union Carbide Corporation on Form S-3
(Nos. 33-26185, 33-55560 and 33-63412), and on Form S-8
(Nos.2-90419, 33-22125, 33-38714 and 33-53573) of our reports
dated January 19, 1995, relating to the consolidated balance
sheets of Union Carbide Corporation and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity and cash flows and
related schedule for each of the years in the three-year period
ended December 31, 1994, appearing and incorporated by reference,
in the annual report on Form 10-K of Union Carbide Corporation
for the year ended December 31, 1994. Our reports refer to
changes in accounting principles as described in Note 1 to the
consolidated financial statements.
KPMG PEAT MARWICK LLP
Stamford, Connecticut
March 7, 1995
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNION
CARBIDE CORPORATION'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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EXHIBIT 13
1994 Annual Report to Stockholders
Contents
1 Financial Highlights
Summary comparison of 1994 and 1993 results.
2 Chairman's Letter
Bob Kennedy recaps 1994 performance and discusses Carbide's strategic
objectives and long-term outlook.
4 President's Report
Bill Joyce reviews 1994 operations and the major initiatives taken during
the year to advance Carbide's business strategy.
8 Principal Products and Services
Carbide's products, services, major site locations and competitors.
10 Financial Index
Management's discussion and analysis, financial statements and notes.
38 Corporate Information
Important dates, names, addresses, telephone numbers and other
information.
39 Directors, Corporate Officers
Information on directors, corporate officers and other senior corporate
staff.
40 A Chemical Glossary, Definition of Terms
Definitions of chemical and nonchemical terms used in this report.
At a Glance
Union Carbide Corporation is a basic chemicals company with many of the
industry's most advanced process technologies and some of the most cost-
efficient, large-scale production facilities in the world. The company also
produces and markets numerous specialty chemicals from manufactured or
purchased chemicals, and targets sharply defined market segments for many of
its technologies.
Union Carbide buys liquefied petroleum gas and naphtha to make ethylene
and propylene - basic building-block chemicals (also known as olefins). The
company then uses state-of-the-art process technologies to convert
manufactured and purchased ethylene and propylene into products that include
polyethylene (the world's most widely used plastic); ethylene oxide/glycol and
derivatives for surfactants, polyester fiber, resin and film, and automobile
antifreeze; and one of the industry's broadest lines of resins, intermediates,
emulsions and additives for the paints and coatings, cosmetic and personal
care, adhesives, household, pharmaceutical, fuel and lube oil additives and
agricultural products markets.
Union Carbide also licenses certain of its key olefins-based technologies
and offers other specialized technology licensing and services.
The leading Union Carbide end markets as a percentage of sales are:
Paints, coatings and adhesives 23%
Packaging and consumer plastics 19%
Wire and cable 10%
Textile 8%
Household and personal care 7%
Automotive, including antifreeze 6%
Agricultural and food 4%
Oil and gas 4%
Industrial cleaners 3%
On the Cover
The linear low-density polyethylene molecule. Union Carbide is among the
largest manufacturers of polyethylene, the world's most widely used plastic,
and is the industry's leading licenser of polyethylene process technology.
Financial Highlights
Dollar amounts in millions (except per share figures) 1994 1993
For the Year
Net sales $ 4,865 $ 4,640
Income available to common stockholders before
accounting change 379 155
Per common share - Primary 2.44 1.00
Cumulative effect of change in accounting principle - (97)
Per common share - Primary - (0.64)
Net income - common stockholders 379 58
Per common share - Primary 2.44 0.36
Per common share - Fully diluted(a) 2.27 -
Cash dividends 113 110
Per common share 0.75 0.75
Capital expenditures 409 395
At Year-End
Total assets $ 5,028 $ 4,689
Total debt 946 966
UCC stockholders' equity 1,509 1,428
Per common share 10.45 9.49
Common shares outstanding (thousands) 144,412 150,548
Common stockholders of record 55,049 58,795
Employees 12,004 13,051
a) Fully diluted per share amounts are not presented where amounts are
antidilutive.
Chairman's Letter
Volume Growth, Competitive Advantage Spell Bright Prospects for the Decade
Nothing beats performance for validating a business strategy, and I'm pleased
to report that Carbide's strategy of backing businesses with significant
competitive advantage got a ringing endorsement from our 1994 performance.
Net income available to shareholders from continuing operations rose 145
percent from the prior year to $379 million, and per share income climbed to
$2.44 from $1.00.
Stockholders had another good year as well. Carbide's share price rose
more than 31 percent for the year to close at $29.38. The increase put our
stock performance at the top of the Dow Jones list of 30 industrials for the
second time in the past three years.
As stockholders know, we've made progress over several years in the teeth
of the worst chemical industry downturn in memory. We did it mainly through
massive cost reductions - approaching $575 million at year-end - made possible
by the drive and initiative of Carbide people, who worked long and hard to
streamline our major work processes.
In mid-1994 we began to get help from the marketplace. As supply and
demand came into better balance in the second half, stronger pricing signaled
that the worst of the cyclical downturn was behind us. But I'm confident that
today's Carbide can post highly competitive financial results regardless of
conditions in the chemical markets.
Our operations are lean and efficient. Our people are working flat out,
with a will to win bred of success. And we're keeping the pressure on costs
through further work process improvements.
With costs in line, our financial condition sound and returns exceeding
our cost of capital, it is clearly time to expand in growing markets for our
core operations.
By spreading fixed costs over larger volumes, and further reducing
variable costs, we reduce our total cost per pound of product. And when
billions of pounds of product are involved, shaving just a little off the cost
of each pound can mean significantly improved profitability and greater
shareholder value.
Several internal expansions underway will help. And large productivity
gains will come from joint ventures, acquisitions and business extensions that
accelerate growth. We've announced several that will add substantial capacity
around the world, for an average investment cost far below the cost of
building new, "greenfield" capacity.
Our planned joint venture with Petrochemical Industries Company of
Kuwait, for example, will have a total of more than 3 billion pounds of
ethylene, polyethylene and ethylene glycol capacity when completed in 1997.
With an advantaged feedstock position and the benefit of Carbide process
technologies - so highly prized that they formed part of our equity - venture
production costs should be among the lowest in the world.
Two European joint ventures announced in 1994 will add substantial
volumes in key operations.
In one, we're joining with EniChem of Italy, Europe's co-leader in
polyethylene production. The venture, which is subject to approval of the
European Union, will own all of EniChem's polyethylene operations. Combined
capacity of these facilities in Italy, France and Germany is about 3 billion
pounds a year.
In another venture, we've joined with Elf Atochem of France to produce
and market specialty polyethylene compounds primarily for the wire and cable
industry. The venture will operate about 600 million pounds per year of
capacity in France by the end of 1995, plus new compounding capacity for wire
and cable products.
In a business extension we think has considerable potential for
profitable growth, we announced plans to build a 200 million-pounds-per-year-
capacity plant in Texas to produce ethylene/propylene rubber. The business is
a new one for Carbide, but one we enter with a product and cost advantage
based on our UNIPOL Process technology that could reshape the industry.
And as the year ended, we agreed to purchase ethylene oxide derivatives
operations with 330 million pounds of capacity - which we'll expand to about
600 million pounds - from Imperial Chemical Industries in London. The purchase
will solidify our position as the industry's leading producer of these
chemicals, used in fibers, resins, paints and personal care products.
The combination of internal expansions and joint ventures will increase
our polyethylene and ethylene glycol capacity by more than 50 percent to 10
billion pounds by 1997. All the additions will benefit our customers and fit
neatly with our strategy. All support or extend operations in which Carbide
already has a significant competitive advantage. All will be advantaged in
their own right. And all are going forward when the chemical business cycle
appears to be trending upward.
Those who recall the deep pessimism many felt about Carbide's future
after the tragedy in Bhopal, India, in 1984, and the takeover attempt a year
later that shrank the company by half, will appreciate how much has changed
since then. We are in some of the same basic businesses, but we are a
different company in virtually everything but name.
Dec. 3 marked the 10th anniversary of that terrible event, the result of
sabotage by a disgruntled employee. Carbide only recently was allowed to sell
its shares in its former Indian affiliate. Part of the proceeds will be used
to build and operate a hospital in Bhopal. This is beyond the $470 million
settlement paid to the Indian government in 1989.
Another outcome, important for every community where chemicals are made,
is the RESPONSIBLE CARE initiative adopted by Union Carbide and other chemical
companies in 35 countries around the world. RESPONSIBLE CARE commits signatory
companies to a rigorous set of codes and practices designed to improve
environmental and safety performance.
Carbide operating policies, safety and environmental reporting, and work
with community advisory panels all reflect our commitment to those codes and
practices. Write to our Public Affairs Department for a copy of Carbide's 1994
RESPONSIBLE CARE progress report.
On a personal note, C. Peter McColough, who has served on the board with
distinction since 1979, will not stand for reelection in accordance with the
board's retirement policy. His wisdom, experience and unswerving support will
be greatly missed.
Also, as this report went to press I announced that I'll be ending my
long and satisfying career with Union Carbide at the end of 1995. In passing
the baton to President Bill Joyce, who will become chief executive officer in
April and chairman of the board when I retire, I could not entrust the future
of this great company to more capable hands.
Robert D. Kennedy
Feb. 22, 1995
(Contained within the Chairman's Letter is a picture of Robert D. Kennedy,
Chairman and Chief Executive Officer and William H. Joyce, President and Chief
Operating Officer, as well as a separate depiction of an ethylene oxide
molecule.)
President's Report
Carbide Boosts Profitability, Accelerates Growth
As 1994 began, the chemical business cycle was still in the cellar, with
prices and margins near their historic lows. Producers got some modest price
relief in the second quarter for the simple reason that they could no longer
withstand the huge losses of the past two years in their commodity operations.
As the year wore on, the economies of the U.S. and other major markets
picked up steam, driving up the demand for chemicals and boosting prices.
At the same time, operating problems at several ethylene production
facilities in the U.S. tightened raw material supplies, causing prices of
polyethylene and ethylene glycol, the two highest-volume downstream chemicals,
to move up in earnest. And Union Carbide, with substantial help from cost
reductions and operating improvements, benefited handsomely as margins
improved and sales volumes rose.
Several years of declining margins in our largest ethylene-based
commodity chemical operations - ethylene glycol and commodity polyethylene
resins - overwhelmed even the massive cost reductions Carbide had achieved.
But results improved substantially as margins began to rebound in the second
half of the year. The businesses, which had been losing money, were profitable
in the third and fourth quarters. Sales volume for the ethylene-based
commodities group rose 6 percent compared to the prior year.
Carbide's less cyclical businesses, which prospered during the downturn,
also benefited from the improved economy. They accounted for 56 percent of
volume and 75 percent of revenues in 1994. The group - consisting of
industrial performance chemicals, solvents and intermediates, UCAR emulsion
systems, specialty polymers and products, UNIPOL licensing and specialty
polyolefins - continued to post a rate of return substantially above the cost
of capital, a sure sign of robust health.
Not enough can be said about the contribution Carbide people made to our
improved performance. They are largely responsible for Carbide successfully
completing our $575 million cost reduction program by year-end 1994. And at
year-end they were operating our businesses with great efficiency, introducing
promising new products and doing more for our customers, while further
improving Carbide's environmental and safety performance.
Better Work Processes
Over the past several years, continuous improvement - the notion that
things can be done better and more efficiently no matter how well they were
done before - has become ingrained in the Carbide culture. And several new
initiatives were under way as 1994 ended.
In one, we eliminated more than $70 million of engineering support and
installation costs by simplifying the design and construction process, and by
sharply curtailing engineering work that did not directly support the
strategies of our individual businesses. The Engineering Excellence initiative
is targeting additional reductions in engineering support costs, and has a
capital cost reduction target for 1995 of about $100 million.
In one such project, associated with our entry into the ethylene/
propylene rubber business, we expect to save nearly $30 million in capital
costs by simplifying product handling systems and using off-the-shelf designs
where possible instead of starting from scratch, among other improvements.
Another initiative, called Pathfinder, seeks to reduce product
distribution costs. Pathfinder eliminated $8 million of annualized costs in
1994 by finding more efficient ways of getting our products from the
manufacturing plant to the customer. In one example, we expect to save $6
million a year through better scheduling and routing, and by ensuring optimum
loads for the 37,000 railcar shipments Carbide makes each year. Optimum loads
will mean fewer cars and trips, less cleaning and handling, and lower total
freight costs.
We are also applying the reengineering concept to Carbide's research and
development work. Our scientists and technicians are exploring ways to reduce
by nearly one-third the time it takes to get newly developed products to the
marketplace. And they are looking at ways to test product viability at early
stages of development, so they can halt work quickly when the market outlook
is doubtful.
Because we expect work process improvement to be a long-term effort, we
have formed a team of Carbide people who are permanently assigned as
reengineering consultants. Their job is to help any group in our system
identify new opportunities to improve efficiency and reduce costs. With
Carbide people replacing outside consultants, the cost of doing the
reengineering will itself be reduced by some 55 percent.
Along with improved efficiency and lower costs in 1994, many of our
operations made important advances during the year.
Examples include:
Several value-added polyethylene products introduced by UNIPOL Polymers,
including a new line of TUFLIN-PLUS film resins with superior puncture- and
tear-resistance for garbage bags and stretch wrap.
An 18 percent increase in export sales of telecommunications and power
cable compounds (by Specialty Polyolefins) mainly to the fast-growing markets
of the Pacific Rim. And a 40 percent increase in sales of flame-retardant
cable jacketing and insulation compounds to the maritime and building
industries.
Signing of another licensee in Asia (by our UNIPOL Systems group) for our
UNIPOL Process technology, bringing the new total of Asian licensees to 28 and
the new worldwide total to 67. Eleven licensees - in Indonesia, China, France,
Ukraine and the U.S. - are scheduled to start up operations in the 1995-96
period. When they do, it is estimated that UNIPOL will account for 18.5
billion pounds of world polyethylene operating capacity, or 18 percent, and
5.6 billion pounds, or 11 percent, of world polypropylene capacity.
Introduction in North America by Industrial Performance Chemicals of an
aircraft anti-icing fluid, called UCAR AAF Ultra. Independent laboratory
simulations have shown that UCAR Ultra can prevent ice formation on aircraft
surfaces for at least 90 minutes, nearly three times as long as competing
materials. A great benefit to aircraft facing long takeoff delays in bad
weather, UCAR Ultra increased Carbide's share of the anti-icing fluid market
in 1994 from less than 10 percent to an estimated 50 percent.
A 9 percent increase in sales volumes of latex emulsions to the
architectural coatings and waterborne adhesives markets by UCAR Emulsion
Systems, the result of sharper marketing focus on the industry's fastest-
growing companies. An intensified marketing campaign in the Middle East and
Southeast Asia that expanded sales volumes in those fast-growing markets by
more than 10 percent.
Completion of a plant in South Charleston, W.Va., for the manufacture of
our line of TRITON specialty surfactants - chemicals that put the cleaning
power in household and industrial detergents, and ensure even dispersal of
color in paints and coatings. This state-of-the-art plant, operated by
Industrial Performance Chemicals, nearly triples the number of specialty
surfactants Carbide can produce.
Capacity Expansion
With results improved, our strategies opening new opportunities, and
employees working hard to make Carbide the preferred supplier in our industry,
we are accelerating expansion of those operations in which we have a clear
competitive advantage.
For example, the new 650 million-pounds-per-year UNIPOL II polyethylene
production facility under construction at Taft, La., is scheduled to come on
stream in the second quarter of 1995. Its new resins will enable fabricators
of industrial liner bags and construction film to make their products with 15
percent less raw material, or to make products 15 percent stronger with the
same amount of raw material. And they can do so without costly modifications
of their fabricating equipment.
To help customers meet the growing demand for paints and cleaning
compounds, we completed a 50 percent expansion of production capacity for
Butyl CARBITOL and Butyl CELLOSOLVE solvents at Seadrift, Tex. We accomplished
the expansion through technology modifications, with little capital expense.
We increased capacity for making isophorone at our Institute, W.Va.,
plant by 30 percent. Isophorone is a specialty chemical used in paint and
agricultural chemicals.
We're building a new butanol facility at our Taft, La., plant that will
incorporate the industry's lowest-cost technology and increase our total
butanol capacity by more than 50 percent. Butanol is a key ingredient in
paints, coatings and plasticizers. And to help customers keep up with growing
demand for coatings and adhesives, we began an expansion of our vinyl acetate
facility in Texas City, Tex., that will increase capacity by 25 percent when
completed in 1995.
Other significant expansions include: acrolein derivatives for animal
feed supplements, fragrances and industrial chemicals; POLYOX water-soluble
resins used in personal care products, pharmaceuticals and adhesives;
polyvinyl acetate used for chewing-gum resins and thermoplastic additives;
specialty ketones used in agricultural chemicals; and alkyl alkanolamines used
in gas treating, pharmaceuticals and other markets.
UOP, a company owned equally by Carbide and AlliedSignal, also made a
good contribution to 1994 results, broadening its product line while
positioning itself for further growth. UOP provides technology, catalysts and
related products and services to the oil refining, petrochemical and gas
industries.
UOP is doubling worldwide capacity for beaded adsorbents - products that
selectively adsorb many compounds - through a recently completed expansion at
its facility in Reggio, Italy, and another expansion under way in Mobile, Ala.
UOP also acquired Separex Membrane Systems from Hoechst Celanese in 1994,
expanding its gas processing technology offerings. And in January 1995 it
acquired UNOCAL's licensing business for process technology.
All of these initiatives and expansions are occurring in operations with
strong technology-based competitive advantages. Technology is also a key to
the advantaged position we believe our new joint ventures will have at start-
up.
New Ventures
The largest of these, our planned joint venture with Petrochemical
Industries Company of Kuwait, would combine a substantial raw materials
advantage with our state-of-the-art polyethylene and ethylene glycol
processing technologies. The combination will make the venture a formidable
competitor in world markets. The Kuwait-based venture would have posted
returns exceeding its cost of capital even at the lowest point of this latest
cycle, which covered a span of about 7 years.
Planning and financing for the venture are in the final stages. A Carbide
management team is in place, contractors have been named and teams of Carbide
and Kuwaiti engineers are making good progress on design and engineering of
key units of the world-scale petrochemical complex. The venture is expected to
start up in 1997.
Our joint venture with EniChem of Italy, combining UNIPOL Process
technology with EniChem's European production facilities and marketing
network, will have all the earmarks of becoming Europe's leading and lowest-
cost polyolefins producer. In February 1995 we announced board-of-director
approval of the formation of the joint venture company, Polimeri Europa. The
venture is subject to European Union approval.
At year-end we completed a joint venture with Elf Atochem of France that
also combines our technology and experience with our partner's manufacturing
facilities. In this case we will license the venture to use our UNIPOL Process
technology, which will double the output of existing facilities. Carbide will
license other technology to the venture to produce compounds for the wire and
cable industry in Europe.
Our customers had asked us to establish a manufacturing presence in
Europe, so along with the venture's competitive strength, we expect it will
have a warm welcome. Carbide sales people in Europe will market the wire and
cable compounds, while Atochem will market the venture's other products.
A fourth joint venture, with Mitsui of Japan and Far Eastern Textile
Limited of Taiwan, started up glycol production in September at a new, world-
scale unit at our plant in Alberta, Canada. Production will supply Asia's
fast-growing textile market. The unit combines raw material and technology
advantages with a highly efficient distribution system.
We are also expanding through acquisitions, and through entry into related
businesses.
In October we announced that Carbide would enter the ethylene/ propylene
rubber (EPDM) business with a substantial competitive advantage based on our
UNIPOL Process technology. We expect that manufacturing costs, excluding
monomer costs, will be about half of competitors', with investment cost well
under half. In addition, substituting our granular product for the big blocks
of material supplied by competitors using conventional technology will reduce
customers' handling and processing costs several cents a pound. Production is
scheduled to start up at our new, 200 million-pounds-per-year plant at
Seadrift, Tex., in 1996.
And at year-end 1994, Carbide announced its intention to acquire certain
ethylene oxide derivatives operations in Europe from Imperial Chemical
Industries of London. Carbide is the leading producer of oxide derivatives
used in polyester fibers and film, paints, solvents, personal care products
and detergents. The acquisition, completed in February 1995, establishes a
strong presence for us in Europe, with potential for further expansion in a
growing market. The newly acquired operations also double Carbide's brake
fluid capacity, making us one of the world's leading suppliers.
Carbide reduced its 50 percent interest in UCAR International, a noncore
business, by half in January 1995.
The advances and expansions of 1994, and the hard work of the past several
years that made them possible, have brought us measurably closer to our vision
of Carbide as the low-cost, preferred supplier in our segment of the industry.
Although Carbide's financial results will continue to reflect turns in
the chemical business cycle, our performance in 1994 is solid evidence that we
are a stronger company, better able to withstand the downturns and to profit
from strong markets.
William H. Joyce
Feb. 22, 1995
(Contained within the President's Report is a depiction of a butanol
molecule.)
Principal Products and Services
Olefins/Ethylene Oxide/Glycol/Derivatives
L.P. McMaster - Corporate VP, General Mgr., Ethylene Oxide/Glycol
G.D. Mounts - VP, General Mgr., Industrial Performance Chemicals
V.F. Villani - VP, General Mgr., Hydrocarbons
Sales (in millions)
1994 1993 1992
($) 1,253 1,093 1,100
(%) 26 24 23
Union Carbide manufactures about three-quarters of its ethylene
requirements and more than one-half of its propylene requirements. Ethylene
and propylene are the key raw materials for Union Carbide's olefins-chain
businesses.
Union Carbide is the world's leading producer of ethylene oxide/glycol
and manufactures a broad range of derivatives. Ethylene oxide is a chemical
intermediate primarily used in the manufacture of ethylene glycol,
polyethylene glycol, glycol ethers, ethanolamines, surfactants, antimicrobials
and cold-sterilants. Ethylene glycol is used extensively in the production of
polyester fiber, resin and film; automotive antifreeze and engine coolants;
and a variety of freeze/thaw stabilizers, including UCAR aircraft and runway
deicing and anti-icing fluids and NORKOOL coolants and UCARTHERM heat-transfer
fluids. Other ethylene oxide-based glycol products include di-, tri-, and
tetraethylene glycols used as chemical intermediates and in dehydrating
natural gas. Ethylene oxide derivative products include CARBOWAX polyethylene
glycols, with hundreds of uses as a processing aid in nearly all industries;
ethanolamines for detergents, personal care products and in natural gas
conditioning and refining; ethyleneamines for many industrial uses; TERGITOL
and TRITON specialty surfactants for industrial and household cleaning
products and personal care products; UCON fluids and lubricants; alkyl
alkanolamines, and gas treating products, including UCARSOL and SELEXOL
solvents.
Manufacturing Sites
Institute, W.Va. Taft, La.
Prentiss, Alberta, Canada Texas City, Tex.
Seadrift, Tex. Washougal, Wash.
South Charleston, W.Va. Wilton, U.K. (2/1/95)
Major Competitors
Saudi Basic Industries Dow Chemical
Occidental Chemical Huntsman
Shell Chemical
Polyolefins
F.D. Ryan - VP, General Mgr., Specialty Polyolefins
R.B. Staub - Corporate VP, General Mgr., UNIPOL Systems
P.T. Wright - Corporate VP, General Mgr., UNIPOL Polymers
Sales (in millions)
1994 1993 1992
($) 1,562 1,477 1,461
(%) 32 32 30
Union Carbide is a leading manufacturer of polyethylene, the world's most
widely used plastic. The company also licenses its UNIPOL Process technology,
the most cost-efficient and versatile method of manufacturing polyethylene and
polypropylene.
UNIPOL Polymers produces and markets linear low-density (LLDPE), medium-
density (MDPE) and high-density (HDPE) polyethylenes used in high-volume
applications such as housewares, milk and water bottles, grocery sacks, trash
bags, packaging and industrial liners, and FLEXOMER very low-density resins,
used to produce hose and tubing, and frozen-food bags and stretch wrap. UNIPOL
Polymers also processes and markets postconsumer recycled polyethylene resins
(under the CURBSIDE BLEND and PRISMA trademarks) used to produce plastic
garbage cans and personal care product, bleach and detergent bottles.
Specialty Polyolefins manufactures and markets worldwide polyolefin-based
insulation, semiconducting and jacketing compounds for wire and cable
applications. These include power distribution, telecommunications and flame-
retardant power and control cables. UNIPOL Systems licenses UNIPOL Process
technology to polyethylene and polypropylene producers worldwide, and it
develops new process technology for the manufacture of other olefins-based
polymers, such as ethylene/propylene rubber.
Manufacturing Sites
Boucherville, Quebec, Canada Seadrift, Tex.
Bound Brook, N.J. Taft (Star Plant), La.
Cubatao, Brazil
Major Competitors
Quantum Chemicals Chevron Chemical
Dow Chemical Exxon Chemical
Novacor Chemical
Solvents, Intermediates and Emulsion Systems
J.F. Flynn - Corporate VP, General Mgr., Solvents and Intermediates
G.E. Playford - Corporate VP, General Mgr., UCAR Emulsion Systems
Sales (in millions)
1994 1993 1992
($) 1,344 1,226 1,289
(%) 27 26 26
Union Carbide supplies one of the industry's broadest product lines of
solvents, resins, intermediates, emulsions and additives.
Solvents and Intermediates products include aldehydes, acids and
alcohols, including high-quality synthetic and fermentation ethanol; esters;
glycol ethers (CARBITOL and CELLOSOLVE solvents); ketones, and monomers (vinyl
acetate and acrylics for waterborne coatings). Its principal customers are the
paints and coatings industries, and many of its products are also used widely
in cosmetics and personal care preparations, adhesives, household and
institutional products, drugs and pharmaceuticals, fuel and lube oil
additives, and agricultural products. The company's UNICARB System is a
pollution-reducing, supercritical fluid technology that can cut costs and
reduce volatile organic compounds in spray-applied coatings by up to 80
percent. Emulsion Systems products, found in exterior and interior house
paints, include UCAR latex products (acrylics and vinyl-acrylics that impart
enhanced staining, weather and scrub resistance to paints) and POLYPHOBE
thickeners.
Manufacturing Sites
Alsip, Ill. Jebel Ali Free Trade Zone,
Batangas, Philippines Dubai, United Arab Emirates
Bayamon, P.R. Nonthaburi, Thailand
Ekala, Sri Lanka Seadrift, Tex.
Garland, Tex. Seremban, Malaysia
Guangdong Province, Somerset, N.J.
People's Republic of China Taft, La.
Guayaquil, Ecuador Texas City, Tex.
Institute, W.Va. Torrance, Calif.
Jakarta, Indonesia Tucker, Ga.
Wilton, U.K. (2/1/95)
Major Competitors
Eastman Chemical Shell Chemical
Hoechst Celanese Rohm & Haas
BASF
Specialty Polymers and Products and UOP
E.J. Boros - VP, General Mgr., Specialty Polymers and Products
J.C. Soviero - Corporate VP and Chairman of UOP
Sales (in millions)(a)
1994 1993 1992
($) 706 844 1,022
(%) 15 18 21
(a) The OrganoSilicon business was included in results for the full year 1992
and in 1993 until its sale in July.
Carbide manufactures and markets numerous specialty products. It targets
sharply defined market segments for many of its technologies.
Specialty Industrial Products includes acrolein derivatives,
glutaraldehyde, vinyl methyl ether, ethylidene norbornene (ENB), specialty
ketones and biocides used to control microorganisms in applications such as
sterilants, water treatment, papermaking, metalworking, oil field operations
and industrial preservatives. Performance Polymers includes POLYOX water-
soluble resins used in personal care products, pharmaceuticals, inks and
thermoplastics; and polyvinyl acetate resins used in chewing-gum resins, low-
profile additives, NEULON polyester modifiers, fast-cure additives and
pigmentable systems, and UCURE reactive modifiers. Coating Materials reaches
markets for paints, coatings, inks, substrates and other materials for
magnetic tape, food and beverage packaging, plastics and orthopedic materials.
Its products include CELLOSIZE hydroxyethyl cellulose (HEC); UCAR solution
vinyl resins; TONE caprolactone-based materials; and cycloaliphatic epoxides,
including CYRACURE UV-curing products and FLEXOL plasticizers. Amerchol
Corporation, a Union Carbide subsidiary, manufactures and sells a wide variety
of lanolin-, glucose- and cellulose-based materials for personal care
products.
UOP, a company owned equally by Carbide and AlliedSignal Inc., is a
leading international supplier of process technology, catalysts, molecular
sieves and adsorbents to the petrochemical and gas processing industries.
Manufacturing Sites
Antwerp, Belgium Mamaroneck, N.Y.
Aratu, Brazil South Charleston, W.Va.
Edison, N.J. Taft, La.
Greensburg, La. Texas City, Tex.
Henderson, Ky. Vilvoorde, Belgium
Institute, W.Va.
Major Competitors
Union Carbide's competitive position varies widely from one
product/market segment to another. Competitors include a number of domestic
and foreign companies, both diversified and specialized.
(Within the Principal Products and Services section, next to each table is a
pie chart depicting each principal products and services' share of the total
consolidated 1994 sales.)
Financial Index
11 Management's Discussion and Analysis
11 Results of Operations
16 Liquidity, Capital Resources and Other Financial Data
18 Quarterly Data
19 Selected Financial Data
20 Consolidated Statement of Income
21 Consolidated Balance Sheet
22 Consolidated Statement of Cash Flows
23 Consolidated Statement of Stockholders' Equity
24 Notes to Financial Statements
24 Note 1 - Summary of Significant Accounting Policies
25 Note 2 - Financial Instruments
27 Note 3 - Geographic Segment Information
27 Note 4 - Other Expense - Net
27 Note 5 - Spin-off of Praxair, Inc.
28 Note 6 - Income Taxes
29 Note 7 - Supplementary Balance Sheet Detail
30 Note 8 - Interest Costs
30 Note 9 - Companies Carried at Equity
30 Note 10 - Long-Term Debt
31 Note 11 - Convertible Preferred Stock
32 Note 12 - UCC Stockholders' Equity
32 Note 13 - Leases
33 Note 14 - Retirement Programs
35 Note 15 - Incentive Plans
35 Note 16 - Commitments and Contingencies
36 Note 17 - Subsequent Events
37 Management's Statement of Responsibility for Financial Statements
37 Independent Auditors' Report
Management's Discussion and Analysis
RESULTS OF OPERATIONS
Dollar amounts in millions
(except per share figures) 1994 1993 1992
Net sales $4,865 $4,640 $4,872
Operating profit(a) 551 297 324
Interest expense 80 70 146
Pre-tax income from
continuing operations 471 227 178
Income from continuing
operations 389 165 119
Income from discontinued
operations - - 67
Cumulative effect of change
in accounting principles(b) - (97) (361)
Net income (loss) -
common stockholders 379 58 (187)
Per share, primary:
Continuing operations 2.44 1.00 0.76
Discontinued operations - - 0.51
Cumulative effect of change in
accounting principles - (0.64) (2.73)
Net Income (Loss) 2.44 0.36 (1.46)
Per Share, Fully Diluted(c) 2.27 - -
a) On April 27, 1994, stockholders voted to approve the merger of Union
Carbide Corporation into Union Carbide Chemicals and Plastics Company Inc. As
a result, operating profit is now calculated on a total consolidated basis.
Prior years' totals have been restated to reflect this change.
b) Effective Jan. 1, 1993, the corporation adopted Financial Accounting
Standard (FAS) 112, "Employers' Accounting for Postemployment Benefits."
Effective Jan. 1, 1992, the corporation adopted FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and FAS 109,
"Accounting for Income Taxes."
c) Fully diluted per share amounts are not presented where amounts are
antidilutive.
Summary and Outlook
In 1994, as well as in the preceding 2 years, Union Carbide's
profitability benefited from on-going cost reduction programs, increasing
sales volumes (exclusive of divestitures) and improved partnership and
corporate joint venture results. Throughout most of the 3-year period,
however, corporate results were negatively affected by record low margins in
ethylene oxide/glycol and in polyethylene, the corporation's two largest
volume products. Strong U.S. and world economic demand, as well as shortages
in ethylene, caused selling prices for these product lines to increase
beginning in the third quarter of 1994. These price increases, coupled with
relatively stable raw material feedstock costs, led to improved margins in the
second half of 1994.
Highlights of 1994 included:
Completion of the corporation's $575 million cost reduction program.
Start up of new ethylene oxide/glycol production facilities in Alberta (a
joint venture with Asian partners) and new surfactant manufacturing facilities
in South Charleston, W.Va.
Formation of a 50-50 joint venture with Elf Atochem of Paris to
manufacture and sell specialty polyethylene compounds for the European wire
and cable industry.
Announcement of a 50-50 joint venture with EniChem of Italy to develop,
manufacture and sell polyethylene resins in Europe. The venture is subject to
European Union approval.
Announcement of the acquisition of certain ethylene oxide derivatives
businesses from Imperial Chemical Industries of London. This transaction was
finalized on Feb. 1, 1995.
Reduction by one-half of the corporation's 50 percent interest in UCAR
International for before-tax cash proceeds of $347 million received in January
1995.
Doubling the corporation's borrowing capacity to $1.2 billion through new
lines of credit.
The increased commodity product margins experienced in the second half of
1994 are expected to continue through at least the first half of 1995. Whether
these trends continue beyond that will depend on the strength of U.S. and
global economies as well as on the availability of ethylene supplies.
Nonethylene chain businesses should continue to perform well, although any
slowness in the overall economy may affect their profitability. The reduction
of the corporation's interest in UCAR International will result in a material
nonrecurring gain to be recorded in the first quarter of 1995. However, the
corporation's share of ongoing future earnings from UCAR will be essentially
eliminated.
The corporation regularly reviews its assets with the objective of
maximizing the deployment of resources in core operations. In this regard, UCC
continues to consider strategies and/or transactions with respect to certain
noncore assets and other assets not essential to the operation of the business
that, if implemented, could result in material nonrecurring gains or losses.
Dollar amounts in millions 1994 1993 1992
Employees (year-end) 12,004 13,051 15,075
Employment costs
(wages, benefits,
payroll taxes) $820 $886 $983
1994 Compared with 1993
Sales revenues increased almost 5 percent from 1993 levels to $4.865
billion, based on a 7 percent increase in volumes. After decreasing through
mid-year, average selling prices increased through the third and fourth
quarters while raw material feedstock prices remained relatively stable
throughout the year (averaging slightly less than in 1993). Export revenues
from domestic operations have averaged approximately $565 million in each of
the past 3 years.
The corporation's variable margin (sales revenues less variable
manufacturing and distribution costs) as a percentage of sales rose to 45.8
percent from 45.6 percent in 1993 reflecting an improvement in ethylene/glycol
and polyethylene margins in the second half of 1994. Excluding the
OrganoSilicon business (OSi), sold in July 1993, the 1993 variable margin
would have been 45.0 percent. The corporation's gross margin (variable margin
less fixed manufacturing and distribution costs) as a percentage of sales rose
to 24.5 percent in 1994 as compared with 22.7 percent in 1993 (22.1 percent
excluding OSi). Fixed manufacturing and distribution costs, excluding OSi,
remained level versus 1993, notwithstanding the year-to-year increases in
volume.
Selling, administration and other expenses (SA&O) continued their
downward trend as the corporation benefited from its ongoing cost
reduction/work process improvement programs. SA&O decreased nearly 15 percent
in 1994 (a 10 percent decline excluding OSi from the 1993 totals) and
represented less than two-thirds of 1990 spending levels. Research and
development expenses increased 5 percent (excluding OSi) as a result of a
number of new developmental projects, including the ethylene/propylene rubber
program.
Operating profit in 1994 increased to $551 million from $297 million in
1993. Nonrecurring gains in 1994 of $81 million on the sale of a manufacturing
site and distribution terminal in Hong Kong and $24 million on the sale of the
corporation's preferred stock investment in its former OSi business offset
charges of $24 million on the write-down and sale of the corporation's
stockholding in Union Carbide India Limited, a $12 million loss on the sale of
interests in a uranium mill and mines, and $74 million of litigation costs and
other costs related to divested operations.
1993 Compared with 1992
Sales revenues fell 5 percent from 1992 levels to $4.640 billion, largely
a result of the sale of the OSi business in midyear 1993. The impact of a
slight improvement in overall volume, excluding the OSi business, was offset
by weaker pricing, particularly in ethylene glycol and polyethylene.
The corporation's variable margin as a percentage of sales rose slightly
in 1993 to 45.6 percent, from 45.5 percent in 1992. Weaker pricing in
commodity product lines and the absence of margins from the OSi business in
the second half of 1993 were offset by strong licensing results as well as
reduced feedstock costs. The corporation's gross margin as a percentage of
sales was 22.7 percent in 1993, the same as in 1992. After excluding the
effect of the OSi sale, fixed manufacturing costs decreased 1 percent versus
the prior year, more than offsetting inflation.
SA&O continued to decline as a result of ongoing cost reduction/work
process improvement programs. In 1993 SA&O totaled $340 million, down 11
percent compared with 1992 (a 5 percent decline excluding the OSi sale).
Excluding OSi, research and development expenses declined modestly compared
with 1992. In general, the corporation sought to use work process initiatives
to improve research and development productivity rather than increasing
expenditures.
Operating profit fell 8 percent in 1993 to $297 million. This included a
gain of $54 million from the sale of the OSi business and a gain of $8 million
from the sale of a corporate aircraft, offset by a charge of $46 million from
the shutdown of an ethylene oxide/glycol manufacturing facility at Montreal
East, Quebec, Canada, a loss of $9 million on the sale of Vitaphore
Corporation, a medical device company, and a loss of $9 million on the write-
down of a Canadian business.
1992 Compared with 1991
Sales of $4.872 billion were essentially flat compared with prior year
sales of $4.877 billion. The impact of increasing volumes in most product
lines, including ethylene glycol and polyethylene, was more than offset by
declining prices.
The corporation's variable margin decreased from 46.1 percent in 1991 to
45.5 percent in 1992 due to higher feedstock costs. Gross margin as a
percentage of sales increased from 22.3 percent in 1991 to 22.7 percent in
1992, due to lower fixed manufacturing costs. In addition, the corporation
realized overhead cost savings through tight cost controls and work process
improvements in concert with the profit improvement program.
Operating profit for 1992 was $324 million. This included a charge of $35
million for additional severance expense associated with the corporation's
profit improvement program, and income of $25 million from the settlement of a
patent infringement case. Operating profit for 1991 totaled $81 million,
including charges of $165 million for severance and relocation costs, joint
venture charges, legal costs and the sale and wind-down of the transformer
retrofill service business of the Unison Transformer Services subsidiary.
Below is the data contained on the bar graphs on pages 12, 13 and
14 of Management's Discussion & Analysis.
(1) Selling Price Fixed Cost (cents/pound)
1991 43.9 15.5
1992 40.7 13.8
1993 38.8 12.9
1994 38.1 11.5
(2) Variable Margin
Millions of Dollars Percent of Sales
1990 2,507 47.8
1991 2,248 46.1
1992 2,219 45.5
1993 2,116 45.6
1994 2,228 45.8
(3) Fixed Costs - Millions of Dollars
As Reported Constant 1990 Dollars
1990 1,768 1,768
1991 1,723 1,660
1992 1,649 1,545
1993 1,544 1,409
1994 1,462 1,299
(4) Total Volume Employee Productivity
(Millions of Pounds) (Thousands of Pounds per Employee)
1991 11,102 665
1992 11,968 794
1993 11,956 916
1994 12,773 1,064
(5) Manufacturing and Distribution Period Costs
As Reported Constant 1990 Dollars
1990 1,145 1,145
1991 1,158 1,116
1992 1,110 1,040
1993 1,065 972
1994 1,037 921
(6) Selling, Administration and Other Expenses
As Reported Constant 1990 Dollars
1990 466 466
1991 408 393
1992 383 359
1993 340 310
1994 290 257
Costs Relating to Protection of the Environment
Worldwide costs relating to environmental protection continue to be
significant, due primarily to increasingly stringent laws and regulations and
to the corporation's commitment to industry initiatives such as RESPONSIBLE
CARE, as well as to its own internal standards. In 1994 worldwide expenses of
continuing operations related to environmental protection for compliance with
Federal, state and local laws regulating solid and hazardous wastes and
discharge of materials to air and water, as well as for waste site remedial
activities, totaled $153 million. Expenses in 1993 and 1992 were $149 million
and $150 million, respectively. In addition, worldwide capital expenditures
relating to environmental protection in 1994 totaled $57 million, compared
with $51 million and $82 million in 1993 and 1992, respectively.
The corporation, like other companies in the U.S., periodically receives
notices from the U.S. Environmental Protection Agency and from state
environmental agencies, as well as claims from other companies, alleging that
the corporation is a potentially responsible party (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act and
equivalent state laws (hereafter referred to collectively as Superfund) for
past and future cleanup costs at hazardous waste sites at which the
corporation is alleged to have arranged for treatment or disposal of hazardous
substances. The corporation is also undertaking environmental investigation
and remediation projects at hazardous waste sites located on property
currently and formerly owned by the corporation pursuant to Superfund, as well
as to the Resource Conservation and Recovery Act and equivalent state laws.
There are approximately 130 hazardous waste sites at which management
believes it is probable or reasonably possible that the corporation will incur
liability for investigation and/or remediation costs. The corporation has
established accruals for those hazardous waste sites where it is probable that
a loss has been incurred and the amount of the loss can reasonably be
estimated. The reliability and precision of the loss estimates are affected by
numerous factors, such as the stage of site evaluation, the allocation of
responsibility among PRPs and the assertion of additional claims. The
corporation adjusts its accruals as new remediation requirements are defined,
as information becomes available permitting reasonable estimates to be made,
and to reflect new and changing facts.
At Dec. 31, 1994, the corporation's accruals for environmental
remediation totaled $297 million ($265 million in 1993). Approximately 46
percent of the accrual pertains to closure and postclosure costs for both
operating and closed facilities. Additionally, environmental loss
contingencies of $147 million in excess of amounts accrued existed at Dec. 31,
1994 ($115 million in 1993).
Estimates of future costs of environmental protection are necessarily
imprecise, due to numerous uncertainties. These include the impact of new laws
and regulations, the availability and application of new and diverse
technologies, the identification of new hazardous waste sites at which the
corporation may be a PRP and, in the case of Superfund sites, the ultimate
allocation of costs among PRPs and the final determination of the remedial
requirements. While estimating such future costs is inherently imprecise,
taking into consideration the corporation's experience to date regarding
environmental matters of a similar nature and facts currently known, the
corporation estimates that worldwide expenses related to environmental
protection, expressed in 1994 dollars, should average about $152 million
annually over the next 5 years.
Worldwide capital expenditures for environmental protection, also
expressed in 1994 dollars, are expected to average about $53 million annually
over the same period. Management anticipates that future annual costs for
environmental protection after 1999 will continue at levels comparable to the
5-year average estimates.
Subject to the inherent imprecision and uncertainties in estimating and
predicting future costs of environmental protection, it is management's
opinion that any future annual costs for environmental protection in excess of
the 5-year average estimates stated here, plus those costs anticipated to
continue thereafter, would not have a material adverse effect on the
corporation's consolidated financial position. However, such excess costs, if
any, could have a material adverse effect on consolidated results of
operations in a given quarter or year.
Litigation
The corporation and its consolidated subsidiaries are involved in a
number of legal proceedings and claims with both private and governmental
parties. These cover a wide range of matters, including, but not limited to,
product liability; governmental regulatory proceedings; health, safety and
environmental matters; employment; patents; contracts and taxes. In addition,
the corporation is one of a number of defendants named in an increasing number
of lawsuits, some of which have more than one plaintiff, involving silicone
gel breast implants. The corporation supplied bulk silicone materials to
certain companies that at various times were involved in the manufacture of
breast implants. These cases are discussed in more detail in the Commitments
and Contingencies note to the financial statements. In some of these legal
proceedings and claims, the cost of remedies that may be sought or damages
claimed is substantial. While it is impossible at this time to determine with
certainty the ultimate outcome of any such legal proceedings and claims,
management believes that adequate provisions have been made for probable
losses with respect thereto and that such ultimate outcome, after provisions
therefor, will not have a material adverse effect on the consolidated
financial position of the corporation, but could have a material effect on
consolidated results of operations in a given quarter or year. Should any
losses be sustained in connection with any of such legal proceedings and
claims, in excess of provisions therefor, they will be charged to income in
the future.
Interest Expense
Interest expense rose $10 million in 1994 to $80 million due to rising
interest rates. In 1993 interest expense totaled $70 million, a decrease of
$76 million from 1992. The decrease resulted primarily from reduction and
refinancing of debt and benefits of lower rates from interest rate hedging
activity.
Partnerships and Corporate Joint Ventures
The corporation has for many years participated in a number of businesses
through 50 percent-owned partnerships and corporate joint ventures. On a
combined basis, the unconsolidated sales of these entities exceeded $2.8
billion in 1994. The most significant of these businesses include:
Partnerships:
UOP - a worldwide supplier of process technology catalysts, molecular sieves
and adsorbents.
Petromont - a Canadian polyolefins producer.
Union Carbide/Shell Polypropylene - a U.S.-based producer of specialty
polypropylene and licenser of polypropylene technology.
World Ethanol - a U.S.-based supplier of ethanol.
Corporate Joint Ventures:
UCAR International - a worldwide supplier of carbon and graphite electrodes
and carbon specialties. Effective Jan. 26, 1995, the corporation's ownership
interest in UCAR International was reduced to 25 percent.
Nippon Unicar - a Japan-based producer of commodity and specialty polyolefins.
Following is a summary of partnership and corporate joint venture results
for the past 3 years.
Dollar amounts in millions Partnerships Corporate Joint Ventures
1994 1993 1992 1994 1993 1992
Combined sales $1,616 $1,445 $1,527 $1,206 $1,144 $1,061
UCC share of
partnership income 98 67 60 - - -
UCC share of net income
(loss)of corporate
joint ventures - - - 55 16 (14)
UCC share of dividends
and distributions 83 82 64 45 10 -
Partnership income increased during the 3-year period, largely due to
improved results from the polyethylene and polypropylene partnerships.
Earnings from UOP, our largest partnership, remained relatively stable over
the period. The significant improvement in UCC share of net income of
corporate ventures was largely due to improved results from UCAR.
On Dec. 31, 1994, the corporation and Elf Atochem of Paris concluded the
formation of a new partnership to produce and sell specialty polyolefins in
Europe. The corporation has also announced a planned joint venture with
Petrochemical Industries of Kuwait to produce ethylene, polyethylene and
ethylene oxide/glycol in Kuwait, as well as approval of the formation, subject
to European Union approval, of a joint venture with EniChem of Italy to
produce ethylene and polyethylene in Italy, France and Germany. In addition,
in late 1994, a new joint venture with Mitsui of Japan and Far Eastern Textile
Limited of Taiwan started up a 660 million-pound-per-year-capacity ethylene
glycol plant in Alberta, Canada.
Provision for Income Taxes
The effective tax rate for 1994 decreased to 29.1 percent from 34.4
percent in 1993 as a result of lower taxes for operations outside the U.S.
(1993 was unusually high due to taxes provided on the sale of certain OSi
international subsidiaries) and a reduction for state and local income taxes.
The corporation's tax rate of 25.3 percent in 1992 reflected research and
development credits, foreign sales corporation benefits, reduced taxes from
joint venture partnerships and income from foreign affiliates taxed at lower
than statutory rates.
Income from Discontinued Operations
Income from discontinued operations for 1992 included the net income of
Praxair for the first six months of 1992, prior to the June 30 spin-off. At
that time Praxair became a separate public company.
Accounting Changes
In 1994 the corporation adopted FAS 115, "Accounting for Certain
Investments in Debt and Equity Securities." The effect of the adoption was
immaterial. In 1993 the corporation recorded a noncash after-tax charge of $97
million as a result of adopting FAS 112. The charge represents the cumulative
effect of the accounting standard and is set forth separately in the
Consolidated Statement of Income. In 1992 the corporation recorded a noncash
after-tax charge of $360 million as a result of adopting FAS 106 and a tax
charge of $1 million as a result of adopting FAS 109.
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
Cash Flow from Operations
Cash flow from operations increased by $104 million to $561 million in
1994, as compared with 1993, primarily due to a significant increase in
operating earnings partially offset by working capital increases consistent
with increased sales.
Cash Flow from (Used for) Investing
Cash flow from (used for) investing includes capital expenditures,
investments, proceeds from the sale of assets and businesses and net cash
received from Praxair.
Capital expenditures totaled $409 million in 1994, compared with $395
million in 1993 and $359 million in 1992. Major domestic capital projects in
1994 include the UNIPOL II unit at Taft (Star Plant), La., the butanol unit at
Taft, La., a bulk chemicals storage facility in Bedford Park, Ill., and the
TRITON surfactants unit at the South Charleston, W.Va., facility.
Over the past 3 years, 34 percent of capital expenditures was directed at
new capacity, 48 percent to cost reduction and replacement, and 18 percent to
environmental, safety and health facilities. Of these expenditures, 90 percent
were in the U.S. and Puerto Rico.
Investments during 1994 totaling $16 million included a $26 million
investment in a Brazilian ethylene company and a return of investment of $30
million from a financing affiliate. Investments during 1993 totaled $39
million, including a $13 million investment in Petromont. Investments in 1992
included $30 million to a financing affiliate.
Proceeds from sale of fixed and other assets in 1994 of $138 million
include $84 million from the sale of the Hong Kong terminal property and $13
million from the divestiture of the corporation's specialty electronic
materials business and its interest in a Zimbabwe mining and smelting
operation. Proceeds from the sale of investments included $86 million from the
sale of the corporation's preferred stock investment in OSi.
In 1993 proceeds from the sale of fixed and other assets included $220
million related to the sale of the OSi business and $18 million from the sale
of a corporate aircraft. In 1992 proceeds included receipt of $50 million from
a licensee in settlement of a receivable and $9 million relating to the sale
of an aircraft. Proceeds from the sale of investments in 1992 included $44
million from the sale of the corporation's investment in a casualty insurance
company, $32 million from the sale of a Canadian investment and $17 million
from the remaining interest in KEMET Electronics.
At Dec. 31, 1994, the cost of completing authorized construction projects
was estimated to be $406 million, of which $30 million is covered by firm
commitments. Future construction expenditures are anticipated to be sourced
through operating cash flows and borrowings.
During 1995 the corporation will make significant investments in joint
ventures. The cost of these investments is expected to be funded from
operating cash flows as well as proceeds from the UCAR transaction.
Cash Flow Used for Financing
Cash flow used for financing includes stockholder dividends, funds used
to buy back common stock and debt reduction, offset in part by proceeds from
sales of common stock pursuant to the corporation's dividend reinvestment plan
and its employee savings and incentive programs.
Cash flow used for financing in 1994 totaled $360 million compared to
$378 million in 1993 and $1.041 billion in 1992. Over the past 3 years, cash
totaling $1.233 billion was used to reduce debt to its present level of $946
million. In addition, pursuant to resolutions of the board of directors, the
corporation has periodically repurchased shares of its common stock. In 1994,
11.6 million shares were repurchased for $337 million at an average effective
price of $29.03 per share. In the previous year, 3.7 million shares were
repurchased for $70 million at an average effective price of $18.87 per share.
On Nov. 4, 1994, the corporation entered into 2 new credit agreements
with a group of banks, replacing an existing $600 million agreement. One of
the new agreements provides the corporation with $1 billion in credit for the
next 5 years, and the other agreement provides $200 million for 364 days.
Several options are available to borrow at various rates on a revolving basis.
At Dec. 31, 1994, there were no outstanding borrowings under the credit
agreements.
Debt Ratios
Total debt outstanding at year-end for the past 3 years was:
Dollar amounts in millions 1994 1993 1992
Domestic $862 $895 $1,274
International 84 71 197
Total $946 $966 $1,471
Year-end ratios of total debt to total capital were:
1994 1993 1992
Debt ratio 38.2% 40.3% 54.3%
Total debt consists of short-term debt, long-term debt and the current
portion of long-term debt. Total capital consists of total debt plus minority
stockholders' equity in consolidated subsidiaries and UCC stockholders'
equity.
Quarterly Data
Union Carbide Corporation and Subsidiaries
Millions of dollars 1Q 2Q 3Q 4Q Year
1994
Net sales $1,126 $ 1,177 $1,252 $1,310 $4,865
Cost of sales 856 906 953 958 3,673
Gross profit 270 271 299 352 1,192
Depreciation and amortization 67 67 69 71 274
Net income 63 73 96 157 389
Net income - common stockholders 61 70 94 154 379
1993
Net sales $1,193 $1,244 $1,130 $1,073 $4,640
Cost of sales 892 969 889 839 3,589
Gross profit 301 275 241 234 1,051
Depreciation and amortization 76 68 66 66 276
Net income before accounting change 42 41 38 44 165
Cumulative effect of change in
accounting principle (97) - - - (97)
Net income (loss) - common
stockholders (57) 38 36 41 58
Dollars per common share 1Q 2Q 3Q 4Q Year
1994
Primary net income $ 0.39 $ 0.44 $ 0.61 $ 1.01 $ 2.44
Fully diluted net income 0.37 0.42 0.57 0.93 2.27
Cash dividends 0.1875 0.1875 0.1875 0.1875 0.75
Market price - high(a) 26.13 28.63 35.88 35.13 35.88
Market price - low(a) 21.75 21.50 26.00 26.38 21.50
1993
Primary income from continuing
operations $ 0.28 $ 0.24 $ 0.23 $ 0.26 $ 1.00
Cumulative effect of change in
accounting principle (0.69) - - - (0.64)
Primary net income (loss) (0.41) 0.24 0.23 0.26 0.36
Fully diluted net income(b) - 0.24 0.22 0.25 -
Cash dividends 0.1875 0.1875 0.1875 0.1875 0.75
Market price - high(a) 18.00 20.63 19.50 23.13 23.13
Market price - low(a) 16.00 17.63 17.63 19.25 16.00
a) Prices are based on New York Stock Exchange Composite Transactions.
b) Fully diluted per share amounts are not presented where amounts are
antidilutive.
<TABLE>
Selected Financial Data
Union Carbide Corporation and Subsidiaries
<CAPTION>
Dollar amounts in millions (except per share figures),
year ended December 31,(a) 1994 1993 1992
From the Income Statement
<S> <C> <C> <C>
Net sales $4,865 $4,640 $4,872
Cost of sales 3,673 3,589 3,764
Research and development 136 139 155
Selling, administration and other expenses 290 340 383
Depreciation and amortization 274 276 293
Interest on long-term and short-term debt 80 70 146
Partnership income (loss) 98 67 60
Pre-tax income (loss) from continuing operations 471 227 178
Provision (credit) for income taxes 137 78 45
UCC share of net income (loss) from
corporate investments carried at equity 55 16 (14)
Income (loss) from continuing operations 389 165 119
Income from discontinued operations - - 67
Cumulative effect of change in accounting
principles - (97) (361)
Net income (loss) - common stockholders 379 58 (187)
Per common share
Primary - Income (loss) from
continuing operations $ 2.44 $ 1.00 $ 0.76
- Net income (loss) 2.44 0.36 (1.46)
Fully diluted(b) - Income from
continuing operations $ 2.27 $ - $ -
- Net income 2.27 - -
From the Balance Sheet (At Year-End)
Net current assets of continuing operations $ 329 $ 233 $ 66
Total assets 5,028 4,689 4,941
Long-term debt 899 931 1,113
Other long-term obligations 537 378 277
Total capital 2,479 2,395 2,710
UCC stockholders' equity 1,509 1,428 1,238
UCC stockholders' equity per common share 10.45 9.49 9.32
Other Data
Cash dividends on common stock $ 113 $ 110 $ 114
Cash dividends per common share 0.75 0.75 0.875
Special distribution per common share - - 15.875
Market price per common share - high(c) 35.88 23.13 17.13(d)
Market price per common share - low(c) 21.50 16.00 10.88(d)
Common shares outstanding (thousands) 144,412 150,548 132,865
Capital expenditures 409 395 359
Employees - continuing operations 12,004 13,051 15,075
Selected Financial Ratios
Total debt/total capital 38.2% 40.3% 54.3%
Return on capital(e) 18.0% 7.7% 6.9%
Income from continuing operations/
average UCC stockholders' equity 26.5% 12.4% 6.8%
Cash dividends on common stock/income
from continuing operations 29.0% 66.7% 95.8%
<CAPTION>
Dollar amounts in millions (except per share figures),
year ended December 31,(a) 1991 1990
From the Income Statement
<S> <C> <C>
Net sales $4,877 $5,238
Cost of sales 3,787 3,876
Research and development 157 157
Selling, administration and other expenses 408 466
Depreciation and amortization 287 278
Interest on long-term and short-term debt 228 269
Partnership income (loss) (22) 70
Pre-tax income (loss) from continuing operations (147) 365
Provision (credit) for income taxes (50) 130
UCC share of net income (loss) from
corporate investments carried at equity (21) (42)
Income (loss) from continuing operations (116) 188
Income from discontinued operations 107 120
Cumulative effect of change in accounting principles - -
Net income (loss) - common stockholders (28) 308
Per common share
Primary - Income (loss) from
continuing operations $(1.06) $ 1.34
- Net income (loss) (0.22) 2.19
Fully diluted(b) - Income from
continuing operations $ - $ 1.34
- Net income - 2.13
From the Balance Sheet (At Year-End)
Net current assets of continuing operations $ 209 $ 7
Total assets 6,826 7,389
Long-term debt 1,160 2,058
Other long-term obligations 428 357
Total capital 4,694 5,338
UCC stockholders' equity 2,239 2,373
UCC stockholders' equity per common share 17.55 18.88
Other Data
Cash dividends on common stock $ 126 $ 138
Cash dividends per common share 1.00 1.00
Special distribution per common share - -
Market price per common share - high(c) 22.63 24.88
Market price per common share - low(c) 15.13 14.13
Common shares outstanding (thousands) 127,607 125,674
Capital expenditures 400 381
Employees - continuing operations 16,705 17,722
Selected Financial Ratios
Total debt/total capital 52.0% 54.0%
Return on capital(e) - 8.4%
Income from continuing operations/
average UCC stockholders' equity - 7.9%
Cash dividends on common stock/income
from continuing operations - 73.4%
<CAPTION>
Dollar amounts in millions (except per share figures),
year ended December 31,(a) 1989 1988
From the Income Statement
<S> <C> <C>
Net sales $5,613 $5,525
Cost of sales 3,909 3,696
Research and development 143 124
Selling, administration and other expenses 442 394
Depreciation and amortization 261 255
Interest on long-term and short-term debt 268 172
Partnership income (loss) 82 95
Pre-tax income (loss) from continuing operations 780 978
Provision (credit) for income taxes 257 381
UCC share of net income (loss) from
corporate investments carried at equity 27 33
Income (loss) from continuing operations 530 608
Income from discontinued operations 43 54
Cumulative effect of change in accounting principles - -
Net income (loss) - common stockholders 573 662
Per common share
Primary - Income (loss) from
continuing operations $ 3.76 $ 4.48
- Net income (loss) 4.07 4.88
Fully diluted(b) - Income from
continuing operations $ 3.63 $ 4.29
- Net income 3.92 4.66
From the Balance Sheet (At Year-End)
Net current assets of continuing operations $ 22 $ 14
Total assets 7,355 7,327
Long-term debt 2,060 2,271
Other long-term obligations 572 594
Total capital 5,319 4,805
UCC stockholders' equity 2,383 1,836
UCC stockholders' equity per common share 16.83 13.34
Other Data
Cash dividends on common stock $ 140 $ 155
Cash dividends per common share 1.00 1.15
Special distribution per common share - -
Market price per common share - high(c) 33.25 28.38
Market price per common share - low(c) 22.75 17.00
Common shares outstanding (thousands) 141,578 137,602
Capital expenditures 483 380
Employees - continuing operations 18,032 17,258
Selected Financial Ratios
Total debt/total capital 49.9% 56.1%
Return on capital(e) 21.2% 24.5%
Income from continuing operations/
average UCC stockholders' equity 25.1% 39.4%
Cash dividends on common stock/income
from continuing operations 26.4% 25.5%
<FN>
a) The OrganoSilicon business was included in the results of the corporation
until its sale in July 1993. b) Fully diluted per share amounts are not
presented where amounts are antidilutive. c) Prices are based on New York
Stock Exchange Composite Transactions. d) On June 30, 1992, the corporation
completed the spin-off of Praxair, distributing to holders of common stock one
share of Praxair common stock for each share of UCC common stock. The high and
low presented in the table for 1992 represent the value of the common stock
after the spin-off. The high for the year before the spin-off was $29.63; the
low before the spin-off was $20.13. e) Return on capital is computed by
dividing income by beginning of year capital. Income consists of income from
continuing operations, less preferred dividends, plus after-tax interest cost
(net of interest income received from Praxair), plus income from minority
interests. Capital consists of the components described below, adjusted for
the corporation's Praxair-related assets and the cumulative effect of the
changes in accounting principles.
Total debt consists of short-term debt, long-term debt and current portion of
long-term debt. Total capital consists of total debt plus minority
stockholders' equity in consolidated subsidiaries and UCC stockholders'
equity.
</TABLE>
<TABLE>
Consolidated Statement of Income
Union Carbide Corporation and Subsidiaries
<CAPTION>
Millions of dollars (except per share figures), year ended December 31, 1994 1993 1992
<S> <C> <C> <C>
Net Sales $4,865 $4,640 $4,872
Cost of sales, exclusive of depreciation and amortization
shown separately below 3,673 3,589 3,764
Research and development 136 139 155
Selling, administration and other expenses 290 340 383
Depreciation and amortization 274 276 293
Interest on long-term and short-term debt 80 70 146
Partnership income 98 67 60
Other expense - net 39 66 13
Income Before Provision for Income Taxes - Continuing Operations 471 227 178
Provision for income taxes 137 78 45
Income of Consolidated Companies - Continuing Operations 334 149 133
Plus: UCC share of net income (loss) from
corporate investments carried at equity 55 16 (14)
Income from Continuing Operations $ 389 $ 165 $ 119
Income from discontinued operations, net of income taxes and
minority interest - - 67
Net Income Before Cumulative
Effect of Change in Accounting Principles $ 389 $ 165 $ 186
Cumulative effect of change in accounting principles - (97) (361)
Net Income (Loss) 389 68 (175)
Preferred stock dividends, net of income taxes 10 10 12
Net Income (Loss) - Common Stockholders $ 379 $ 58 $ (187)
Earnings per Common Share
Primary - Income from continuing operations $ 2.44 $ 1.00 $ 0.76
- Income from discontinued operations $ - $ - $ 0.51
- Cumulative effect of change in accounting principles $ - $(0.64) $(2.73)
- Net income (loss) - common stockholders $ 2.44 $ 0.36 $(1.46)
Fully diluted(a) $ 2.27 $ - $ -
Cash Dividends Declared per Common Share $ 0.75 $ 0.75 $0.875
<FN>
a) Fully diluted per share amounts are not presented where amounts are antidilutive.
The Notes to Financial Statements on pages 24 through 36 should be read in conjunction with this
statement.
</TABLE>
Consolidated Balance Sheet
Union Carbide Corporation and Subsidiaries
Millions of dollars at December 31, 1994 1993
Assets
Cash and cash equivalents $ 109 $ 108
Notes and accounts receivable 898 689
Inventories 390 385
Prepaid expenses 217 247
Total Current Assets 1,614 1,429
Property, plant and equipment 5,889 5,626
Less: Accumulated depreciation 3,347 3,206
Net Fixed Assets 2,542 2,420
Companies carried at equity 418 437
Other investments and advances 88 137
Total Investments and Advances 506 574
Other assets 366 266
Total Assets $5,028 $4,689
Liabilities and Stockholders' Equity
Accounts payable $ 326 $ 310
Short-term debt 28 24
Payments to be made within 1 year on long-term debt 19 11
Accrued income and other taxes 179 189
Other accrued liabilities 733 662
Total Current Liabilities 1,285 1,196
Long-term debt 899 931
Postretirement benefit obligation 488 489
Other long-term obligations 537 378
Deferred credits 242 230
Minority stockholders' equity in consolidated subsidiaries 24 1
Convertible preferred stock - ESOP 148 150
Unearned employee compensation - ESOP (104) (114)
UCC stockholders' equity
Common stock
Authorized - 500,000,000 shares
Issued - 154,609,669 shares 155 155
Additional paid-in capital 369 366
Equity adjustment from foreign currency translation (59) (84)
Retained earnings 1,333 1,067
1,798 1,504
Less: Treasury stock, at cost - 10,197,367 shares
(4,062,189 in 1993) 289 76
Total UCC Stockholders' Equity 1,509 1,428
Total Liabilities and Stockholders' Equity $5,028 $4,689
The Notes to Financial Statements on pages 24 through 36 should be read in
conjunction with this statement.
Consolidated Statement of Cash Flows
Union Carbide Corporation and Subsidiaries
Increase (Decrease) in Cash and Cash Equivalents
Millions of dollars, year ended December 31, 1994 1993 1992
Operations
Income from continuing operations $ 389 $ 165 $ 119
Noncash charges (credits) to net income
Depreciation and amortization 274 276 293
Deferred income taxes 31 (34) (44)
Other noncash charges 88 65 8
Investing debits to net income (100) (52) (59)
Working capital(a) (151) (9) 2
Long-term assets and liabilities 30 46 (39)
Cash Flow from Operations 561 457 280
Investing
Capital expenditures (409) (395) (359)
Investments (16) (39) (69)
Sale of investments 87 29 101
Sale of fixed and other assets 138 266 132
Net cash transferred from Praxair, Inc. - - 1,066
Cash Flow from (Used for) Investing (200) (139) 871
Financing
Change in short-term debt (3 months or less) 8 (263) (260)
Proceeds from short-term debt 43 - 203
Repayment of short-term debt (48) (36) (222)
Proceeds from long-term debt 18 320 324
Repayment of long-term debt (36) (262) (1,022)
Issuance of common stock 111 57 73
Purchase of common stock (337) (70) -
Repurchase of convertible preferred stock - - (202)
Repayment of loan by ESOP - - 202
Payment of dividends (126) (124) (130)
Other 7 - (7)
Cash Flow Used for Financing (360) (378) (1,041)
Effect of exchange rate changes on cash
and cash equivalents - (3) (3)
Change in cash and cash equivalents 1 (63) 107
Cash and cash equivalents beginning-of-year 108 171 64
Cash and Cash Equivalents End-of-Year $ 109 $ 108 $ 171
Cash Paid for Interest and Income Taxes
Interest (net of amount capitalized) $ 89 $ 67 $ 174
Income taxes $ 74 $ 44 $ 59
a) Net change in working capital by component (excluding cash and cash
equivalents, and due from Praxair, deferred income taxes and short-term
debt):
1994 1993 1992
(Increase) decrease in current assets
Notes and accounts receivable $ (206) $ 5 $ 73
Inventories (22) 11 71
Prepaid expenses (19) 16 (13)
Increase (decrease) in payables and accruals 96 (41) (129)
Working capital $ (151) $ (9) $ 2
The Notes to Financial Statements on pages 24 through 36 should be read in
conjunction with this statement.
<TABLE>
Consolidated Statement of Stockholders' Equity
Union Carbide Corporation and Subsidiaries
<CAPTION>
1994 1993 1992
Shares Millions Shares Million Shares Millions
(in thousands) of dollars (in thousands) of dollars (in thousands) of dollars
<S> <C> <C> <C> <C> <C> <C>
Common Stock
Balance at January 1 154,610 $ 155 135,513 $ 136 130,256 $ 130
Issued:
For the Dividend Reinvestment
and Stock Purchase Plan - 134 - 483 1
For employee savings
and incentive plans - 2,463 2 4,742 5
Conversion of debentures - 16,500 17 32 -
Balance at December 31 154,610 $ 155 154,610 $ 155 135,513 $ 136
Additional Paid-in Capital
Balance at January 1 $ 366 $ 100 $ 33
Proceeds from the sale of put options 3 1 -
Reclassification of put option obligations (3) (2) -
Issued:
For the Dividend Reinvestment and
Stock Purchase Plan 1 2 9
For employee savings and incentive plans 2 19 58
Conversion of debentures - 246 -
Balance at December 31 $ 369 $ 366 $ 100
Equity Adjustment from Foreign
Currency Translation
Balance at January 1 $ (84) $ (71) $ (8)
Translation and other adjustments 7 (11) (47)
Praxair spin-off - - (16)
Sale of businesses 18 (2) -
Balance at December 31 $ (59) $ (84) $ (71)
Retained Earnings
Balance at January 1 $1,067 $1,119 $2,130
Net income (loss) - common stockholders 379 58 (187)
Dividends on spin-off of Praxair - - (710)
Cash dividends on common stock (113) (110) (114)
Balance at December 31 $1,333 $1,067 $1,119
Less: Treasury Stock
Balance at January 1 4,062 $ 76 2,649 $ 46 2,649 $ 46
Common Stock repurchase program 11,624 337 3,688 71 - -
Issued:
For the Dividend Reinvestment and
Stock Purchase Plan (275) (6) (322) (6) - -
For employee savings and incentive plans (5,214) (118) (1,953) (35) - -
Balance at December 31 10,197 $ 289 4,062 $ 76 2,649 $ 46
Total Stockholders' Equity $1,509 $1,428 $1,238
<FN>
The Notes to Financial Statements on pages 24 through 36 should be read in conjunction with this statement.
</TABLE>
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements include
the accounts of all significant subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. Investments in 20 percent-
to 50 percent-owned companies and partnerships are carried at equity in net
assets. Other investments are carried generally at cost.
On April 27, 1994, stockholders voted to approve the merger of Union
Carbide Corporation (UCC) into Union Carbide Chemicals and Plastics Company
Inc. (UCC&P). The merger was effective May 1, 1994. Immediately after the
merger, UCC&P had the same consolidated assets, liabilities and stockholders'
equity as the corporation. UCC&P changed its name to Union Carbide
Corporation.
Accounting and Reporting Changes - Effective Jan. 1, 1994, the corporation
adopted Financial Accounting Standard (FAS) 115, "Accounting for Certain
Investments in Debt and Equity Securities." The effect of the adoption of FAS
115 was immaterial. Effective Jan. 1, 1993, the corporation adopted FAS 112,
"Employers' Accounting for Postemployment Benefits." The cumulative effect of
the change in the method of accounting for postemployment benefits is reported
in the 1993 Consolidated Statement of Income. Effective Jan. 1, 1992, the
corporation adopted FAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and FAS 109, "Accounting for Income Taxes." The
cumulative effects of the changes in the method of accounting for
postretirement benefits and income taxes are reported in the 1992 Consolidated
Statement of Income.
Foreign Currency Translation - Unrealized gains and losses resulting from
translating foreign subsidiaries' assets and liabilities into U.S. dollars
generally are accumulated in an equity account on the balance sheet until such
time as the subsidiary is sold or substantially or completely liquidated,
except for Latin America. Translation gains and losses relating to operations
located in Latin American countries, where hyperinflation exists, are included
in the income statement until hyperinflation ceases.
Financial Instruments - Financial instruments are used to hedge financial risk
caused by fluctuating interest and currency rates. The amounts to be paid or
received on interest rate swap agreements and forward rate agreements (FRAs)
that hedge debt accrue and are recognized over the lives of the agreements.
Gains and losses on foreign currency forward contracts and foreign currency
options used to hedge firm commitments are deferred and recognized as part of
the related foreign currency transactions.
Interest rate swaps and FRAs, which are designated to offset earnings
fluctuations due to cyclical business conditions, and foreign currency forward
contracts, which are designated to offset earnings fluctuations from
anticipated foreign currency cash flows, are marked to market and the results
recognized immediately as other income or other expense.
Cash Equivalents - The corporation considers as cash equivalents all highly
liquid investments that are readily convertible to known amounts of cash and
are so near their maturity that they present insignificant risk of changes in
value because of changes in interest rates.
Inventories - Inventories are stated at cost or market, whichever is lower.
These amounts do not include depreciation and amortization, the impact of
which is not significant to the financial statements.
Approximately 65 percent of inventory amounts before application of the
LIFO method at Dec. 31, 1994 (66 percent at Dec. 31, 1993) have been valued on
the LIFO basis; the "average cost" method is used for the balance. It is
estimated that if inventories had been valued at current costs, they would
have been approximately $275 million and $287 million higher than reported at
Dec. 31, 1994, and Dec. 31, 1993, respectively.
Fixed Assets - Fixed assets are carried at cost. Expenditures for replacements
are capitalized, and the replaced items are retired. Gains and losses from the
sale of property are included in income.
Depreciation is calculated on a straight-line basis. The corporation and
its subsidiaries generally use accelerated depreciation methods for tax
purposes where appropriate.
Patents, Trademarks and Goodwill - Amounts paid for purchased patents and
newly acquired businesses in excess of the fair value of the net assets of
such businesses have been charged to patents, trademarks and goodwill. The
portion of such amounts determined to be attributable to patents is amortized
over their remaining lives, while trademarks and goodwill are amortized over
the estimated period of benefit, generally 5 to 20 years.
Research and Development - Research and development costs are charged to
expense as incurred. Depreciation expense applicable to research and
development facilities and equipment is included in Depreciation and
amortization in the Consolidated Statement of Income ($13 million in 1994, $12
million in 1993 and $13 million in 1992).
Income Taxes - Provisions have been made, pursuant to FAS 109, for deferred
income taxes based on differences between financial statement and tax bases of
assets and liabilities using currently enacted tax rates and regulations.
Environmental Costs - Environmental expenditures are expensed or capitalized
as appropriate, depending on their future economic benefit. Expenditures
relating to an existing condition caused by past operations and having no
future economic benefits are expensed. Environmental expenditures include site
investigation, physical remediation, operation and maintenance, and legal and
administrative costs. Environmental accruals are established for sites where
it is probable that a loss has been incurred and the amount of the loss can
reasonably be estimated. Where the estimate is a range and no amount within
the range is a better estimate than any other amount, the corporation accrues
the minimum amount in the range.
Retirement Programs - The cost of pension benefits under the U.S. Retirement
Program is determined by an independent actuarial firm using the projected
unit credit actuarial cost method, with an unrecognized net asset at Jan. 1,
1986, amortized over 15 years. Contributions to this program are made in
accordance with the regulations of the Employee Retirement Income Security Act
of 1974.
Pursuant to FAS 106, the cost of postretirement benefits are recognized
on the accrual basis over the period in which employees become eligible for
benefits.
Earnings per Common Share - Primary earnings per common share is computed by
dividing net income (loss) - common stockholders, excluding tax benefits
related to unallocated preferred stock dividends, by the weighted average
number of common shares outstanding during the year and common stock
equivalents related to dilutive stock options. Fully diluted earnings per
common share is computed by dividing adjusted net income (loss) - common
stockholders by the weighted average number of common shares outstanding,
common stock equivalents related to dilutive stock options, and common shares
issuable upon conversion of debentures and convertible preferred stock.
2. Financial Instruments
Fair values of financial instruments are estimated by using a method that
indicates the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation
sale. The fair values of the financial instruments included on the
Consolidated Balance Sheet were estimated as follows:
Cash, Short-Term Receivables and Accounts Payable - At Dec. 31, 1994 and 1993,
the carrying amounts approximate fair value because of the short maturity of
these instruments. The corporation had foreign currency forward contracts of
$67 million at Dec. 31, 1994, hedging fluctuations in short-term foreign
currency receivables and payables by offsetting the effects of currency
changes in these accounts. Deferred gains and losses on these contracts are
not material.
Investments - The corporation's investments in equity companies, partnerships
and other businesses generally involve joint ventures for which it is not
practicable to determine fair values. The corporation purchased a currency
option ($50 million notional amount, expiring March 1995) to hedge partially a
committed foreign currency transaction related to an investment in a joint
venture.
Long-Term Receivables - The fair values of long-term receivables are
calculated using current interest rates and consideration of underlying
collateral where appropriate. The fair values approximate the carrying value
of $200 million and $96 million reported in the Consolidated Balance Sheet at
Dec. 31, 1994 and 1993, respectively.
Debt - The corporation uses various types of financial instruments to manage
exposure to financial market risk caused by interest rate fluctuations. Such
instruments include interest rate swaps and FRAs. See Note 10 for a discussion
of debt instruments.
Other Financial Instruments - Interest rate swaps and FRAs, which were
designated to offset earnings fluctuations due to cyclical business
conditions, were carried at fair market value. At Dec. 31, 1993, the net
notional amount of interest rate swaps was $615 million and the net notional
amount of related FRAs was $1.3 billion. In the first half of 1994, as the
risk of cyclically higher interest rates increased, the corporation unwound
its positions in these instruments, resulting in a before-tax charge to Other
expense - net of $9 million.
Outstanding foreign currency forward contracts used as a means of
offsetting earnings fluctuations from anticipated foreign currency cash flows
totaled $182 million at Dec. 31, 1994 ($269 million at Dec. 31, 1993). During
1994 their fair values averaged a $1 million loss. Total net losses associated
with these contracts were $6 million.
Carrying and Fair Values - The carrying values and fair values of the
corporation's investments, receivables and debt financial instruments at Dec.
31, 1994 and 1993 are summarized in the table below. Fair values are based on
quoted market values, where available, or discounted cash flows (principally
long-term debt). Individually and in total, other derivative positions,
interest rate swaps, FRAs and open forward currency contracts and options had
a nominal carrying amount and fair value. Put stock options on equity
securities are discussed in Note 12.
At December 31, 1994 1993
Millions of dollars
Carrying Fair Carrying Fair
Assets (liabilities) Amount Value Amount Value
Investments and receivables $ 288 $ 288 $ 233 $ 237
Debt(a)
Short and long-term debt $(946) $(896) $(966) $(991)
Debt-related derivative
instruments -
Swap positions - (1) - 30
FRA positions - - - 2
Net debt $(946) $(897) $(966) $(959)
a) See Note 10.
3. Geographic Segment Information
Millions of dollars
Net Sales 1994 1993 1992
United States & Puerto Rico(a) $3,535 $3,443 $3,529
Canada 136 130 137
Europe 474 454 550
Latin America 218 241 222
Far East & Other 502 372 434
International operations 1,330 1,197 1,343
Total UCC Consolidated $4,865 $4,640 $4,872
a) Includes export sales of $532 million in 1994 ($604 million in 1993 and
$560 million in 1992).
Operating Profit (Loss)(a) 1994 1993 1992
United States & Puerto Rico $ 433 $ 299 $ 285
Canada 14 (53) (16)
Europe 12 18 13
Latin America 16 6 8
Far East & Other 74(b) 28 31
International operations 116 (1) 36
Inter-segment eliminations 2 (1) 3
Total Operating Profit $ 551 $ 297 $ 324
Less: Interest Expense (80) (70) (146)
Income Before Provision
for Income Taxes $ 471 $ 227 $ 178
a) Due to the merger between UCC & UCC&P (see Note 1), operating profit is
calculated on a total consolidated basis; prior years' totals have been
restated to reflect this change.
b) Includes an $81 million gain on the sale of a manufacturing facility and
distribution terminal in Hong Kong and a $24 million charge from the write-
down and sale of the corporation's stockholding in Union Carbide India
Limited.
Identifiable Assets 1994 1993 1992
United States & Puerto Rico $3,777 $3,579 $3,575
Canada 259 263 367
Europe 305 255 316
Latin America 203 140 151
Far East & Other 272 210 213
International operations 1,039 868 1,047
Inter-segment eliminations (7) (28) (53)
Total Identifiable Assets $4,809 $4,419 $4,569
Other 219 270 372
Total Assets $5,028 $4,689 $4,941
4. Other Expense - Net
The following is an analysis of Other expense - net:
Millions of dollars 1994 1993 1992
(Gains) losses on sales and
disposals of businesses
and other assets(a) $(67) $ 14 $(45)
Foreign currency adjustments 16 31 24
Severance - - 35
Interest income from Praxair - - (31)
Other(b) 90 21 30
$ 39 $ 66 $ 13
a) Includes for 1994 an $81 million gain on the sale of a manufacturing
facility and distribution terminal in Hong Kong; a $24 million gain on a
preferred stock investment in OSi; a $24 million charge from the write-down
and sale of the corporation's stockholding in Union Carbide India Limited; and
a $12 million loss on the sale of the corporation's interest in a uranium mill
and certain uranium mines. Includes for 1993 a $54 million gain from the sale
of OSi; a $46 million charge from the shut-down of an ethylene oxide/glycol
manufacturing facility at Montreal East, Quebec, Canada; a $9 million loss on
the sale of a medical device company; a $9 million loss on the write-down of a
Canadian business; and a gain of $8 million on the sale of a corporate
aircraft. Includes for 1992 gains of $34 million on the sale of the
corporation's investments in a casualty insurance company and $8 million on
the sale of a corporate aircraft.
b) Includes for 1994 $74 million for litigation costs and other costs related
to divested operations. Includes $7 million, $10 million and $21 million, in
1994, 1993 and 1992, respectively, related to discontinued and noncore
businesses.
5. Spin-off of Praxair, Inc.
On June 30, 1992, the corporation completed the spin-off of its industrial
gases subsidiary, Praxair, Inc. Under the terms of the spin-off, UCC
distributed to its holders of common stock 1 share of Praxair common stock and
an associated Praxair common stock purchase right for each share of UCC common
stock. The conversion prices of the corporation's convertible preferred stock
and common stock purchase rights were adjusted for the dilutive effects of the
spin-off (see Notes 11 and 12). For the first 6 months of 1992, Praxair had
sales of $1.315 billion, provision for income taxes of $43 million and net
income of $67 million.
6. Income Taxes
The following is a summary of the U.S. and non-U.S. components of Income
before provision for income taxes - continuing operations:
Millions of dollars 1994 1993 1992
Income (loss) before provision
for income taxes:
U.S. $362 $235 $147
Non-U.S. 109 (8) 31
$471 $227 $178
<TABLE>
The following is an analysis of income tax expense:
<CAPTION>
1994 1993 1992
Millions of dollars Current Deferred Current Deferred Current Deferred
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal income taxes $ 77 $46 $ 60 $(21) $45 $(28)
U.S. business and research and
experimentation tax credits (10) - (9) - (5) -
U.S. state and local taxes based on income 4 (2) 19 2 18 (4)
Non-U.S. income taxes 35 (13) 42 (15) 31 (12)
$106 $31 $112 $(34) $89 $(44)
Provision for Income Taxes -
Continuing Operations $137 $78 $45
</TABLE>
<TABLE>
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets
and deferred tax liabilities are as follows:
<CAPTION>
1994 1993
Deferred Deferred Deferred Deferred
Millions of dollars Assets Liabilities Assets Liabilities
<S> <C> <C> <C> <C>
Depreciation and amortization $ - $354 $ - $320
Postretirement benefits other than pensions 221 - 214 -
Postemployment benefits and severance costs 25 - 62 -
Environmental and litigation 147 - 124 -
Sale/leaseback and related deferrals 45 - 47 -
Other 177 216 170 205
Gross deferred tax assets and liabilities $615 $570 $617 $525
Net Deferred Tax Asset $45 $92
</TABLE>
Net noncurrent deferred tax liabilities of $91 million ($78 million in
1993) are included in Deferred credits in the Consolidated Balance Sheet. Net
current deferred tax assets of $129 million ($170 million in 1993) are
included in Prepaid expenses. Net noncurrent deferred tax assets of $7 million
(none in 1993) are included in Other assets. In 1994 there were $6 million in
non-U.S. net operating loss carryforwards included in the deferred tax assets
above. There were $8 million at Dec. 31, 1993, offset by a valuation allowance
of $2 million. There were no alternate minimum tax credit carryforwards in
1994 ($10 million were included in deferred tax assets in 1993).
Undistributed earnings of affiliates intended to be reinvested
indefinitely amounted to approximately $374 million at Dec. 31, 1994 ($350
million at Dec. 31, 1993). Determination of deferred taxes related to these
earnings is not practicable.
The consolidated effective income tax rate was 29.1 percent in 1994, 34.4
percent in 1993 and 25.3 percent in 1992. An analysis of the difference
between Provision for income taxes and the amount computed by applying the
statutory Federal income tax rate to Income before provision for income taxes
- - continuing operations is as follows:
Percent of pre-tax income
1994 1993 1992
Tax at statutory Federal rate 35.0% 35.0% 34.0%
Taxes related to operations
outside the U.S. - 3.1 (0.4)
U.S. state and local taxes
based on income 0.2 5.7 5.6
Foreign sales corporation (2.8) (4.0) (6.7)
Business credits (2.1) (4.0) (2.8)
Other, net (1.2) (1.4) (4.4)
29.1% 34.4% 25.3%
7. Supplementary Balance Sheet Detail
Millions of dollars at December 31, 1994 1993
Notes and Accounts Receivable
Trade $ 726 $ 555
Other 183 146
909 701
Less: Allowance for doubtful accounts 11 12
$ 898 $ 689
Inventories
Raw materials and supplies $ 103 $ 104
Work in process 41 52
Finished goods 246 229
$ 390 $ 385
Property, Plant and Equipment
Land and improvements $ 296 $ 287
Buildings 351 338
Machinery and equipment 4,847 4,656
Construction in progress and other 395 345
$5,889 $5,626
Other Assets
Deferred charges $ 129 $ 126
Insurance recoveries 103 -
Long-term receivables 97 96
Patents, trademarks and goodwill 37 44
$ 366 $ 266
Other Accrued Liabilities
Accrued accounts payable $ 266 $ 213
Payrolls 61 57
Severance and relocation costs 36 94
Environmental remediation costs 62 51
Postretirement benefit obligation 34 30
Other 274 217
$ 733 $ 662
Other Long-term Obligations
Environmental remediation costs $ 235 $ 214
Product liability costs 138 35
Postemployment benefits 42 63
Other 122 66
$ 537 $ 378
Equity Adjustment from Foreign
Currency Translation
Canada $ (48) $ (38)
Europe (17) (39)
Far East & Other 6 (7)
$ (59) $ (84)
8. Interest Costs
The following is an analysis of Interest on long-term and short-term debt:
Millions of dollars 1994 1993 1992
Interest incurred on debt $ 93 $ 84 $164
Less: Interest capitalized
and other adjustments 13 14 18
$ 80 $ 70 $146
9. Companies Carried at Equity
The following are financial summaries of partnerships and 20 percent- to 50
percent-owned corporate investments carried at equity. The corporation's most
significant partnerships include UOP, Petromont and Company Limited
Partnership, World Ethanol Company and a Union Carbide/Shell polypropylene
partnership. In 1994 the corporation and Elf Atochem completed the formation
of a partnership, located in France, to produce and market specialty
polyethylene compounds for the wire and cable industry. It began operations on
Dec. 31, 1994.
Partnerships
Millions of dollars 1994 1993 1992
Net sales(a) $1,616 $1,445 $1,527
Cost of sales 954 863 902
Depreciation 51 50 59
Partnership income 229 199 194
Union Carbide Share of
Partnership Income $ 98 $ 67 $ 60
Current assets $ 494 $ 450
Noncurrent assets 735 673
Total assets $1,229 $1,123
Current liabilities $ 309 $ 248
Noncurrent liabilities 455 435
Total liabilities $ 764 $ 683
Net assets $ 465 $ 440
Union Carbide Equity $ 220 $ 234
a) Includes $209 million net sales to Union Carbide Corporation in 1994
($175 million in 1993 and $171 million in 1992).
Corporate investments carried at equity include UCAR International Inc.,
Nippon Unicar Company Limited, Alberta & Orient Glycol Company Limited and
several smaller entities.
20% - 50%
Corporate Investments
Millions of dollars 1994 1993 1992
Net sales(a) $1,206 $1,144 $1,061
Cost of sales 817 823 834
Depreciation 58 55 58
Net income (loss) 109 36 (82)(b)
Union Carbide Share
of Net Income (Loss) $ 55 $ 16 $ (14)
Current assets $ 622 $ 572
Noncurrent assets 920 879
Total assets $1,542 $1,451
Current liabilities $ 457 $ 594
Noncurrent liabilities 676 407
Total liabilities $1,133 $1,001
Net assets $ 409 $ 450
Union Carbide Equity $ 198 $ 203
a) Includes $73 million net sales to the corporation in 1994 ($46 million in
1993 and $63 million in 1992).
b) Includes $55 million after-tax charge representing UCAR's adoption of FAS
106 and FAS 109.
10. Long-Term Debt
Millions of dollars at December 31, 1994 1993
Domestic
5.30% Sinking fund debentures, with equal
annual sinking fund payments to 1997 $ - $ 25
6.75% Notes due 2003 125 125
7.00% Notes due 1999 175 175
7.875% Debentures due 2023 175 175
8.75% Debentures due 2022 125 125
Pollution control and other facility obligations 248 249
Obligations under capital leases 14 19
Other - 2
International Subsidiaries
Obligations under capital leases 39 40
Other debt - various maturities and
interest rates 17 7
918 942
Less: Payments to be made within 1 year 19 11
$899 $931
On Nov. 4, 1994, the corporation entered into 2 new credit agreements
with a group of banks, replacing an existing $600 million agreement. One of
the new agreements provides the corporation with $1 billion in credit for the
next 5 years, and the other agreement provides $200 million for 364 days.
Several options are available to borrow at various rates on a revolving basis.
At Dec. 31, 1994, there were no outstanding borrowings under the credit
agreements. Interest rates on credit agreements are floating interest rates
based on LIBOR (London Interbank Offered Rate), CD (Certificate of Deposit),
or Bank Reference Rate. There were no borrowings under the credit agreements
in 1994 and 1993.
The bank credit agreements contain covenants, normal for this type of
agreement, that place certain limits on the ability of UCC to merge with
another entity, incur debt or create liens on assets, and that require the
corporation to meet net worth, leverage and interest coverage tests. Other
indentures also restrict the corporation from incurring liens to secure debt.
Pollution control and other facility obligations represent state,
commonwealth and local governmental bond financing of pollution control and
other facilities, and are treated for accounting and tax purposes as debt of
the corporation. These tax-exempt obligations mature at various dates from
1996 through 2023, and have an average annual effective rate of 7.3 percent.
During the first half of 1994, to reduce exposure to rising interest
rates, the corporation terminated substantially all of its interest rate swaps
and FRAs used as hedges to manage exposure to financial market risk caused by
interest rate fluctuations on debt. A net charge of $19 million ($13 million
after-tax) resulting from these terminations was deferred and is being
amortized to interest expense over the remaining terms of the underlying
instruments, which have various maturity dates through the year 2002. At Dec.
31, 1994, $16 million of the deferred loss remained, and it will be amortized
as follows: $7 million in 1995, $3 million in 1996, and the balance from 1997
through 2002.
At Dec. 31, 1994, the corporation had 2 open swap positions totaling $48
million ($625 million at Dec. 31, 1993) for which the corporation receives a
fixed rate and pays a floating rate. The corporation had no open FRAs at Dec.
31, 1994 ($1.7 billion at Dec. 31, 1993). The corporation's exposure to
counterparty creditworthiness is not material.
The average and effective interest rates in 1994 on the corporation's
fixed rate debt, other than pollution control and other facility obligations,
were 7.5 percent.
At Dec. 31, 1994, $40 million of consolidated assets were pledged as
security for $36 million of subsidiaries' debt.
Payments due on long-term debt in the 4 years following 1995 are: 1996, $20
million; 1997, $5 million; 1998, $5 million; and 1999, $180 million.
11. Convertible Preferred Stock
The Union Carbide Corporation Employee Stock Ownership Plan (ESOP) is an
integral part of the Savings Program for employees. On Jan. 1, 1991, the Trust
for the ESOP purchased 15.1 million shares of a new series of convertible
preferred stock (ESOP stock) from the corporation for $325 million. Each share
of ESOP stock is convertible into and has the same voting rights as 1 share of
the corporation's common stock, and is protected from dilution. The annual
preferred dividend is $0.794 per share.
Prior to the spin-off of Praxair in 1992, the corporation repurchased and
retired 7.5 million shares of unallocated ESOP stock from the ESOP's trustee
for $202 million, and unearned employee compensation was reduced accordingly.
Also in connection with the spin-off, approximately 1 million shares of the
ESOP stock held by individuals who became employees of Praxair were redeemed
for Union Carbide Corporation common stock.
At the date of the spin-off of Praxair, the conversion price, liquidation
price and annual preferred dividend of the ESOP stock were adjusted and a
special ESOP stock dividend of 10.5 million shares was issued so that the
interests of the ESOP stockholders were not diluted.
Substantially all full-time employees in the U.S. are eligible to
participate in the ESOP through the corporation's matching contribution of 50
percent (75 percent beginning Jan. 1, 1995) on eligible employee
contributions. At the corporation's option, ESOP shares may be redeemed either
in cash or the corporation's common stock when employees make withdrawals from
their accounts. It has been UCC's policy to redeem ESOP shares with cash.
The cost of the ESOP is recognized as incurred and was $6 million in 1994
($6 million in 1993 and $16 million in 1992). Reductions in ESOP costs in 1993
were due primarily to appreciation in the corporation's common stock and to
the spin-off of Praxair. At Dec. 31, 1994, 16.4 million preferred shares were
outstanding, 4.8 million of which were credited to employees' accounts,
including 0.8 million credited during 1994.
12. UCC Stockholders' Equity
At Dec. 31, 1994, Retained earnings included $134 million ($108 million at
Dec. 31, 1993), representing the corporation's share of undistributed earnings
of 20 percent- to 50 percent-owned companies accounted for by the equity
method. Dividends received from companies carried at equity aggregated $128
million in 1994 ($92 million in 1993 and $64 million in 1992). At Dec. 31,
1994, restrictions on the transfer of funds from consolidated subsidiaries to
the parent were not material.
In July 1989 the board of directors adopted a stockholder rights plan and
declared a dividend, payable on Aug. 31, 1989, of one Right for each
outstanding share of common stock. Each Right entitles its holder, under
certain circumstances, to buy a share of common stock at a purchase price of
$37.67 (subject to adjustment).
The Rights may not be exercised until 10 days after a person or group
acquires 20 percent or more of UCC's common stock, or announces a tender offer
that, if consummated, would result in 20 percent or more ownership of the
common stock.
Until then, separate Rights certificates will not be issued, nor will the
Rights be traded separately from the stock.
Should an acquirer become the beneficial owner of 20 percent of the
common stock, and under certain additional circumstances, Union Carbide
Corporation stockholders (other than the acquirer) would have the right to buy
common stock in Union Carbide Corporation, or in the surviving enterprise if
the corporation is acquired, having a value equal to 2 times the purchase
price of the Right then in effect.
The Rights will expire on Aug. 31, 1999, unless redeemed prior to that
date. The redemption price is $0.01 per Right. The corporation's independent
directors may redeem the Rights by a majority vote during the 10-day period
following public announcement that a person or group has acquired 20 percent
of UCC's common stock.
On July 27, 1994, the board of directors announced that it had authorized the
repurchase of an additional 10 million shares of UCC common stock, bringing to
20 million shares the total number authorized for repurchase. The repurchase
program, which began in the first quarter of 1993 with an initial
authorization of 10 million shares, was carried out to minimize future
earnings dilution due to common stock requirements under certain employee
benefit plans. Through Dec. 31, 1994, the corporation had repurchased
15,312,260 shares at an average effective price of $26.59 per share. On Feb.
6, 1995, the board of directors increased the number of shares that may be
repurchased under the program to an aggregate of 30 million shares. Additional
share repurchases under the repurchase program will be made over an unlimited
period in a manner consistent with the combination of corporate cash flow and
market conditions.
In conjunction with the corporation's common stock buyback program, put
options were sold in a series of private placements entitling the holders to
sell 4.8 million shares of common stock to UCC, at specified prices upon
exercise of the options. Since inception of this program through Dec. 31,
1994, options representing 3,663,800 common shares have expired unexercised,
and options representing 986,200 shares were exercised for $30 million, or an
average of $30.88 per share. Options representing 150,000 shares remain
outstanding at Dec. 31, 1994. Premiums received since inception of the program
have reduced the average price of repurchased shares to $26.59 per share from
$26.84 per share.
13. Leases
Leases that meet the criteria for capitalization have been classified and
accounted for as capital leases. For operating leases, primarily involving
facilities and distribution equipment, the future minimum rental payments
under leases with remaining noncancelable terms in excess of 1 year are:
Year ending Millions of dollars
1995 $ 84
1996 68
1997 67
1998 55
1999 52
Subsequent to 1999 338
Total minimum payments 664
Future sublease rentals 130
Net Minimum Rental Commitments $534
The present value of the net minimum rental commitments amounts to $335
million. Total lease and rental payments (net of sublease rental of $20
million in 1994, and $10 million in 1993 and 1992) were $65 million, $98
million and $92 million for 1994, 1993 and 1992, respectively. The corporation
is contingently required to pay certain domestic lease obligations assigned to
Praxair, in the event of Praxair's default, the present value of which totals
$21 million. If such a payment is required, the corporation has a legal right
to set off any such amounts paid against amounts it may owe to Praxair.
14. Retirement Programs
Pension Benefits
The noncontributory defined benefit retirement program of Union Carbide
Corporation ("U.S. Retirement Program") covers substantially all U.S.
employees and certain employees in other countries. Pension benefits are based
primarily on years of service and compensation levels prior to retirement.
Pension coverage for employees of the corporation's non-U.S. consolidated
subsidiaries is provided through separate plans, to the extent deemed
appropriate. Obligations under such plans are principally provided for by
depositing funds with trustees.
Worldwide Retirement Program net pension cost applicable to continuing
operations amounted to $21 million in 1994, $20 million in 1993 and $22
million in 1992. Net pension cost for discontinued operations amounted to $8
million through June 30, 1992 (see Note 5).
The components of net pension cost for the U.S. Retirement Program and
non-U.S. plans are as follows:
Millions of dollars 1994 1993 1992(a)
Service cost - benefits
earned during the
period $ 51 $ 48 $ 61
Interest cost on
projected benefit
obligation 180 182 191
Return on plan assets
(gain) loss
- Actual $154 $(430) $(150)
- Unrecognized
return (355) (201) 229 (201) (64) (214)
Amortization of
net gain (9) (9) (8)
Net Pension Cost $ 21 $ 20 $ 30
a) Includes net pension costs for Praxair through June 30, 1992.
The funded status of the U.S. Retirement Program and non-U.S. plans was as
follows:
Millions of dollars at December 31, 1994 1993
Actuarial present value of plan benefits:
Accumulated benefit obligation,
including vested benefits
of $2,037 million at Dec. 31,
1994, and $2,261 million at
Dec. 31, 1993 $(2,150) $(2,404)
Projected benefit obligation $(2,398) $(2,652)
Fair value of plan assets, primarily
invested in common stocks and
fixed income securities $ 2,414 $ 2,747
Plan assets in excess of
projected benefit obligation $ 16 $ 95
Unamortized net asset at transition (80) (92)
Unamortized prior service cost 25 30
Unrecognized (gains) losses - net 35 (20)
Prepaid (Accrued) Pension Cost $ (4) $ 13
Pension obligations are valued using the 1983 Group Annuity Mortality
Table. The actuarial assumptions used were as follows:
1994 1993
Discount rate for determining projected
benefit obligation 8.50% 7.00%
Rate of increase in compensation levels 5.75% 4.25%
Expected long-term rate of return on
plan assets 8.50% 8.25%
Postretirement Benefits Other Than Pensions
The corporation and certain of its consolidated subsidiaries provide health
care and life insurance benefits for eligible retired employees and their
eligible dependents. These benefits are provided through various insurance
companies and health care providers.
FAS 106 was adopted in the fourth quarter of 1992, effective Jan. 1,
1992, for U.S. and international employees. The standard requires employers to
account for retiree benefit obligations on an accrual basis rather than on a
"pay-as-you-go" basis. The cumulative effect of adopting FAS 106 as of Jan. 1,
1992, resulted in a charge of $360 million to 1992 earnings, net of $205
million of income taxes ($2.72 per share).
The obligation is determined by application of the terms of health and
life insurance plans, together with relevant actuarial assumptions and health
care cost trends that are projected to increase annually at rates of 13.5
percent in 1994, 12.5 percent in 1995, reduced incrementally to 7 percent in
2004 and thereafter.
The effect of a 1 percent annual increase in the assumed health care cost
trend rates would increase the accumulated postretirement benefits obligation
at Dec. 31, 1994, by $15 million and the aggregate of service and interest
cost components of net periodic postretirement benefit costs by $2 million.
Measurement of the accumulated postretirement benefit obligation was based on
the same assumptions used in the pension calculations referred to on page 33.
During 1993 the corporation made changes to its health care programs,
principally related to plan eligibility requirements for active employees.
These changes resulted in a reduction of the accumulated postretirement
benefit obligations.
The corporation has funded postretirement benefits for certain retirees
who retired prior to Dec. 31, 1988. The funds are invested primarily in common
stocks and fixed income securities.
The following tables provide information on the status of the plans.
The components of net periodic postretirement benefit cost are as
follows:
Millions of dollars 1994 1993 1992
Service cost-benefits
earned during
the period $ 12 $ 12 $ 11
Interest cost 32 32 42
Return on plan assets
(gain) loss
- Actual $ 1 $(5) $(3)
- Unrecognized return (3) (2) 3 (2) 1 (2)
Net amortization and
deferral (21) (21) -
Net Periodic
Postretirement
Benefit Cost $ 21 $ 21 $ 51
The status of the postretirement benefit obligation was as follows:
Millions of dollars at December 31, 1994 1993
Accumulated postretirement benefit
obligations:
Retirees $354 $347
Fully eligible active plan participants 78 88
Other active plan participants 20 23
Accumulated postretirement
benefit obligations $452 $458
Fair value of plan assets (19) (26)
Accumulated postretirement benefits
in excess of plan assets 433 432
Unrecognized gains - net 89 87
Accrued Unfunded Postretirement
Benefit Obligations $522 $519
The accumulated postretirement benefit obligation for retirees is net of
$130 million at Dec. 31, 1994 ($145 million at Dec. 31, 1993) related to all
retirees, which is reimbursed to the corporation in part from Praxair and UCAR
under benefit-sharing agreements.
Deferred Compensation Plan
During 1994 the board of directors approved an unfunded, nonqualified deferred
compensation plan for certain key employees, who may defer a portion of their
gross pay beginning Jan. 1, 1995. The corporation's obligation to employees
will be adjusted to reflect changes in the market values of employees'
investment choices. With limited exceptions, participants' deferred account
balances are scheduled for payment at or after full retirement.
Postemployment Benefits
The cumulative effect of adopting FAS 112 as of Jan. 1, 1993, resulted in a
$97 million after-tax charge to 1993 earnings ($0.64 per common share). FAS
112 requires that postemployment benefits expected to be paid before
retirement, principally severance, be accrued over employees' working lives.
This charge includes postemployment benefits based on normal year-to-year
attrition rates, giving effect to the corporation's cost reduction program as
of Jan. 1, 1993. Prior year financial statements were not restated.
15. Incentive Plans
In 1994 stockholders approved the 1994 Union Carbide Long-Term Incentive Plan
for key employees, which replaced the 1988 Union Carbide Long-Term Incentive
Plan. The new incentive plan, effective until the 1997 shareholders' meeting,
provides for granting incentive and nonqualified stock options, stock
appreciation rights, exercise payment rights, grants of stock, including
restricted stock, and performance awards. Holders of options may be granted
the right to receive payments of amounts equal to the regular cash dividends
paid to holders of the corporation's common stock during the period an option
is outstanding. The number of shares granted or subject to options cannot
exceed 7.5 million under the plan. Option prices are equal to the closing
price of the corporation's common stock on the date of the grant, as listed on
the New York Stock Exchange Composite Transactions. Options generally become
exercisable 2 years after such date. Options may not have a duration of more
than 10 years. Restricted stock award shares to be issued in 1995 will be
entitled to vote and dividends will be credited to the holder's account, but
these shares will be nontransferable for 3 years after the grant date. These
restricted stock awards and accumulated dividends are subject to forfeiture if
matching employee-owned stock on deposit with the corporation is withdrawn or
if other conditions are not met. Performance awards may be paid in common
stock, cash or any other form of property. No stock appreciation rights or
performance awards were granted in 1994.
No further awards can be made under either the 1988 or 1984 plan
programs. Options granted under both plans are still outstanding and have
terms similar to nonqualified stock options under the 1994 plan.
Changes during 1994 in outstanding shares under option were as follows:
Shares (in thousands)
1994 Total
Outstanding at January 1 14,112
Granted 1,930
Exercised (2,213)
Canceled or expired (22)
Outstanding at
December 31 13,807
Options outstanding at Dec. 31, 1994, ranged in price from $1.00 to
$28.625 per share with a weighted average price of $15.702 per share, as
adjusted for the distribution of Praxair stock in accordance with the terms of
the plan, for options outstanding prior to July 1, 1992. At Dec. 31, 1994, 6.5
million options were generally exercisable at prices ranging from $1.00 to
$11.368 per share, with a weighted average price of $9.089 per share. Options
were exercised during 1994 at prices ranging from $1.00 to $16.75 per share.
16. Commitments and Contingencies
Purchase Agreements - The corporation has 3 major agreements for the purchase
of ethylene-related products and 3 other purchase agreements in the U.S. and
Canada. The net present value of the fixed and determinable portion of
obligations under these purchase commitments at Dec. 31, 1994 (at current
exchange rates, where applicable) are presented in the following table.
Millions of dollars
1995 $ 80
1996 71
1997 61
1998 54
1999 47
2000 to expiration of contracts 132
Total $445
Environmental - The corporation is subject to loss contingencies resulting
from environmental laws and regulations, which include obligations to remove
or mitigate the effects on the environment of the disposal or release of
certain wastes and substances at various sites. The corporation has
established accruals for those hazardous waste sites where it is probable that
a loss has been incurred and the amount of the loss can reasonably be
estimated. The reliability and precision of the loss estimates are affected by
numerous factors, such as different stages of site evaluation, the allocation
of responsibility among potentially responsible parties and the assertion of
additional claims. The corporation adjusts its accruals as new remediation
requirements are defined, as information becomes available permitting
reasonable estimates to be made, and to reflect new and changing facts.
At Dec. 31, 1994, the corporation had established environmental
remediation accruals in the amount of $297 million ($265 million in 1993), of
which $235 million is classified as Other long-term obligations ($214 million
in 1993). Approximately 46 percent of the corporation's environmental accrual
at Dec. 31, 1994, pertained to closure and postclosure costs for both
operating and closed facilities. In addition, the corporation had
environmental loss contingencies of $147 million at Dec. 31, 1994 ($115
million at Dec. 31, 1993).
Other - The corporation sold certain receivables with recourse to various
banks for proceeds of $101 million in 1994 ($270 million in 1993). At Dec. 31,
1994, approximately $11 million remained due ($47 million in 1993). The fair
value of the recourse provisions at Dec. 31, 1994, approximates the carrying
value.
The corporation and its consolidated subsidiaries had additional
contingent obligations at Dec. 31, 1994, totaling $83 million, of which $35
million related to guarantees of debt.
Litigation - The corporation's stock in Union Carbide India Limited (UCIL) has
been sold for the Indian rupee equivalent of $92 million. Of that amount the
equivalent of approximately $15 million went to The Bhopal Hospital Trust,
which, with other funding from unremitted dividends and UCIL, discharged the
corporation's and UCIL's commitment for funding, in the amount of
approximately $19 million, a hospital to be built in Bhopal by the Government
of India. The remainder of the proceeds of the sale of the stock, after
payment of certain expenses of the transaction, is subject to attachment in
the pending criminal proceedings against the corporation in Bhopal, in which
the corporation has not appeared. The corporation had earlier reduced the
carrying value of its stock in UCIL to zero. In the opinion of counsel for the
corporation, under generally recognized legal principles, the criminal
proceedings in India should not have adverse financial consequences for the
corporation outside of India.
The corporation provisionally joined a multibillion-dollar silicone
breast implant litigation settlement agreement. Union Carbide's contribution
to the settlement will be $138 million over the next several years. The
corporation has previously taken before-tax charges aggregating $35 million
for this litigation. Although insurance coverage is subject to issues as to
scope and application of policies, retention limits, exclusions and policy
limits, and the insurers have reserved their right to deny coverage, the
corporation believes that after probable insurance recoveries neither the
settlement nor ongoing litigation outside the settlement will have a material
adverse effect on the consolidated financial position of the corporation. The
corporation was not a manufacturer of breast implants but did supply generic
bulk silicone materials to the industry. Also, in 1990 the corporation
acquired and in 1992 divested the stock of a small specialty silicones company
which, among other things, supplied silicone gel intermediates and silicone
dispersions for breast implants.
The settlement has been approved by the United States District Court,
Northern District of Alabama. A number of appeals have been filed that will
delay implementation and might require settlement terms to be reconsidered.
Both the corporation and the other companies which are parties to the
agreement have the right to withdraw from the settlement if, among other
factors, in their individual judgment, there are too few recipients of breast
implants covered by the final settlement.
In addition, the corporation and its consolidated subsidiaries are
involved in a number of legal proceedings and claims with both private and
governmental parties. These cover a wide range of matters, including, but not
limited to: product liability; governmental regulatory proceedings; health,
safety and environmental matters; employment; patents; contracts; and taxes.
In some of these legal proceedings and claims, the cost of remedies that may
be sought or damages claimed is substantial.
While it is impossible at this time to determine with certainty the
ultimate outcome of any legal proceedings and claims referred to in this note,
management believes that adequate provisions have been made for probable
losses with respect thereto and that such ultimate outcome, after provisions
therefor, will not have a material adverse effect on the consolidated
financial position of the corporation but could have a material effect on
consolidated results of operations in a given quarter or year. Should any
losses be sustained in connection with any of such legal proceedings and
claims in excess of provisions therefor, they will be charged to income in the
future.
17. Subsequent Events
The corporation regularly reviews its assets with the objective of maximizing
the deployment of resources in core operations. In this regard, UCC continues
to consider strategies and/or transactions with respect to certain noncore
assets and other assets not essential to the operation of the business that,
if implemented, could result in material nonrecurring gains or losses. As part
of this process, on Jan. 26, 1995, the corporation and Mitsubishi Corporation
reached an agreement for the sale of newly issued common stock of UCAR
International Inc. to a new company formed by Blackstone Capital Partners II
Merchant Banking Fund L.P. and a repurchase of certain shares by UCAR that
resulted in Blackstone acquiring a 75 percent interest in UCAR. The
corporation received $347 million in cash proceeds and retained a 25 percent
equity interest in UCAR. This transaction resulted in a nonrecurring material
gain to be recorded in the first quarter of 1995 and essentially eliminates
the corporation's share of ongoing future earnings from UCAR.
On Feb. 1, 1995, the corporation purchased certain ethylene oxide
derivative businesses from Imperial Chemical Industries of London.
On Feb. 9, 1995, the corporation and EniChem of Milan, Italy, announced
that their boards of directors had approved the formation of Polimeri Europa,
S.r.l., a 50-50 joint venture company to produce and market polyethylene in
Europe. The formation is subject to the approval of the European Union.
Management's Statement of Responsibility for Financial Statements
Union Carbide Corporation's financial statements are prepared by management,
which is responsible for their fairness, integrity and objectivity. The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles and, accordingly, include amounts
that are estimates and judgments. All historical financial information in this
annual report is consistent with the accompanying financial statements.
The corporation maintains accounting systems, including internal
accounting controls monitored by a staff of internal auditors, that are
designed to provide reasonable assurance of the reliability of financial
records and the protection of assets. The concept of reasonable assurance is
based on recognition that the cost of a system must not exceed the related
benefits. The effectiveness of those systems depends primarily upon the
careful selection of financial and other managers, clear delegation of
authority and assignment of accountability, inculcation of high business
ethics and conflict-of-interest standards, policies and procedures for
coordinating the management of corporate resources and the leadership and
commitment of top management.
The corporation's financial statements are audited by KPMG Peat Marwick
LLP, independent certified public accountants, in accordance with generally
accepted auditing standards. These standards provide for the auditors to
consider the corporation's internal control structure to the extent they deem
necessary in order to issue their opinion on the financial statements.
The Audit Committee of the board of directors, which consists solely of
nonemployee directors, is responsible for overseeing the functioning of the
accounting system and related controls and the preparation of annual financial
statements. The Audit Committee recommends to the board of directors the
selection of the independent auditors, subject to the approval of
stockholders. The Audit Committee periodically meets with the independent
auditors, management and internal auditors to review and evaluate their
accounting, auditing and financial reporting activities and responsibilities.
The independent and internal auditors have full and free access to the Audit
Committee and meet with the committee, with and without management present.
Robert D. Kennedy John K. Wulff
Chairman and Vice President, Controller and
Chief Executive Officer Principal Accounting Officer
Danbury, Conn.
Jan. 19, 1995
Independent Auditors' Report
To the Stockholders and Board of Directors of Union Carbide Corporation:
We have audited the accompanying consolidated balance sheet of Union Carbide
Corporation and subsidiaries as of Dec. 31, 1994 and 1993, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the years in the three-year period ended Dec. 31, 1994. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Union
Carbide Corporation and subsidiaries at Dec. 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended Dec. 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993
the company changed its method of accounting for postemployment benefits and
in 1992 its methods of accounting for postretirement benefits other than
pensions and income taxes.
KPMG Peat Marwick LLP
Stamford, Conn.
Jan. 19, 1995
Corporate Information
1995 Annual Meeting
The 1995 annual meeting of stockholders will be held on Wednesday, April 26,
in the Grand Ballroom of the Danbury Hilton and Towers, 18 Old Ridgebury Road,
Danbury, CT 06810, beginning at 8:30 A.M.
A notice of the annual meeting, a proxy statement and a proxy voting card
are mailed to each stockholder in March, together with a copy of the current
annual report.
General Offices
The general offices of Union Carbide Corporation are located at 39 Old
Ridgebury Road, Danbury, CT 06817-0001 (Telephone: 203-794-2000).
Inquiries from the public about Union Carbide and its products and
services should be directed to the Corporate Information Center, Union Carbide
Corporation, Section N-0, 39 Old Ridgebury Road, Danbury, CT 06817-0001
(Telephone: 203-794-5300).
Stock Exchanges
Union Carbide stock is traded primarily on the New York Stock Exchange (ticker
symbol: UK). The stock is also listed on the Chicago and Pacific Stock
Exchanges in the U.S., and overseas on the exchanges in Amsterdam, Basel,
Brussels, Frankfurt, Geneva, Lausanne, London, Paris and Zurich.
Stockholder Inquiries
Inquiries about stockholder accounts and dividend reinvestment should be
directed to Union Carbide Corporation, William H. Smith, manager, Shareholder
Services Department, Section G-1328, 39 Old Ridgebury Road, Danbury, CT 06817-
0001 (Telephone: 203-794-3350).
Stock Records and Transfer
The corporation acts as its own stock transfer agent through Shareholder
Services, which also maintains stockholder records, transfers stock and
answers questions regarding stockholders' accounts, including dividend
reinvestment accounts. Stockholders wishing to transfer stock to someone else
or to change the name on a stock certificate should contact Shareholder
Services for assistance. The Registrar is Chemical Bank.
Dividend Reinvestment
Stockholders of record may purchase shares directly through Union Carbide's
Dividend Reinvestment and Stock Purchase Plan. Under the plan, shares may be
purchased from UCC free of commissions and service charges.
Requests for a prospectus that explains the plan in detail should be
directed to Shareholder Services (Telephone: 800-934-3350).
Form 10-K/Charitable Contributions Booklet
A Form 10-K Report for the year ended Dec. 31, 1994, will be available in
April 1995. A copy without exhibits may be obtained without charge by writing
to Union Carbide Corporation, Joseph E. Geoghan, secretary, Section E-4, 39
Old Ridgebury Road, Danbury, CT 06817-0001.
Union Carbide annually publishes a booklet that lists organizations
receiving charitable, educational, cultural or similar grants of $500 or more.
The booklet is available to any stockholder on written request to the
secretary.
RESPONSIBLE CARE Progress Report
This reports covers health, safety and environmental progress at Union
Carbide. Information includes performance data for U.S. and international
locations, goals, and progress toward full implementation of RESPONSIBLE CARE
management practices in the U.S. To obtain a copy, write to Union Carbide
Corporation, Scott L. Brier, business communications manager, Public Affairs
Department, Section L-4503, 39 Old Ridgebury Road, Danbury, CT 06817-0001
(Telephone: 203-794-7011).
Inquiries
Institutional investors, financial analysts and portfolio managers should
direct questions about Union Carbide to Union Carbide Corporation, D. Nicholas
Thold, director of investor relations, Investor Relations Department, Section
E-4286, 39 Old Ridgebury Road, Danbury, CT 06817-0001 (Telephone 203-794-
6440).
Financial journalists should direct questions to Union Carbide
Corporation, Tomm F. Sprick, assistant manager, financial communications,
Public Affairs Department, Section L-4505, 39 Old Ridgebury Road, Danbury, CT
06817-0001 (Telephone: 203-794-6992).
Directors
John J. Creedon is retired president and chief executive officer of
Metropolitan Life Insurance Company. A Carbide director since 1984, he chairs
the Audit Committee and serves on the Compensation & Management Development,
Executive and Health, Safety and Environmental Affairs (HS&EA) Committees.
C. Fred Fetterolf is a retired director, president and chief operating officer
of Aluminum Company of America. A UCC director since 1987, he chairs the HS&EA
Committee and serves on the Audit, Compensation & Management Development and
Nominating Committees.
Joseph E. Geoghan is vice-president, general counsel and secretary of Union
Carbide, and has been a director since 1990. He serves on the Executive and
Public Policy Committees.
Rainer E. Gut is chairman of Credit Suisse and CS Holding, Zurich,
Switzerland. A UCC board member since 1994, he is a member of the Finance &
Pension and Nominating Committees.
James M. Hester is president of The Harry Frank Guggenheim Foundation. A
director since 1963, he is chairman of the Public Policy Committee and serves
on the Audit, Executive and Nominating Committees.
Vernon E. Jordan, Jr. is a partner with Akin, Gump, Strauss, Hauer & Feld. He
is chairman of the Nominating Committee and a member of the Compensation &
Management Development, Finance & Pension and Public Policy Committees. He has
been a board member since 1987.
William H. Joyce is president and chief operating officer of Union Carbide
Corporation. He serves on the Executive and Finance & Pension Committees and
has been a director since 1992.
Robert D. Kennedy is chairman and chief executive officer of Union Carbide
Corporation and has been a director since 1985. He is chairman of the
Executive Committee.
Ronald L. Kuehn, Jr. is a director and chairman, president and chief executive
officer of Sonat, Inc. A UCC board member since 1984, he chairs the
Compensation & Management Development Committee and serves on the Finance &
Pension, HS&EA and Nominating Committees.
C. Peter McColough is a director and retired chairman of the board of Xerox
Corporation. He has been a Carbide director since 1979 and is a member of the
Compensation & Management Development, Executive, HS&EA and Public Policy
Committees.
Rozanne L. Ridgway is co-chair of the Atlantic Council of the United States.
Appointed to the board in 1990, she is a member of the Audit, HS&EA,
Nominating and Public Policy Committees.
William S. Sneath is a director of various corporations and retired chairman
and chief executive officer of Union Carbide Corporation. He chairs the
Finance & Pension Committee and serves on the Executive, HS&EA and Nominating
Committees. He has been a director since 1969.
In accordance with the board's retirement policy, Mr. McColough, who has
served on the board with distinction for more than 15 years, will not stand
for reelection.
Corporate Officers
Robert D. Kennedy
Chairman of the Board and Chief Executive Officer
William H. Joyce
President and Chief Operating Officer
Joseph S. Byck
Vice-President, Strategic Planning, Investor Relations and Public Affairs
James F. Flynn
Vice-President, General Manager, Solvents and Intermediates
Joseph E. Geoghan
Vice-President, General Counsel and Secretary
Thomas D. Jones
Vice-President and Treasurer
Malcolm A. Kessinger
Vice-President, Human Resources
Lee P. McMaster
Vice-President, General Manager, Ethylene Oxide/Glycol
Gilbert E. Playford
Vice-President and Principal Financial Officer
Joseph C. Soviero
Vice-President, Corporate Ventures and Purchasing
Roger B. Staub
Vice-President, General Manager, UNIPOL Systems
Ronald Van Mynen
Vice-President, Health, Safety and Environment
Philip T. Wright
Vice-President, General Manager, UNIPOL Polymers
John K. Wulff
Vice-President, Controller and Principal Accounting Officer
Other Senior Corporate Staff
David L. Brucker
Vice-President, Engineering and Operations
John L. Gigerich
Vice-President, Information Systems
William Lindner
Vice-President, Purchasing
Philip F. McGovern
Vice-President, Tax
John P. Yimoyines
Vice-President, Venture Management
A Chemical Glossary
Monomer - a reactive chemical that can be converted into a polymer. For
example, ethylene is a monomer that is made into polyethylene.
Polymer - a chain or network made up of many monomer units, such as ethylene.
All plastics are polymers.
Ethylene - a reactive chemical made from natural gas or crude oil components.
In Carbide's olefins units, ethylene is the starting material from which many
of the company's chemical products are made.
Propylene - a basic chemical made from crude oil or natural gas components. It
is used as a starting material to produce many of Carbide's chemical products.
Olefins - the generic name for ethylene, propylene and other unsaturated
hydrocarbons made from components of crude oil or natural gas. Olefins are the
starting material from which most of Union Carbide's chemical products are
made.
Ethylene Oxide - a chemical made from ethylene and oxygen. It combines with
other chemicals to produce a wide range of products, such as ethylene glycol,
and surfactants for detergents and cleaning products.
Ethylene Glycol - a chemical made from ethylene oxide and water. It is used to
make polyester fiber, resin and film, and automobile antifreeze and engine
coolants.
Polyethylene - the world's most widely used plastic, made by reacting ethylene
and other olefins to form polymers. Union Carbide uses its low-pressure UNIPOL
Process technology to make most of its polyethylene.
Solvent - a liquid chemical used to dissolve other chemicals. For example,
butyl alcohol and related solvents are manufactured, starting from propylene,
using Union Carbide's low-pressure Oxo process.
Definition of Terms
Unless the context otherwise requires, the terms below refer to the following:
Union Carbide Corporation, Union Carbide Corporation,
Union Carbide, Carbide, the parent company, and its
the corporation, we, our consolidated subsidiaries
the company, UCC
Domestic United States and Puerto Rico
Domestic operations Operations of Union Carbide in
this area, including exports
International operations Operations of Union Carbide in
areas of the world other than
the United States and Puerto
Rico
The use of these terms is for convenience of reference only. The consolidated
subsidiaries are separate legal entities that are managed by, and accountable
to, their respective boards of directors.
EXHIBIT 10.31
EXECUTION COPY
RECAPITALIZATION AND STOCK PURCHASE AND SALE AGREEMENT
dated as of November 14, 1994
among
UNION CARBIDE CORPORATION,
MITSUBISHI CORPORATION,
UCAR INTERNATIONAL INC.,
AND
UCAR INTERNATIONAL ACQUISITION INC.
TABLE OF CONTENTS
Page
TITLE...........................................................1
RECITALS........................................................1
ARTICLE 1 - PURCHASE AND SALE OF SHARES; RECAPITALIZATION;
CLOSING............................................2
1.1 Purchase and Sale of Shares; Recapitalization.........2
1.2 Closing...............................................3
1.3 Payments..............................................6
1.4 Closing Deliveries....................................6
1.5 Recapitalization Price Adjustment.....................9
1.6 Termination of Agreements on Closing Date............11
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES REGARDING BUYER....13
2.1 Organization.........................................13
2.2 Authorization........................................13
2.3 No Breach............................................13
2.4 Consents.............................................14
2.5 Purchase for Investment..............................15
2.6 Investigation by Buyer...............................15
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES REGARDING UNION
CARBIDE...........................................15
3.1 Organization.........................................15
3.2 Authorization........................................15
3.3 No Breach............................................16
3.4 Consents.............................................17
3.5 Ownership of Capital Stock...........................17
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES REGARDING
MITSUBISHI........................................17
4.1 Organization.........................................17
4.2 Authorization........................................17
4.3 No Breach............................................18
4.4 Consents.............................................19
4.5 Ownership of Capital Stock...........................19
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES REGARDING UCAR.....19
5.1 Organization.........................................19
5.2 Authorization........................................20
5.3 No Breach............................................20
5.4 Consents.............................................22
5.5 Organizational Instruments...........................22
5.6 Capital Stock........................................23
5.7 Subsidiaries.........................................24
5.8 Financial Statements.................................25
5.9 Tax Matters..........................................26
5.10 Real Property........................................28
5.11 Owned Personal Property..............................30
5.12 Title to Owned Properties............................30
5.13 Contracts; Leases; Licenses..........................31
5.14 Performance of Contracts, Leases and Licenses........33
5.15 Compliance with Laws.................................34
5.16 Permits; Licenses....................................35
5.17 Environmental Conditions.............................35
5.18 Litigation; Claims; Proceedings......................42
5.19 Patents; Technology..................................43
5.20 Trademarks; Copyrights...............................45
5.21 Human Resources......................................46
5.22 Business Operations..................................51
5.23 Health and Safety Conditions.........................52
5.24 Insurance............................................53
5.25 Liabilities..........................................53
5.26 Entire Business......................................54
5.27 Full Disclosure......................................54
5.28 Limitation on Representations........................55
5.29 Receivables..........................................55
5.30 Limitations on Representations.......................56
ARTICLE 6 - PRE-CLOSING COVENANTS.............................56
6.1 Conduct By Buyer.....................................56
6.2 Conduct by Stockholders and UCAR.....................57
6.3 Conduct of the Business..............................59
6.4 Filings and Consents.................................61
6.5 Fulfillment of Conditions............................62
6.6 Supplemental Disclosure..............................63
6.7 Limitation of Stockholders' Liabilities..............63
6.8 Tax Certificate......................................64
ARTICLE 7 - BUYER'S CONDITIONS TO CLOSING.....................64
ARTICLE 8 - STOCKHOLDERS' AND UCAR'S CONDITIONS TO CLOSING....66
ARTICLE 9 - EFFECTIVENESS; TERMINATION; SURVIVAL OF AGREEMENT.68
9.1 Effectiveness........................................68
9.2 Termination..........................................68
9.3 Survival after Termination...........................69
ARTICLE 10 - TAX MATTERS; POST-CLOSING COVENANTS..............70
10.1 Transactional Taxes and Costs........................70
10.2 Records Retained by Stockholders.....................71
10.3 Access by Stockholders...............................73
10.4 Preservation of Records..............................73
10.5 Agreement Not To Compete.............................74
ARTICLE 11 - EMPLOYEES AND BENEFITS...........................77
ARTICLE 12 - SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.....79
12.1 Survival of Representations and Covenants of Buyer...79
12.2 Survival of Representations and Covenants of Union
Carbide..............................................80
12.3 Survival of Representations and Covenants of
Mitsubishi...........................................81
12.4 Indemnification by Buyer.............................82
12.5 Indemnification by Stockholders......................83
12.6 Indemnification by UCAR..............................87
12.7 Indemnification Procedure............................88
ARTICLE 13 - PUBLICITY; CONFIDENTIALITY.......................93
13.1 Publicity............................................93
13.2 Confidentiality......................................94
13.3 Survival.............................................96
ARTICLE 14 - NOTICES..........................................96
ARTICLE 15 - BROKERAGE FEES; CERTAIN EXPENSES.................98
15.1 Brokerage Fees.......................................98
15.2 Certain Expenses.....................................98
ARTICLE 16 - GOVERNING LAW; FORUM.............................99
ARTICLE 17 - BINDING EFFECT; ASSIGNMENT; THIRD PARTY
BENEFICIARIES....................................99
ARTICLE 18 - ENTIRE AGREEMENT................................100
ARTICLE 19 - FURTHER ASSURANCES..............................101
ARTICLE 20 - AMENDMENTS......................................101
ARTICLE 21 - WAIVERS.........................................102
ARTICLE 22 - REMEDIES LIMITED................................103
ARTICLE 23 - HEADINGS; COUNTERPARTS..........................103
ARTICLE 24 - SEVERABILITY....................................104
ARTICLE 25 - CERTAIN REFERENCES..............................104
25.1 Affiliate...........................................104
25.2 Knowledge...........................................105
25.3 Person..............................................105
ARTICLE 26 - INDEX TO DEFINED TERMS..........................105
EXHIBITS
Exhibit A Stockholders' Agreement
*Exhibit B Amended and Restated Certificate of
Incorporation of UCAR
*Exhibit C Amended and Restated By-Laws of UCAR
[Note: With respect to the Certificate of Incorporation and
By-Laws of UCAR, the only changes that will be made relate to
eliminating the class of common stock currently held by
Mitsubishi, and specifying an authorized number of shares of
common stock, which would result in the only unissued shares being
those reserved for issuance to management.]
* To be appended after execution of the Agreement.
UCC will furnish to the Commission supplementally on request
a copy of the above Exhibits which have been omitted.
DISCLOSURE SCHEDULES
I SUBSIDIARIES AND AFFILIATES
II FINANCIAL STATEMENTS; CERTAIN TAX MATTERS
III REAL PROPERTY
IV CONTRACTS
V PERMITS & LICENSES
VI ENVIRONMENTAL CONDITIONS
VII LITIGATION, CLAIMS & PROCEEDINGS
VIII PATENTS
IX TRADEMARKS & COPYRIGHTS
X EMPLOYEES
XI EMPLOYEE BENEFIT PLANS
XII HEALTH AND SAFETY CONDITIONS
XIII INSURANCE
XIV CONSENTS
XV LIENS
XVI BUSINESS OPERATIONS, CAPITAL EXPENDITURES AND OTHER
MATTERS
XVII INTERNATIONAL EMPLOYEE BENEFIT MATTERS
UCC will furnish to the Commission supplementally on request a
copy of the above Disclosure Schedules which have been ommitted.
RECAPITALIZATION AND STOCK PURCHASE AND SALE AGREEMENT (the
"Agreement") dated as of November 14, 1994 among UNION CARBIDE
CORPORATION, a corporation validly existing under the laws of New
York ("Union Carbide"), MITSUBISHI CORPORATION, a corporation
validly existing under the laws of Japan ("Mitsubishi"), UCAR
INTERNATIONAL INC., a corporation validly existing under the laws
of Delaware ("UCAR"), and UCAR INTERNATIONAL ACQUISITION INC., a
corporation validly existing under the laws of Delaware ("Buyer"),
W I T N E S S E T H:
WHEREAS, Union Carbide and Mitsubishi (collectively,
"Stockholders") own all of the issued and outstanding shares of
capital stock of UCAR (the "Capital Stock");
WHEREAS, UCAR is engaged in the development, manufacture,
marketing, use, sale, distribution and servicing of carbon and
graphite products, components and systems for furnaces, and
related products and equipment throughout the world (the
"Business"); and
WHEREAS, UCAR desires to issue and sell to Buyer, and Buyer
desires to purchase from UCAR, newly issued shares of the Capital
Stock on the terms and subject to the conditions set forth herein;
WHEREAS, in connection with such sale of Capital Stock to
Buyer, Union Carbide, Mitsubishi, Buyer and UCAR (collectively,
the "Parties" and, sometimes individually, a "Party") desire to
recapitalize UCAR by virtue of extensions of credit to UCAR and
its Subsidiaries (as hereinafter defined in Article 5.3 hereof)
and to effect certain related transactions as more fully set forth
herein;
WHEREAS, the Parties desire to utilize the proceeds from such
extensions of credit and such sale of Capital Stock to Buyer to
(i) repay or redeem certain outstanding indebtedness of UCAR and
its Subsidiaries, (ii) redeem all of the Capital Stock currently
held by Mitsubishi, and (iii) pay a cash dividend to Union
Carbide, in each case as more fully set forth herein;
NOW, THEREFORE, in consideration of the premises,
representations and warranties and the mutual covenants and
agreements contained herein and other good, valuable and
sufficient consideration, the receipt of which is hereby
acknowledged, each of the Parties, intending to be legally bound,
hereby agrees as follows:
ARTICLE 1 - PURCHASE AND SALE OF SHARES; RECAPITALIZATION; CLOSING
1.1 Purchase and Sale of Shares; Recapitalization.
(a) Subject to the terms and conditions set forth
herein, at the Closing (as defined in Article 1.2 hereof), UCAR
shall issue, sell and deliver to Buyer, and Buyer shall purchase
and accept from UCAR, seven hundred fifty (750)1 shares of common
__________________
1 Based upon 1,000 shares to be outstanding following the Closing,
the actual number to be determined.
stock, $1.00 par value, of UCAR (the "Acquired Shares"), free and
clear of all preemptive rights, liens, claims and encumbrances
(the "Acquisition"). In consideration for the Acquired Shares,
Buyer will pay UCAR in cash an aggregate purchase price of not
less than one hundred ninety-five million U.S. dollars
($195,000,000) and not more than two hundred two million five
hundred thousand U.S. dollars ($202,500,000), as determined by the
Buyer (the "Purchase Price").
(b) Subject to the terms and conditions set forth
herein, at the Closing the Stockholders shall cause UCAR and its
Subsidiaries to collectively borrow (the "Borrowings"), and Buyer
shall cause certain providers of financing (the "Lenders") to
collectively lend to UCAR and its Subsidiaries with respect to
such Borrowings, such amount so that, when taken together with the
Purchase Price and other cash available to UCAR and its
Subsidiaries, UCAR has sufficient cash at the Closing (net of any
fees, expenses or other costs required to be paid by UCAR in
connection with the Transactions (as defined below)) to (i) repay
or redeem certain indebtedness of UCAR and its Subsidiaries (the
"Repayment"), (ii) redeem (the "Redemption") the two hundred fifty
(250) shares of Class A Common Stock currently held by Mitsubishi
(the "Redeemed Shares") and (iii) pay a cash dividend (the
"Dividend") to Union Carbide. The aggregate amount of the price
to be paid for the Redeemed Shares (the "Redemption Price") and
the Dividend shall be equal to eight hundred twenty million U.S.
dollars ($820,000,000) minus one-third of the Purchase Price (the
"Recapitalization Amount"), subject to adjustment as provided in
Article 1.5. The Acquisition, the Borrowings, the Repayment, the
Redemption, the Dividend and the other transactions contemplated
hereby are collectively referred to herein as the "Transactions."
1.2 Closing.
(a) The closing of the Transactions (the "Closing")
shall take place at the offices of Union Carbide located at 39 Old
Ridgebury Road, Danbury, Connecticut or such other place as the
Parties may mutually agree (the "Closing Place") on the day (the
"Closing Date") which is the fifth day following the satisfaction
or waiver by the affected Party of each condition to the
obligations of the Parties to this Agreement set forth in
Articles 7 and 8; provided, however, that Buyer shall have the
right to defer the Closing to not later than January 31, 1995 (the
"Deferral Date") if there have not previously been sold not less
than $375,000,000 of senior subordinated securities of UCAR or a
new subsidiary of UCAR to be incorporated under the laws of a
state in the United States (the "New Non-Foreign Subsidiary");
provided further that, the Deferral Date shall be December 29,
1994, if Chemical Bank agrees to such date. Subject to
completion, the Closing shall be deemed to have been consummated
and become effective for all purposes as of 12:01 AM New York time
on the Closing Date; provided, that to the extent necessary or
desirable, any Borrowing relating to a Subsidiary whose
jurisdiction of organization is (i) outside of the United States
or (ii) Puerto Rico (a "Foreign Subsidiary") may be closed at a
location in such jurisdiction; provided, further, that such
closings shall be considered part of the Closing for all purposes
hereof.
(b) At the Closing, the Stockholders shall cause
UCAR to take the following actions:
(i) UCAR and each of its Subsidiaries
(including in certain cases the New Foreign Subsidiaries
(as defined below)) shall consummate the Borrowings on such
terms and conditions as the Buyer shall determine in its
sole discretion;
(ii) UCAR shall (A) form such new
subsidiaries (the "New Foreign Subsidiaries") as are
necessary or desirable to consummate the Borrowings with
respect to any Foreign Subsidiary, and (B) cause each such
New Foreign Subsidiary to merge with or purchase the Foreign
Subsidiary whose jurisdiction of organization is the same as
that of the New Foreign Subsidiary;
(iii) UCAR shall, to the extent required by
any of the Lenders, (A) contribute or cause to be contributed
the capital stock of certain of its Subsidiaries (which may
include New Foreign Subsidiaries) to the New Non-Foreign
Subsidiary, and the New Non-Foreign Subsidiary shall
consummate certain Borrowings and otherwise serve as the
obligor on certain extensions of credit relating to certain
other Borrowings, (B) pledge the capital stock of the New
Non-Foreign Subsidiary and cause the New Non-Foreign
Subsidiary to pledge the capital stock of its subsidiaries
to such Lenders as collateral with respect to the
Borrowings, (C) pledge its assets and cause its
Subsidiaries (which may include the New Non-Foreign
Subsidiary) to pledge their respective assets to such
Lenders as collateral with respect to the Borrowings and
(D) to the extent consistent with applicable laws, cause
its Foreign Subsidiaries or New Foreign Subsidiaries to
guarantee certain obligations of certain other Subsidiaries;
(iv) UCAR shall repay all amounts outstanding
under (A) the $100,000,000 Credit Agreement, dated as of
September 15, 1994, by and among UCAR, Credit Suisse, as
Agent, and the Banks parties thereto, and (B) the $50,000,000
Credit Agreement, dated as of September 15, 1994 by and among
UCAR, Credit Suisse, as Agent, and the Banks parties thereto;
(v) UCAR shall redeem all of the outstanding
UCAR 7.88% Series A Senior Notes due June 1, 2004 and UCAR
8.18% Series B Senior Notes due June 1, 2009;
(vi) UCAR shall redeem the Redeemed Shares as
provided in Article 1.3 below and otherwise on the terms and
subject to the conditions set forth herein;
(vii) The Stockholders shall cause UCAR to
pay the Dividend as provided in Article 1.3 below and
otherwise on the terms and subject to the conditions set
forth herein;
(viii) UCAR shall, along with Union Carbide and
Buyer, enter into a Stockholders' Agreement in the form
attached hereto as Exhibit A;
(ix) UCAR shall amend and restate UCAR's
Certificate of Incorporation and By-laws in the forms
attached hereto as Exhibits B and C, respectively.
1.3 Payments. At the Closing, (a) Buyer shall pay the
Purchase Price to UCAR by wire transfer of immediately available
funds, and (b) immediately following the consummation of the
Borrowings and the Acquisition, and the receipt by UCAR of the
proceeds therefrom, UCAR shall pay to each of Union Carbide and
Mitsubishi, such portion of the Recapitalization Amount (net of
any applicable withholding taxes) as shall be mutually determined
by Union Carbide and Mitsubishi prior to the Closing Date by wire
transfer of immediately available funds. Prior to the Closing,
the Parties shall provide all necessary information as to the
accounts to which such payments shall be made.
1.4 Closing Deliveries.
(a) At the Closing, Stockholders shall each deliver
to Buyer or the Stockholders shall cause UCAR to deliver to Buyer,
as applicable:
(i) one (1) copy of the resolutions adopted
by the Boards of Directors of Union Carbide and Mitsubishi,
respectively, authorizing the Transactions certified by
appropriate authorized officers of Union Carbide and
Mitsubishi, respectively;
(ii) one (1) copy of the resolutions adopted
by the Board of Directors of UCAR authorizing the
Transactions, certified by the Secretary or an Assistant
Secretary of UCAR;
(iii) evidence of the action taken by the
Stockholders as the sole holders of Capital Stock authorizing
the Transactions, certified by the Secretary or an Assistant
Secretary of UCAR;
(iv) one (1) copy of the resolutions adopted
by the Board of Directors of each of the Subsidiaries
authorizing, to the extent required, any of the Transactions,
in each case certified by an appropriate authorized officer
of each of such Subsidiaries;
(v) evidence of the action taken by the
stockholder of each of the Subsidiaries authorizing, to the
extent required, any of the Transactions, in each case
certified by an appropriate authorized officer of each of
such Subsidiaries;
(vi) certificates to the effect of Articles
7(v) and 7(vi) hereof executed by appropriate authorized
officers of Union Carbide and Mitsubishi respectively;
(vii) the duly executed and sealed stock
certificates representing the Acquired Shares registered in
the name of the Buyer; and
(viii) resignations of all directors of UCAR
serving in office immediately prior to the Closing.
(b) At the Closing, Buyer shall deliver or cause to
be delivered to Union Carbide and Mitsubishi:
(i) one (1) copy of the resolutions adopted
by the Board of Directors (or equivalent) of Buyer
authorizing the Transactions certified by the Secretary or
an Assistant Secretary of Buyer;
(ii) a certificate to the effect of Articles
8(v) and 8(vi) hereof executed by an appropriate authorized
officer of Buyer; and
(iii) one (1) copy of the resolutions adopted
by the Board of Directors (or equivalent) of Blackstone
Capital Partners II Merchant Banking Fund L.P. and of
Blackstone Offshore Capital Partners II L.P. authorizing the
Guaranty provided herewith certified by the Secretary or an
Assistant Secretary (or equivalent Person) of each such
entity.
(c) At the Closing, Mitsubishi shall deliver to UCAR
the stock certificates representing the Redeemed Shares currently
owned by it duly endorsed in blank or accompanied by stock
transfer powers in proper form for transfer and duly endorsed in
blank and such certificates shall immediately be cancelled by
UCAR.
(d) At the Closing, each of the Parties shall
execute, deliver and acknowledge, or cause to be executed,
delivered and acknowledged, to the other Parties such certificates
and other documents related to the consummation of the
Transactions as may be reasonably requested by the other Parties.
1.5 Recapitalization Price Adjustment.
(a) The Recapitalization Amount shall be reduced for
all purposes hereof by an amount (the "Adjustment Amount") equal
to the greater of:
(i) the amount by which $194.2 million
exceeds Net Worth (as defined below); and
(ii) the amount by which Net Indebtedness
(as defined below) exceeds $256.3 million.
(b) For purposes of Article 1.5(a), "Net Worth"
shall mean, as of the Closing Date, the aggregate amount of all
assets of UCAR and its Subsidiaries on a consolidated basis less
the aggregate amount of all liabilities of UCAR and its
Subsidiaries on a consolidated basis, in each case, calculated in
a manner consistent with the basis and manner of preparation of
the Audited Financial Statements (as defined in Article 5.8(a)).
For purposes of Article 1.5(a), "Net Indebtedness" shall
mean, as of the Closing Date, the aggregate amount of all
indebtedness of UCAR and its Subsidiaries on a consolidated basis,
less cash and cash equivalents held by UCAR and its Subsidiaries
on a consolidated basis (excluding cash and cash equivalents held
by UCAR Carbon S.A.), in each case, calculated in a manner
consistent with the basis and manner of preparation of the Audited
Financial Statements.
For purposes of Article 1.5(a), (i) any accruals, expenses or
payments relating to the worker's compensation claim by Union
Carbide set forth on Schedule VII and (ii) the Borrowings and any
payments to be made as part of the Closing, shall be excluded in
the calculation of Net Worth or Net Indebtedness.
(c) Buyer shall provide Stockholders full access
during normal business hours to the books and records of Buyer and
its Affiliates (as defined in Article 25.1 hereof) pertaining to
UCAR and the Subsidiaries for the purpose of determining the
Adjustment Amount. Stockholders shall deliver to Buyer within
thirty (30) days following the Closing Date a statement (the
"Statement") setting forth the Adjustment Amount.
(d) Within thirty (30) days after delivery to the
Buyer of the Statement the Buyer shall notify the Stockholders of
any dispute of any item contained therein, which notice shall set
forth in reasonable detail the basis for such dispute (the "Notice
of Dispute"). If the Buyer fails to deliver to the Stockholders
any such Notice of Dispute within such thirty (30) day period, the
Statement shall be deemed to be final and binding.
(e) In the event that the Buyer timely delivers a
Notice of Dispute to the Stockholders of any dispute, the Buyer
and the Stockholders shall cooperate in good faith to resolve such
dispute as promptly as possible. If the Buyer and the
Stockholders are unable to resolve such dispute within ten (10)
days after delivery by the Buyer of the Notice of Dispute, such
dispute shall be submitted to and finally resolved by, within
thirty (30) days after submission, a nationally recognized firm of
accountants mutually agreeable to the Parties (the "Arbitrator"),
whose determination with respect to such dispute shall be final
and binding upon the Parties. Any expenses relating to the
engagement of the Arbitrator shall be shared equally by UCAR and
the Stockholders. The Statement shall be deemed final as modified
by the resolution of any dispute by the Buyer and the Stockholders
or by the Arbitrator.
(f) The Stockholders shall each pay to UCAR the
Adjustment Amount in such proportions as shall be mutually agreed
between the Stockholders at the Post-Closing referred to in
Article 1.5(g) hereof, in immediately available funds by wire
transfer to such account as Buyer shall specify prior to the date
of the Post-Closing.
(g) The closing of the transactions contemplated by
this Article 1.5 (the "Post-Closing") shall take place (i) if the
Buyer does not deliver a Notice of Dispute to the Stockholders
within the time period specified in Article 1.5(d) hereof, on the
fifth day after the expiration of such period, or (ii) if the
Buyer delivers a Notice of Dispute to the Stockholders within the
specified time period, on the fifth day after the final resolution
of any dispute detailed in such Notice of Dispute by the Buyer and
the Stockholders, or by the Arbitrator, as the case may be.
1.6 Termination of Agreements on Closing Date. The
following agreements shall be terminated at the Closing:
(i) The Stockholders Agreement dated as of
November 9, 1990;
(ii) Amendment to the Stockholders Agreement
dated as of May 27, 1993;
(iii) The Letter Agreement dated as of
November 9, 1990 entitled "Re: Stockholders Agreement";
(iv) The Letter Agreement dated as of
February 25, 1991 entitled "Re: Miscellaneous Issues";
(v) The Letter Agreement dated as of
February 25, 1991 entitled "Re: Project Atlas";
(vi) The Letter Agreement regarding "C&M"
dated September 4, 1992;
(vii) The Letter Agreement dated December 31,
1993 entitled "Re: Stockholders Agreement";
(viii) The Stockholders Agreement dated as of
December 31, 1993; and
(ix) Summary of Agreements agreed as of
October 8, 1992.
Upon such termination, notwithstanding any provisions
contained in the documents listed in subparagraphs (i) through
(ix) above (the "Documents") to the contrary, the consequent force
and effect of the Documents shall be nullified and none of the
provisions thereof shall survive the termination for any reason.
Notwithstanding anything contained herein to the contrary,
the Stockholders and their Affiliates who are parties to the
contracts indicated with an asterisk in Schedule IV (other than
the Documents) shall remain bound thereby after the Closing.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES REGARDING BUYER
Buyer represents and warrants as of the date hereof as
follows:
2.1 Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. Buyer has all corporate power and authority necessary to
(i) execute, deliver and perform its obligations under this
Agreement and (ii) consummate the Transactions.
2.2 Authorization. The execution and delivery by Buyer
of this Agreement, the performance by Buyer of its obligations
hereunder and the consummation by Buyer of the Transactions have
been duly authorized by all necessary corporate actions on the
part of Buyer. This Agreement constitutes a legal, valid and
binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except insofar as enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws which
may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
2.3 No Breach. The execution and delivery by Buyer of
this Agreement, the performance by Buyer of its obligations
hereunder and the consummation by Buyer of the Transactions will
not:
(i) conflict with, result in a violation of,
or constitute a default under, the Articles of Incorporation
or Bylaws (or comparable instruments) of Buyer, as amended to
date;
(ii) constitute a default under, result in a
violation or breach of, result in the cancellation or
termination of, accelerate the performance required under or
result in the creation of any lien, claim or encumbrance upon
any of the material properties of Buyer pursuant to any
material mortgage, guaranty, deed of trust, note, indenture,
bond, lease, agreement or other instrument to which Buyer is
a party or by which any of such properties is bound; or
(iii) result in a violation of or conflict
with any law, ordinance, rule or regulation or any order,
writ, judgment, award, edict or decree of any court of
competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of
competent jurisdiction applicable to Buyer or any of its
material properties, which default, breach, cancellation,
termination, acceleration, creation, violation or conflict
would have a Material Adverse Effect (as defined in
Article 5.1 as it would relate to Buyer) on the consummation
by Buyer of the Transactions.
2.4 Consents. Except as otherwise contemplated by
Article 6.4 hereof, no consent, approval, exemption or
authorization is required to be obtained from, no notice is
required to be given to and no filing is required to be made with
any third party (including, without limitation, governmental and
quasi-governmental agencies, authorities and instrumentalities of
competent jurisdiction) by Buyer, in order (i) for this Agreement
to constitute a legal, valid and binding obligation of Buyer or
(ii) to authorize or permit the consummation by Buyer of the
Transactions.
2.5 Purchase for Investment. Buyer is purchasing the
Acquired Shares for its own account and investment and not with a
view toward, or for resale in connection with any distribution
thereof.
2.6 Investigation by Buyer. Buyer has conducted its
own independent review and analysis of the business, operations,
technology, assets, liabilities, results of operations, financial
condition and prospects of the Business, UCAR and the Subsidiaries
and acknowledges that Stockholders have provided, caused to be
provided, made available to or caused to be made available to
Buyer the personnel, properties, premises and records of UCAR and
the Subsidiaries for this purpose; provided, that this Article 2.6
in no way limits the representation contained in Article 5.27.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES REGARDING UNION CARBIDE
Union Carbide represents and warrants as of the date hereof
as follows:
3.1 Organization. Union Carbide is a corporation duly
organized, validly existing and in good standing under the laws of
New York. Union Carbide has all corporate power and authority
necessary to (i) execute, deliver and perform its obligations
under this Agreement and (ii) consummate the Transactions.
3.2 Authorization. The execution and delivery by Union
Carbide of this Agreement, the performance by Union Carbide of its
obligations hereunder and the consummation by Union Carbide of the
Transactions have been duly authorized by all necessary corporate
actions on the part of Union Carbide. This Agreement constitutes
a legal, valid and binding obligation of Union Carbide,
enforceable against Union Carbide in accordance with its terms,
except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law).
3.3 No Breach. The execution and delivery by Union
Carbide of this Agreement, the performance by Union Carbide of its
obligations hereunder and the consummation by Union Carbide of the
Transactions will not:
(i) conflict with, result in a violation of,
or constitute a default under, the Certificate of
Incorporation or Bylaws of Union Carbide, each as amended to
date;
(ii) constitute a default under, result in a
violation or breach of, result in the cancellation or
termination of, accelerate the performance required under or
result in the creation of any lien, claim or encumbrance upon
any of the material properties of Union Carbide or the Class
B Common Stock (as defined in Article 5.6 hereof) pursuant to
any material mortgage, guaranty, deed of trust, note,
indenture, bond, lease, agreement or other instrument to
which Union Carbide is a party or by which any of such
properties or the Class B Common Stock is bound; or
(iii) result in a violation of or conflict
with any law, ordinance, rule or regulation or any order,
writ, judgment, award, edict or decree of any court of
competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of
competent jurisdiction applicable to Union Carbide or any of
its material properties or the Class B Common Stock, which
default, breach, cancellation, termination, acceleration,
creation, violation or conflict would have a material adverse
effect on the consummation by Union Carbide of the
Transactions.
3.4 Consents. Except as otherwise contemplated by
Article 6.4 hereof, or as set forth in Schedule XIV attached
hereto, no consent, approval, exemption or authorization is
required to be obtained from, no notice is required to be given to
and no filing is required to be made with any third party
(including, without limitation, governmental and quasi-
governmental agencies, authorities and instrumentalities of
competent jurisdiction) by Union Carbide in order (i) for this
Agreement to constitute a legal, valid and binding obligation of
Union Carbide or (ii) to authorize or permit the consummation by
Union Carbide of the Transactions.
3.5 Ownership of Capital Stock. All of the issued and
outstanding shares of Class B Common Stock are owned by Union
Carbide, free and clear of all preemptive rights, liens, claims
and encumbrances other than restrictions on transfer under federal
and state securities laws.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES REGARDING MITSUBISHI
Mitsubishi represents and warrants as of the date hereof as
follows:
4.1 Organization. Mitsubishi is a corporation duly
organized and validly existing under the laws of Japan.
Mitsubishi has all corporate power and authority necessary to (i)
execute, deliver and perform its obligations under this Agreement
and (ii) consummate the Transactions.
4.2 Authorization. The execution and delivery by
Mitsubishi of this Agreement, the performance by Mitsubishi of its
obligations hereunder and the consummation by Mitsubishi of the
Transactions have been duly authorized by all necessary corporate
actions on the part of Mitsubishi. This Agreement constitutes a
legal, valid and binding obligation of Mitsubishi, enforceable
against Mitsubishi in accordance with its terms, except insofar as
enforceability may be limited by bankruptcy, insolvency,
moratorium or other laws which may affect creditors' rights and
remedies generally and by principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or
at law).
4.3 No Breach. The execution and delivery by
Mitsubishi of this Agreement, the performance by Mitsubishi of its
obligations hereunder and the consummation by Mitsubishi of the
Transactions will not:
(i) conflict with, result in a violation of,
or constitute a default under, the Articles of Incorporation
of Mitsubishi, as amended to date;
(ii) constitute a default under, result in a
violation or breach of, result in the cancellation or
termination of, accelerate the performance required under or
result in the creation of any lien, claim or encumbrance upon
any of the material properties of Mitsubishi or the Class A
Common Stock (as defined in Article 5.6 hereof) pursuant to
any material mortgage, guaranty, deed of trust, note,
indenture, bond, lease, agreement or other instrument to
which Mitsubishi is a party or by which any of such
properties or the Class A Common Stock is bound; or
(iii) result in a violation of or conflict
with any law, ordinance, rule or regulation or any order,
writ, judgment, award, edict or decree of any court of
competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of
competent jurisdiction applicable to Mitsubishi or any of its
material properties or the Class A Common Stock, which
default, breach, cancellation, termination, acceleration,
creation, violation or conflict would have a material adverse
effect on the consummation by Mitsubishi of the Transactions.
4.4 Consents. Except as otherwise contemplated by
Article 6.4 hereof, or as set forth in Schedule XIV hereto, no
consent, approval, exemption or authorization is required to be
obtained from, no notice is required to be given to and no filing
is required to be made with any third party (including, without
limitation, governmental and quasi-governmental agencies,
authorities and instrumentalities of competent jurisdiction) by
Mitsubishi in order (i) for this Agreement to constitute a legal,
valid and binding obligation of Mitsubishi or (ii) to authorize or
permit the consummation by Mitsubishi of the Transactions.
4.5 Ownership of Capital Stock. All of the issued and
outstanding shares of Class A Common Stock are owned by
Mitsubishi, free and clear of all preemptive rights, liens, claims
and encumbrances other than restrictions on transfer under federal
and state securities laws.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES REGARDING UCAR
Stockholders represent and warrant as of the date hereof as
follows:
5.1 Organization. UCAR is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. UCAR has all corporate power and authority necessary to
(i) execute, deliver and perform its obligations under this
Agreement and (ii) consummate the Transactions. UCAR has all
corporate power and authority necessary to (A) own, lease or use
the properties owned, leased or used by it and (B) conduct the
Business as presently conducted by it. UCAR is duly qualified or
licensed and in good standing as a foreign corporation authorized
to do business under the laws of the jurisdictions where the
failure to be so qualified or licensed would have a material
adverse effect, individually or in the aggregate, on (i) the
business, assets, properties, financial condition or results of
operations of UCAR and the Subsidiaries taken as a whole, or (ii)
the ownership, leasing or use by UCAR and any of the Subsidiaries
of the properties owned, leased or used by them (which is material
to UCAR and the Subsidiaries taken as a whole) as presently owned,
leased or used by them (a "Material Adverse Effect").
5.2 Authorization. The execution and delivery by UCAR
of this Agreement, the performance by UCAR of its other
obligations hereunder and the consummation by UCAR of the
Transactions have been duly authorized by all necessary corporate
actions on the part of UCAR. This Agreement constitutes a legal,
valid and binding obligation of UCAR, enforceable against UCAR in
accordance with its terms except insofar as enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws which
may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
5.3 No Breach. The execution and delivery by
Stockholders and UCAR of this Agreement, the performance by
Stockholders and UCAR of their other respective obligations
hereunder and the consummation by Stockholders and UCAR of the
Transactions will not:
(i) except as set forth in Schedule XVI,
constitute a default under, result in a violation or breach
of, result in the cancellation or termination of (except as
specifically contemplated by Article 1.6), accelerate the
performance required under or result in the creation of any
lien, claim or encumbrance (other than liens, claims or
encumbrances arising under this Agreement) upon any of the
material properties owned, leased or used by UCAR and the
subsidiaries and Affiliates listed on Schedule I attached
hereto (collectively, the "Subsidiaries" and, sometimes
individually, a "Subsidiary") pursuant to any mortgage,
guaranty, deed of trust, note, indenture, bond, lease,
agreement or other instrument to which UCAR or any Subsidiary
is a party or by which any of such properties is bound;
(ii) result in a violation of or conflict
with any law, ordinance, rule or regulation or any order,
writ, judgment, award, edict or decree of any court of
competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of
competent jurisdiction applicable to UCAR, any Subsidiary or
any of the properties owned, leased or used by UCAR and the
Subsidiaries; or
(iii) conflict with, result in a violation
of or constitute a default under the charters or other
organizational documents of UCAR or any Subsidiary, in each
case as amended to date;
except, in the case of subparagraphs (i), (ii) and (iii) above,
for any defaults, breaches, cancellations, terminations,
accelerations, creations, violations or conflicts which would not
have a Material Adverse Effect.
5.4 Consents. Except as otherwise contemplated by
Article 6.4 hereof, or set forth in Schedule XIV attached hereto,
no consent, approval, exemption or authorization is required to be
obtained from, no notice is required to be given to and no filing
is required to be made with any third party (including, without
limitation, governmental and quasi-governmental agencies,
authorities and instrumentalities of competent jurisdiction) by
UCAR or any of its Subsidiaries (A) in order (i) for this
Agreement to constitute a legal, valid and binding obligation of
UCAR or (ii) to authorize or permit the consummation by UCAR of
the Transactions or (B) under or pursuant to any governmental or
quasi-governmental permits, licenses, consents, authorizations or
approvals held by or issued to UCAR or any Subsidiary (including,
without limitation, environmental, health, safety and operating
permits and licenses) by reason of this Agreement or the
consummation of the Transactions.
5.5 Organizational Instruments. Stockholders have
delivered to Buyer complete and accurate copies of the Certificate
of Incorporation and By-laws of UCAR, in each case as amended to
date. UCAR is not in violation of any provision of its
Certificate of Incorporation or By-laws, in each case as amended
to date. Stockholders have made available or caused to be made
available to Buyer complete and accurate copies of the charter or
other organizational documents of each of the Subsidiaries, in
each case as amended to date. No Subsidiary is in violation of
any provision of its charter or other organizational documents, in
each case as amended to date. Except for this Agreement, there
are no agreements or commitments which obligate or require
Stockholders or UCAR to amend or authorize an amendment of the
Certificate of Incorporation or By-laws of UCAR, in each case as
amended to date. Except for this Agreement, there are no
agreements or commitments which obligate or require Stockholders,
UCAR or any Subsidiary to amend or authorize an amendment of the
charter or other organizational documents of any Subsidiary, in
each case as amended to date. Stockholders have made available or
caused to be made available to Buyer complete and accurate copies
of the minute books with respect to meetings of the Board of
Directors and shareholders of UCAR since February 25, 1991 and the
stock books of (i) UCAR and (ii) each of the Subsidiaries. Such
minute books contain complete and accurate copies of all records
of all meetings and consents in lieu of a meeting of (a) the board
of directors (and any committee thereof) of UCAR and its non-
Foreign Subsidiaries, and to the knowledge of the Stockholders, of
each of the Foreign Subsidiaries, and (b) the stockholders of UCAR
and its non-Foreign Subsidiaries, and to the knowledge of the
Stockholders, of each of the Foreign Subsidiaries.
5.6 Capital Stock. The authorized capital stock of
UCAR consists of five hundred (500) shares of Class A Common
Stock, par value $1.00 per share ("Class A Common Stock"), of
which two hundred and fifty (250) shares have been duly authorized
and validly issued and are outstanding, fully paid and non-
assessable and five hundred (500) shares of Class B Common Stock,
par value $1.00 per share ("Class B Common Stock"), of which two
hundred and fifty (250) shares have been duly authorized and
validly issued and are outstanding, fully paid and non-assessable.
Except for this Agreement, there are no outstanding subscriptions,
options, warrants, rights, convertible or exchangeable securities,
agreements or commitments which obligate or require Stockholders
or UCAR to issue, sell or transfer any shares of Capital Stock.
The Acquired Shares, when issued and delivered at the Closing
in accordance herewith, shall be duly authorized, validly issued,
fully paid and non-assessable and shall be sold and delivered to
Buyer, free and clear of all preemptive rights, liens, claims and
encumbrances except for such rights, liens, claims and
encumbrances of which the Buyer or its Affiliates have knowledge.
5.7 Subsidiaries. UCAR does not directly or indirectly
own or have the power to vote shares of the capital stock or other
ownership interests of any corporation or other Person (as defined
in Article 25.3 hereof) such that it has voting power to elect a
majority of the directors of such corporation, or other Persons
performing similar functions for such Person, as the case may be,
other than the Subsidiaries. Neither UCAR nor any Subsidiary is a
partner of any partnership or a member of any joint venture or
other business entity other than the partnerships and joint
ventures listed on Schedule I attached hereto. Except as set
forth in Schedule I attached hereto, UCAR or its nominees own all
of the outstanding shares of capital stock of each Subsidiary
directly or indirectly through another Subsidiary free and clear
of all liens, claims and encumbrances (other than liens, claims
and encumbrances on such shares owned by its nominees in favor of
UCAR or such other Subsidiary) and there are no outstanding
subscriptions, options, warrants, rights, convertible or
exchangeable securities, agreements or commitments which obligate
or require Stockholders, UCAR, any Subsidiary or any of such
nominees to issue, sell or transfer (i) any shares of capital
stock of any Subsidiary (other than agreements or commitments by
such nominees to transfer such shares owned by such nominees to
UCAR, a Subsidiary or other such nominees) or (ii) any securities
convertible into or exchangeable for shares of capital stock of
any Subsidiary. UCAR's nominees and the percentage of outstanding
shares of capital stock of each Subsidiary owned by them are
listed on Schedule I attached hereto. Each Subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction under which it has been
organized, which are set forth on Schedule I attached hereto. All
of the issued and outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued.
Each Subsidiary has all corporate power and authority necessary to
(i) own, lease or use the properties owned, leased or used by it
and (ii) engage in the conduct of the Business as presently
conducted by it. Each Subsidiary is duly qualified or licensed and
in good standing as a foreign corporation authorized to do
business under the laws of the jurisdictions listed on Schedule I
attached hereto which are the only jurisdictions where the failure
to so qualify would have a Material Adverse Effect.
5.8 Financial Statements.
(a) Schedule II attached hereto sets forth a
complete and accurate copy of the audited consolidated balance
sheets of UCAR and the Subsidiaries as of December 31, 1992 and
1993 and the consolidated statements of operations and retained
earnings and of cash flows for each of the three calendar years in
the three calendar year period ended December 31, 1993, including
the report of KPMG Peat Marwick LLP, certified public accountants
("Peat Marwick"), thereon and the notes thereto (collectively, the
"Audited Financial Statements"). The Audited Financial Statements
(i) present fairly, in all material respects, the consolidated
financial position of UCAR and the Subsidiaries as of December 31,
1992 and 1993, respectively, and the consolidated results of
operations and retained earnings and of cash flows of UCAR and the
Subsidiaries for each of the three calendar years in the three
calendar year period ended December 31, 1993 in conformity with
generally accepted accounting principles applied on a consistent
basis other than as disclosed therein and (ii) except as otherwise
stated therein, for dates and periods on or before February 25,
1991, have been derived from the books and records of UCAR and the
Subsidiaries.
(b) Schedule II attached hereto sets forth a
complete and accurate copy of the unaudited consolidated balance
sheets of UCAR and the Subsidiaries for the nine-month period
ended September 30, 1994 (the "Balance Sheet Date") and the
consolidated statements of operations and retained earnings and of
cash flows for each of the nine- month periods ended September 30,
1993 and 1994 (collectively, the "Unaudited Financial
Statements"). The Unaudited Financial Statements (i) present
fairly, in all material respects, the consolidated financial
position of UCAR and the Subsidiaries as of the Balance Sheet Date
and the consolidated results of operations and retained earnings
and cash flows of UCAR and the Subsidiaries for the nine-month
periods ended September 30, 1993 and 1994 in conformity with
generally accepted accounting principles applied on a consistent
basis other than as disclosed therein, and subject to normal year-
end adjustments (except that footnote disclosure may not be
included therewith) and (ii) have been derived from the books and
records of UCAR and the Subsidiaries.
5.9 Tax Matters.
(a) All Tax Returns (as defined in Article 5.9(d)
hereof) required to be filed by or on behalf of UCAR or any
Subsidiary have been timely filed for all years and periods for
which such Tax Returns were due (taking into account all filing
date extensions) and to the extent required by applicable law all
Taxes (as defined in Article 5.9(c) hereof) required to be paid
during the period from February 26, 1991 through the Closing Date
(regardless of whether shown on a Tax Return) have been paid.
Except as set forth in Schedule II attached hereto, since the
Balance Sheet Date, none of UCAR or its non-Foreign Subsidiaries
nor, to the knowledge of Stockholders, any Foreign Subsidiary has
incurred any material liability with respect to any Tax except in
the ordinary course of business. Except as set forth in Schedule
II or XVII attached hereto, there are no presently pending written
claims by any foreign, federal, state or local taxing authority
which pertain to UCAR, any Subsidiary, any of the material
properties owned, used or leased by UCAR and the Subsidiaries or
any of such Tax Returns, which, if adversely determined, would
have a Material Adverse Effect.
(b) Except as set forth on Schedule II attached
hereto, with respect to all Tax Returns, (i) the statute of
limitations for the assessment of any Tax in respect of such Tax
Return has expired through the taxable years set forth in Schedule
II attached hereto and (ii) except as set forth in Schedule II
attached hereto, no audit is in progress and no waiver
or agreement is in force for the extension of time for the
assessment or payment of any Tax in respect of such Tax Returns.
(c) As used herein, the term "Tax" or "Taxes"
shall mean any or all federal, state, local and foreign taxes,
assessments, imposts, duties and other similar governmental
charges (including, without limitation, income, profits, excise,
sales, use, occupancy, value added, gross receipts, franchise, ad
valorem, capital, transfer, withholding, employment, payroll and
property taxes and import duties), any or all interest thereon,
any or all additions thereto or to any such interest and any or
all penalties with respect thereto.
(d) As used herein, the term "Tax Return" shall
mean any return, report, declaration, estimate or information
statement filed or required to be filed with any taxing authority
with respect to any Tax.
(e) Except as set forth on Schedule II, (i) none
of UCAR and its Subsidiaries has filed a consent under Code
Section 341(f) concerning collapsible corporations, (ii) except as
provided in UCAR's Long Term Incentive Compensation Plan, as
amended, none of UCAR and its Subsidiaries has made any payments,
is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G, and
(iii) neither UCAR nor any of its Subsidiaries is a party to, or
has any tax-related contractual liability with respect to, any
lease made pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended.
5.10 Real Property.
(a) Schedule III attached hereto identifies (i)
all of the real property which is owned by UCAR or any Subsidiary
(the "Owned Real Property"), all of which UCAR and its
Subsidiaries have good and valid title to, subject to the
exceptions set forth in Article 5.12 below, (ii) all of the real
property which is leased by UCAR or any Subsidiary (the "Leased
Real Property" together with the Owned Real Property the "Real
Property"), (iii) all of the leases and subleases pertaining to
the Owned Real Property, all leases to and/or subleases by UCAR or
any Subsidiary of Leased Real Property and all amendments thereto,
including, without limitation, all of the leases to third parties
by UCAR or any Subsidiary pertaining to the Real Property
(collectively, the "Real Property Leases"), (iv) all of the suits,
actions, proceedings, investigations and written claims presently
pending or to the knowledge of Stockholders, threatened which (A)
pertain to the Owned Real Property or (B) pertain to the Leased
Real Property or the Real Property Leases and to which UCAR or any
Subsidiary is a party or, to the knowledge of Stockholders, is
threatened in writing to be made a party and (v) all of the final
orders, writs, judgments, awards, edicts and decrees of any court
of competent jurisdiction presently outstanding against UCAR or
any Subsidiary which pertain to the Owned Real Property and which
materially affect the ownership or use of the Owned Real Property
as presently owned or used by UCAR and the Subsidiaries. Except
as set forth in Schedule III attached hereto, all of the real
property which is reflected in the balance sheet included among
the Unaudited Financial Statements is owned by UCAR or one of the
Subsidiaries.
(b) Except as set forth in Schedule III attached
hereto, neither UCAR nor any of the Subsidiaries owns, holds, is
obligated under or a party to any option, right of first refusal
or other contractual right to purchase, acquire, sell or dispose
of the Real Property or any portion thereof or interest therein.
(c) The components of the buildings, structures
and other improvements which are located on the Owned Real
Property are in reasonable working order and repair for the
conduct of the Business as presently conducted by UCAR and the
Subsidiaries. The buildings, structures and other improvements
which are located on the Owned Real Property are supplied with all
utilities necessary for the operation thereof as presently
operated by UCAR and the Subsidiaries and all associated "hook-up"
fees and other similar charges due and payable through the date
hereof have been fully paid.
(d) Except as set forth in Schedule III attached
hereto, neither UCAR nor any of the Subsidiaries has received
written notice of any, and, there is not any pending, or, to the
knowledge of Stockholders, threatened, (i) condemnation proceeding
affecting the Real Property or any part thereof or (ii) sale or
other disposition of the Real Property or any part thereof in lieu
of condemnation.
(e) The representations and warranties set forth
in this Article 5.10 shall be deemed to have been breached only if
one or more events or circumstances which give rise to such a
breach would have a Material Adverse Effect.
5.11 Owned Personal Property. Except as set forth in
Schedule XVI attached hereto and except for properties sold,
transferred or otherwise disposed by UCAR or any Subsidiary in the
ordinary course of business since the Balance Sheet Date, all of
the material tangible personal property (including, without
limitation, furnishings, furniture, office equipment, vehicles,
inventories, tools, machinery, equipment, structures and movable
fixtures) which is reflected in the balance sheet included among
the Unaudited Financial Statements is (i) owned by UCAR or one of
the Subsidiaries and (ii) in reasonable working order and repair
for use as presently used by UCAR and the Subsidiaries in
connection with the Business.
5.12 Title to Owned Properties. Except as set forth in
Schedule III attached hereto with respect to the properties listed
therein or in Schedule XV attached hereto, UCAR and each
Subsidiary has good and valid title to all of the material
properties owned by it, free and clear of all liens, claims and
encumbrances other than:
(i) liens, claims and encumbrances reflected
in the Unaudited Financial Statements;
(ii) liens for taxes, charges and
assessments imposed by any taxing authority which are not yet
due and payable or which are being contested in good faith by
appropriate proceedings listed in Schedule II or VII attached
hereto;
(iii) mechanics', suppliers', installment
sales and similar liens for services rendered or materials
furnished, the charges for which are not yet due and payable
or which are being contested in good faith by appropriate
proceedings;
(iv) defects or imperfections in title,
liens, claims, easements or rights, restrictions and
encumbrances which do not materially, individually or in the
aggregate, interfere with the use of such properties as
presently used by, or the conduct of the Business as
presently conducted by, UCAR and the Subsidiaries.
5.13 Contracts; Leases; Licenses. Except for
contracts, agreements and commitments contemplated by Article 5.7
hereof, leases and subleases described in Article 5.10 hereof,
licenses and agreements described in Articles 5.19 and 5.20
hereof, plans, policies, practices, programs, agreements,
arrangements, contracts and commitments described in Article 5.21
hereof, consent orders described in Article 5.23 hereof and
insurance policies described in Article 5.24 hereof (collectively,
the "Other Scheduled Contracts"), Schedule IV attached hereto sets
forth all written contracts, agreements and commitments
(including, without limitation, leases, subleases, licenses and
installment sales contracts) to which UCAR or any Subsidiary is a
party and:
(i) which involve future expenditures with
respect to the purchase of raw materials, manufacturing
supplies or utilities used in the ordinary course of business
in excess of $1,000,000;
(ii) which involve future receipts with
respect to the sale of products in the ordinary course of
business in excess of $1,000,000;
(iii) which involve future expenditures or
receipts with respect to the purchase, sale or lease of real
property or personal property (other than raw materials,
manufacturing supplies and products described in clauses (i)
and (ii) of this Article 5.13) in excess of $1,000,000;
(iv) which involve future expenditures or
receipts with respect to the rendition of services (other
than the purchase of utilities) in excess of $1,000,000;
(v) which contain commitments of suretyship,
guaranty or indemnification (other than guarantees,
warranties and indemnities provided in connection with the
purchase, sale or lease of materials, supplies, utilities,
products or other personal property or the rendition of
services in the ordinary course of business);
(vi) which involve the handling, treatment,
storage, transportation, recycling, reclamation or disposal
of wastes or hazardous substances;
(vii) which provide for the grant of a
security interest or the extension of credit, constitute a
mortgage or lien on or pledge of any properties or relate to
the borrowing or lending of funds (other than security
interests granted and credit extended in connection with the
purchase, lease or sale of materials, supplies, utilities,
products or other personal property or the rendition of
services in the ordinary course of business and security
interests, mortgages, liens and pledges described in Article
5.12 hereof);
(viii) which relate to the disposition or
acquisition of any material business or any material equity
interest in any business;
(ix) which are material to the conduct of
the Business as presently conducted by UCAR and the
Subsidiaries;
(x) to which Union Carbide, Mitsubishi or
any of their respective Affiliates is also a party (other
than those described in Article 1.6 hereof), which are in
each case marked by an asterisk in Schedule IV;
(xi) pursuant to which UCAR or any of the
Subsidiaries agrees not to compete in any line of business
with any Person or in any geographical area; or
(xii) to which the United States government
is a party.
5.14 Performance of Contracts, Leases and Licenses.
Except as set forth in each Schedule attached hereto with respect
to the contracts, agreements and commitments listed therein, to
the knowledge of Stockholders, (i) all of the contracts,
agreements and commitments set forth in Schedule IV attached
hereto and all of the Other Scheduled Contracts are legal, valid
and binding obligations of UCAR and the Subsidiaries, as the case
may be, and are in full force and effect in all material respects,
(ii) neither UCAR nor any Subsidiary is in default, or has
received written notice of any default or of any event which, with
the passage of time, the giving of further notice or both, would
constitute a default by UCAR or any Subsidiary under any such
contract, agreement or commitment or any of the Other Scheduled
Contracts in any material respect and (iii) to the knowledge of
Stockholders none of the other parties to any such contract,
agreement or commitment or any of the Other Scheduled Contracts is
in default thereunder in any material respect.
5.15 Compliance with Laws.
(a) Except as set forth in any Schedule attached
hereto with respect to the matters set forth therein or in
Schedule VII attached hereto, to the knowledge of Stockholders,
neither Stockholders, UCAR nor any of their respective
subsidiaries (including the Subsidiaries) is in default under or
in violation of any foreign, federal, state or local law,
ordinance, regulation or rule or any judgment, writ, order, award,
edict or decree of any court of competent jurisdiction or any
governmental or quasi-governmental agency, authority or
instrumentality of competent jurisdiction pertaining to UCAR, any
of the Subsidiaries or any of the properties owned, leased or used
by UCAR or any of the Subsidiaries other than such defaults and
violations, if any, which will not have a Material Adverse Effect.
(b) To the knowledge of Stockholders, neither
Stockholders, UCAR nor any of the Subsidiaries has, in connection
with the conduct of the Business, (i) made any payment to officers
or employees of any governmental agency, authority or
instrumentality, (ii) made any payment to customers for the
sharing of fees or to customers or suppliers for rebating of
charges, (iii) engaged in any other reciprocal practice or (iv)
made any payment or given any other consideration to purchasing
agents or other representatives of customers in respect of sales
made or to be made, in each case which was illegal under any
applicable United States or foreign law.
5.16 Permits; Licenses. Schedule V attached hereto
sets forth all of the governmental and quasi-governmental
consents, approvals, exemptions, permits, licenses, franchises and
other authorizations which have been issued to or are held for use
by UCAR or any Subsidiary, or for which UCAR or any Subsidiary has
applied and which are material to the conduct of the Business as
presently conducted by UCAR and any of the Subsidiaries. Except
as described in Schedule V attached hereto, to the knowledge of
Stockholders, the consummation of the Transactions will not result
in a violation or invalidation of any of such consents, approvals,
exemptions, permits, licenses, franchises or other authorizations.
Except as described in Schedule V, VI or XII attached hereto, to
the knowledge of Stockholders, UCAR and the Subsidiaries have
obtained all of the material governmental and quasi-governmental
consents, approvals, permits, exemptions, licenses, franchises and
other authorizations which are necessary in order to conduct the
Business as presently conducted by them or own, lease or use the
material properties presently owned, leased or used by them.
5.17 Environmental Conditions.
(a) Schedule VI attached hereto:
(i) lists (A) all waste treatment, storage
and disposal facilities and sites (including, without
limitation, underground storage tanks) which are located on
the Real Property and which are presently used by UCAR or any
Subsidiary and (B) as to each such facility or site, the time
period used and the type of material treated, stored or
disposed;
(ii) lists (A) all waste treatment, storage
and disposal facilities and sites which are not located on
the Real Property and which are presently used by UCAR or any
Subsidiary and (B) as to each such facility or site, the time
period used and the type of material treated, stored or
disposed;
(iii) to the knowledge of Stockholders, lists
(A) all waste treatment, storage and disposal facilities and
sites (including, without limitation, underground storage
tanks) which are located on the Real Property but are not
presently used by UCAR or any Subsidiary and (B) as to each
such facility or site, the time period used and the type of
material treated, stored or disposed;
(iv) to the knowledge of Stockholders, lists
(A) all waste treatment, storage and disposal facilities and
sites which are not located on the Real Property and which
were used in the conduct of the Business as conducted by UCAR
and the Subsidiaries but are not presently used by UCAR or
any Subsidiary and (B) as to each such facility or site, the
time period used and the type of material treated, stored or
disposed;
(v) identifies all written internal
environmental audits conducted since February 26, 1991
relating to UCAR or any of the Subsidiaries;
(vi) lists all reports of releases
(including,
without limitation, continuous release reports) of hazardous
substances relating to UCAR or any of the Subsidiaries
furnished since February 26, 1991 to any foreign, federal,
state or local governmental or quasi-governmental agency,
authority or instrumentality, including, without limitation,
all such reports furnished to the National Response Center,
any state emergency response commission, any local emergency
planning committee or the United States Environmental
Protection Agency (the "EPA") pursuant to requirements of the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (collectively, "CERCLA");
(vii) lists all reports made to the EPA or
any state or local governmental agency, authority or
instrumentality pursuant to Sections 302, 311, 312 and 313 of
Title III of the Superfund Amendments and Reauthorization Act
of 1986; and
(viii) describes all material events of non-
compliance relating to UCAR or any of the Subsidiaries
reported to or, to the knowledge of Stockholders, identified
by any governmental or quasi-governmental agency, authority
or instrumentality since February 26, 1991 with (A)
environmental permits, approvals, authorizations or licenses
or (B) the requirements of HS&EA Laws (as defined in Article
5.17(d)(iii) hereof), including without limitation, the Clean
Air Act, as amended, the Clean Water Act, as amended, the
Resource Conservation and Recovery Act, as amended, or the
Toxic Substance Control Act, as amended ("TSCA").
(b) Except as set forth in Schedule II, III, IV,
V, VI,VII or XII attached hereto, to the knowledge of
Stockholders:
(i) UCAR and the Subsidiaries are in
compliance, in all material respects, with all HS&EA Permits
(as defined in Article 5.17(d)(v) hereof) held by them and
all of such HS&EA Permits are in full force and effect and no
action to revoke any of such HS&EA Permits is pending;
(ii) neither Stockholders, UCAR nor any of
the Subsidiaries has received written notice from any
governmental or quasi-governmental authority of any event,
condition, circumstance, activity, practice, incident, action
or plan (A) which may materially interfere with or prevent
compliance with (1) any HS&EA Law in connection with the
conduct of the Business as presently conducted by UCAR and
the Subsidiaries or (2) any HS&EA Permit held by UCAR or any
Subsidiary in connection with the conduct of the Business or
(B) which may (1) require the amendment or transfer of any
HS&EA Permit held in connection with the conduct of the
Business as presently conducted by UCAR and the Subsidiaries
or (2) materially interfere with any such amendment or
transfer;
(iii) neither Stockholders, UCAR nor any of
the Subsidiaries has received written notice that it is
subject to, responsible or liable for any material HS&EA
Liabilities and Costs (as defined in Article 5.17(d)(iv)
hereof) based upon or arising out of (A) past or present
environmental conditions on, under, above or about real
property, or assets, equipment or facilities located on,
under, above or about real property, previously or presently
used by UCAR or any of the Subsidiaries, including, without
limitation, HS&EA Liabilities and Costs arising from, related
to or associated with notices given, claims made, actions and
proceedings instituted or orders issued by a federal, state,
local or foreign government or governmental agency or by any
third party, (B) the use, production, manufacture,
processing, distribution, management, handling, shipment,
transport, treatment, generation, storage, or Release (as
defined in Article 5.17(d)(vi) hereof) of any Contaminant (as
defined in Article 5.17(d)(i) hereof) in connection with the
conduct of the Business by UCAR and the Subsidiaries or (C)
the failure of such real property, assets, equipment or
facilities, or property about such real property, to comply
in full or in part with all requirements of any HS&EA Law or
any HS&EA Permit;
(iv) with respect to real property previously
or presently owned or operated in connection with the conduct
of Business by UCAR and the Subsidiaries, neither
Stockholders, UCAR nor any of the Subsidiaries or any of the
other present or prior owners or operators thereof are
subject to any outstanding written notice or order from, or
agreement with, any governmental authority or other Person in
respect of which it (A) is required to incur any material
HS&EA Liabilities and Costs or (B) is subject to any
investigation by any governmental authority evaluating
whether any material Remedial Action (as defined in Article
5.17(d)(vii) hereof) is needed to respond to a Release of a
Contaminant into the Environment (as defined in Article
5.17(d)(ii) hereof) or as a result of which other material
HS&EA Liabilities and Costs may arise;
(v) UCAR and the Subsidiaries have filed all
notices required to be filed under the HS&EA Laws indicating
past and present Releases of Contaminants used or held in
connection with the conduct of the Business by UCAR and the
Subsidiaries; and
(vi) neither Stockholders, UCAR nor any
Subsidiary has entered into any written agreement with any
governmental authority or other Person pursuant to which it
has assumed responsibility for, either directly or as a
guarantor, indemnitor, surety or Remedial Action, which
provides for future expenditures in excess of $1,000,000.
(c) The representations and warranties set forth
in Article 5.17(b) hereof shall be deemed to have been breached
only if one or more events or circumstances which give rise to
such breach would have a Material Adverse Effect.
(d) As used in this Agreement, the following terms
shall have the meanings set forth below:
(i) "Contaminant" shall mean any waste,
pollutant, noise, hazardous substance, toxic substance,
hazardous material, hazardous waste, special waste,
industrial substance or waste, radioactive material or waste,
petroleum or petroleum-derived substance or waste or any
constituent of any such substance or waste (including,
without limitation, any such substance regulated under or
defined by any HS&EA Law or otherwise determined by a court
of law to be a basis for personal injury or property damage
liability).
(ii) "Environment" shall have the meanings set
forth in Section 9601(8) of Title 42 of the United States
Code and "Environmental" shall have a concomitant meaning.
(iii) "HS&EA Laws" shall mean foreign and
domestic laws, and any rules and regulations promulgated
thereunder by any governmental entity, relating to pollution,
health and safety or protection of the Environment
(including, without limitation, laws relating to the Release
or threatened Release of Contaminants into the Environment or
otherwise relating to the presence, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Contaminants).
(iv) "HS&EA Liabilities and Costs" shall mean
all liabilities, obligations, obligations to conduct Remedial
Actions, responsibilities, losses, damages, punitive damages,
consequential damages, treble damages, costs or expenses
(including, without limitation, all reasonable fees,
disbursements and expenses of counsel and experts and all
reasonable consulting fees and costs of investigations and
feasibility studies), fines, penalties, monetary sanctions
and interest resulting from any claim or demand by any person
or governmental entity, domestic or foreign, arising pursuant
to the HS&EA Laws, from (A) environmental, health or safety
conditions, or the Release or threatened Release of a
Contaminant into the Environment, as a result of the conduct
of the Business by UCAR and the Subsidiaries and
(B) conditions on, under, above or about any real property
owned or operated by UCAR or any of the Subsidiaries.
(v) "HS&EA Permit" shall mean any permit,
license, authorization, approval or registration required
pursuant to the HS&EA Laws.
(vi) "Release" shall mean any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, disbursal, leaching or migration of any
Contaminant into the Environment or into, out of or through
any structure, property, air, soil, surface water or ground
water.
(vii) "Remedial Action" shall mean all actions
required to (A) clean up, remove, treat, mitigate or
remediate Contaminants in the Environment (including, without
limitation, any structure or property), or (B) perform pre-
remedial studies and investigations and post-remedial
monitoring and care with respect to Contaminants in the
Environment.
(e) No modification, revocation, reissuance,
alteration, transfer, or amendment of the HS&EA Permits, or any
review by, or approval of, any third party of the HS&EA Permits is
required in connection with the execution or delivery of this
Agreement or the consummation of the Transactions where such
modification, revocation, reissuance, alteration, transfer or
amendment would have a Material Adverse Effect.
5.18 Litigation; Claims; Proceedings. Except for
suits, actions, proceedings, investigations, audits, examinations
and written claims described in Articles 5.9, 5.10, 5.12, 5.17,
5.19, 5.20, 5.21 and 5.23 hereof and orders, judgments, writs,
decrees, awards and edicts described in Articles 5.9, 5.10, 5.15,
5.19, 5.20 and 5.23 hereof, Schedule VII attached hereto sets
forth all of the civil, criminal, administrative and arbitral
suits, actions, proceedings, investigations and written claims
presently pending or, to the knowledge of Stockholders, threatened
in writing and all of the final orders, judgments, writs, decrees,
awards and edicts presently outstanding which pertain to UCAR, any
Subsidiary or any of the material properties owned, leased or used
by UCAR and the Subsidiaries other than routine suits, actions,
proceedings, investigations and written claims (including, without
limitation, product liability, product warranty and worker's
compensation suits, actions, proceedings, investigations and
written claims) where the amount involved therein does not exceed
$1,000,000 or where the amount involved therein and in all suits,
actions, proceedings, investigations and written claims involving
substantially similar issues outstanding at any time after
February 26, 1991 does not exceed $1,000,000. Neither
Stockholders, UCAR nor any of the Subsidiaries has received
written notice of any statements, citations or decisions by any
governmental agency, authority or instrumentality stating that any
product made by UCAR or any of the Subsidiaries is defective or
unsafe or fails to meet any standards promulgated by such agency,
authority or instrumentality. To the knowledge of Stockholders,
there have been no recalls ordered by any such agency, authority
or instrumentality with respect to any such product.
5.19 Patents; Technology.
(a) Schedule VIII attached hereto lists:
(i) all of the United States and foreign
patents and patent applications owned by or licensed or
assignable to UCAR or any Subsidiary which are material to
the conduct of the Business as presently conducted by UCAR
and the Subsidiaries;
(ii) all of the licenses and non-assertion
rights granted to or by UCAR or any Subsidiary pursuant to
written agreements pertaining to patents, patent
applications, proprietary technology or inventions which are
material to the conduct of the Business as presently
conducted by UCAR and the Subsidiaries;
(iii) all of the written confidentiality,
secrecy, screening, development and settlement agreements
pertaining to patents, patent applications, proprietary
technology or inventions which are material to the conduct of
the Business as presently conducted by UCAR and the
Subsidiaries (other than confidentiality or secrecy
agreements made in connection with the purchase, sale or
lease of materials, supplies, products or other personal
property or the rendition of services in the ordinary course
of business); and
(iv) all of the suits, actions, proceedings
(including, without limitation, interference, opposition,
revocation and conflict proceedings) and written claims
presently pending or, to the knowledge of Stockholders,
threatened and all of the orders, judgments, writs, edicts,
awards and decrees presently outstanding pertaining to
patents, patent applications, proprietary technology or
inventions described in the preceding clauses of this
Article.
(b) Except as set forth in Schedule VIII attached
hereto, to the knowledge of Stockholders, all of the patents,
patent applications, trade secrets, know-how, inventions,
processes, manufacturing information, engineering information and
technical information, which are material to the conduct of the
Business as presently conducted by UCAR and the Subsidiaries and
which are not available in the public domain are owned by,
licensed to or subject to non-assertion rights granted to UCAR or
a Subsidiary. Except as set forth in Schedule VIII attached
hereto, to the knowledge of Stockholders, neither UCAR nor any of
the Subsidiaries has received written notice that it has infringed
the patent rights of third parties.
5.20 Trademarks; Copyrights.
(a) Schedule IX attached hereto lists:
(i) all of the foreign, United States and
state trademarks, service marks, trade names and copyrights
owned by or licensed or assignable to UCAR or any Subsidiary
which are material to the conduct of the Business as
presently conducted by UCAR and the Subsidiaries;
(ii) all of the written licenses and all of
the rights under registered user or other written agreements
granted to UCAR or any Subsidiary by third parties pertaining
to trademarks, service marks, trade names and copyrights
which are material to the conduct of the Business as
presently conducted by UCAR and the Subsidiaries;
(iii) all of the written licenses and all of
the rights under registered user or other written agreements
granted to third parties by UCAR or any Subsidiary pertaining
to trademarks, service marks, trade names and copyrights
which are material to the conduct of the Business as
presently conducted by UCAR and the Subsidiaries; and
(iv) all of the suits, actions, proceedings
(including, without limitation, interference, opposition and
cancellation proceedings) and written claims presently
pending or, to the knowledge of Stockholders threatened and
all of the orders, judgments, writs, edicts, awards and
decrees presently outstanding pertaining to trademarks,
service marks, trade names or copyrights described in the
preceding clauses of this Article 5.20.
(b) Except as set forth in Schedule IX attached
hereto, all of the trademarks and service marks described in
Article 5.20(a)(i) hereof have been duly registered or are the
subject of pending registration applications in the jurisdictions
indicated in Schedule IX attached hereto. Except as set forth in
Schedule IX attached hereto, to the knowledge of Stockholders,
neither Stockholders, UCAR nor any Subsidiary has received written
notice that it has infringed the trademark rights or copyrights of
third parties in connection with the conduct of the Business by
them.
5.21 Human Resources.
(a) Schedule X attached hereto sets forth a
complete and accurate list of (i) all of the collective bargaining
agreements and agreements with labor unions or associations
representing employees to which UCAR or any of the Subsidiaries is
a party and (ii) as of the dates set forth in Schedule X attached
hereto, the total number of employees of UCAR and the Subsidiaries
and the number of such employees represented by each such
agreement. Such numbers of employees have not changed since such
dates except in the ordinary course of business. Except as set
forth in Schedule X attached hereto, to the knowledge of
Stockholders, there are no organizing efforts, strikes, slowdowns,
picketing, work stoppages, labor troubles or other similar events
in which employees of UCAR or any Subsidiary are participating and
which is having or is reasonably likely to have a Material Adverse
Effect.
(b) For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(i) "Benefit Plan" shall mean any plan,
agreement or arrangement which is (A) an employment, change
of control, consulting or deferred compensation agreement,
(B) an incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase, appreciation,
thrift or savings plan, (C) a severance pay plan, (D) a life,
health, disability or accident insurance plan, (E) a holiday,
vacation or other bonus practice or (F) any other material
"employee benefit plan" as defined in Section 3(3) of ERISA
(as defined below), or fringe benefit, in each of the cases
as described in clauses (A) through (F) of this clause (i)
which is maintained by UCAR or any Subsidiary or ERISA
Affiliate (as defined below) with respect to any employee,
officer, director or consultant of UCAR or any of the
Subsidiaries or any ERISA Affiliate or in respect of which
UCAR or any Subsidiary has any present or future liability
(including any foreign benefit plan).
(ii) "Code" shall mean the Internal Revenue
Code of 1986, as amended, and the regulations promulgated
thereunder.
(iii) "ERISA Affiliate" shall mean any entity,
whether or not incorporated, which is, or since February 26,
1991 has been, treated as a single employer with UCAR or any
of the Subsidiaries under Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.
(iv) "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
(v) "PBGC" shall mean the Pension Benefit
Guaranty Corporation.
(vi) "IRS" shall mean the Internal Revenue
Service.
(vii) "Pension Plan" shall mean a Benefit Plan
which is a "pension plan" as defined in Section 3(3) of ERISA
and which is covered by ERISA.
(c) Schedule XI attached hereto sets forth a
complete and accurate list of all Benefit Plans and Stockholders
have delivered to or made available to the Buyer current copies of
each such Benefit Plan including any amendments thereto since the
Balance Sheet Date (or, to the extent no such copy exists, an
accurate description thereof) and, to the extent applicable, (i)
any related trust agreement, annuity contract or other funding
instrument; (ii) any summary plan description and other material
written communications to UCAR and its Subsidiaries' employees
concerning the extent of the benefits provided under a Benefit
Plan; and (iii) the most recent (I) Form 5500s and attached
schedules, (II) determination letter, (III) audited financial
statements and (IV) actuarial valuation reports.
(d) With respect to each Benefit Plan:
(i) UCAR and each of the Subsidiaries have
made all contributions and other payments (including premiums
payable to the PBGC) due from it to date on a timely basis
and all amounts properly accrued as liabilities of UCAR or
any of the Subsidiaries which have not been paid have been
properly recorded on the books of UCAR or such Subsidiaries;
(ii) no Benefit Plan which is subject to
Section 302 of ERISA or Section 412 of the Code has incurred
an "accumulated funding deficiency" as defined in either of
such Sections (whether or not waived);
(iii) to the knowledge of Stockholders, each
Benefit Plan and its related trust agreement has been
administered in all material respects in accordance with its
terms and is in material compliance with ERISA and the Code
or, if applicable, foreign laws;
(iv) each Benefit Plan which is intended to
qualify under Section 401(a) or 403(a) of the Code has
received a favorable determination letter from the IRS with
respect to its qualification and its related trust has been
determined to be exempt from taxation under Section 501(a) of
the Code; and
(v) other than as described in Schedule VII,
X or XI attached hereto, there are no actions, suits, liens
(statutory or otherwise) or claims pending (other than
routine claims for benefits) or, to the knowledge of
Stockholders, threatened in writing against or with respect
to any Benefit Plan.
(e) With respect to each Pension Plan that is
subject to Title IV of ERISA:
(i) no filing of a notice to terminate any
such Pension Plan has been made by UCAR or any of the
Subsidiaries; and
(ii) Stockholders have received no written
notice from the PBGC of the initiation of a proceeding to
terminate any such Pension Plan and, to the knowledge of
Stockholders, no proceeding has been initiated by the PBGC to
terminate any such Pension Plan.
(f) Except as set forth in Schedule XI attached
hereto, no Benefit Plan provides medical or death benefits with
respect to any employee, officer, director or consultant of UCAR
or any of the Subsidiaries beyond their retirement or other
termination of service other than (i) COBRA coverage or (ii) death
benefits provided under any pension plan.
(g) With respect to each Benefit Plan, no such
Benefit Plan has engaged in a non-exempt "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406 of
ERISA.
(h) Except as provided in UCAR's Long Term
Incentive Compensation Plan, as amended, and as set forth in
Schedule XI, the Transactions will not result in (i) the payment
to any employee of UCAR or the Subsidiaries of any money or other
property or right, (ii) the acceleration or provision of any other
rights or benefits to any employee of UCAR or the Subsidiaries, or
(iii) any increase in benefits or compensation under any Benefit
Plan.
5.22 Business Operations.
(a) Except as set forth herein or in any Schedule
attached hereto:
(i) since the Balance Sheet Date, neither
UCAR nor any Subsidiary has, except in the ordinary course of
business, made any material change in practices, operations
or policies with respect to (A) the standard terms and
conditions of sale of products (including standard terms
regarding returns and discounts, but excluding price
changes), (B) the method of accounting for sale of products,
(C) the policy regarding maintenance of inventory levels or
(D) the conduct of accounts receivable collection and
accounts payable payment activities;
(ii) since the Balance Sheet Date, neither
UCAR nor any Subsidiary has, except in the ordinary course of
business, or as specifically contemplated by this Agreement
in connection with the Transactions, (A) engaged in any
material transaction, (B) entered into any material
agreement, (C) incurred, paid or discharged any material
obligation or liability, (D) sold or transferred any material
property, (E) waived or released any material right or
obligation, (F) guaranteed, assumed or otherwise become
responsible for the material obligations of any Person,
(G) made any material loan or advance to any Person, (H) made
any payments to any of the Stockholders or their Affiliates,
(I) made any repurchase or redemption of, or any
reclassification of, shares of its Capital Stock, (J) issued
or sold any shares of its Capital Stock or granted any of its
Capital Stock or granted any options, rights, subscriptions
or warrants to purchase any shares of its Capital Stock, or
issued any convertible or exchangeable securities or entered
into any agreements or commitments pending for the issuance
or sale of any shares of its Capital Stock, (K) acquired or
sold, leased, granted any interest in or otherwise disposed
of any material assets or businesses, or (L) entered into any
agreement or commitment, other than this Agreement, to do any
of the foregoing; provided, that one or more cash dividends
declared and paid after the Balance Sheet Date and prior to
the Closing Date shall not be considered a breach of this
Section 5.22; provided further, that this in no way limits or
otherwise modifies the provisions of Article 1.5 hereof; and
(iii) since the Balance Sheet Date, there has
been no material damage to or loss of the material properties
owned, leased or used by UCAR and the Subsidiaries
(regardless of whether such damage or destruction is covered
by insurance).
(b) Except as set forth in Schedule XVI attached
hereto, to the knowledge of Stockholders, no material
supplier or customer of UCAR and the Subsidiaries has
indicated in writing that it will cease doing business with
UCAR and the Subsidiaries as a result of the Transactions.
5.23 Health and Safety Conditions. Schedule XII
attached hereto:
(i) lists all current material safety data
sheets relating to the products currently sold by UCAR and
the Subsidiaries and the chemical substances or mixtures
currently used by UCAR and the Subsidiaries in the conduct of
the Business as presently conducted by them;
(ii) lists all written internal safety and
health audits conducted since February 26, 1991 by UCAR or
any of the Subsidiaries; and
(iii) lists all citations, notices of
violations, orders and consent orders issued and
administrative or judicial enforcement proceedings commenced
by governmental or quasi-governmental agencies, authorities
and instrumentalities (including the United States
Occupational Safety and Health Administration, any state
occupational safety and health administration and, with
respect to TSCA, the EPA) with respect to safety and health
matters relating to UCAR or any of the Subsidiaries since
February 26, 1991.
5.24 Insurance. Schedule XIII attached hereto lists
all of the material insurance policies (other than insurance
policies relating to plans, policies, practices, programs,
contracts, agreements, arrangements and commitments described in
Article 5.21 hereof) which cover employees, properties, products
or operations (including, without limitation, fire, public
liability, worker's compensation and vehicular insurance policies)
and which are held by or on behalf of UCAR or any Subsidiary for
their respective accounts. To the knowledge of Stockholders,
there is no material inaccuracy in any application for any such
policy which would form a basis for termination of any such
policy.
5.25 Liabilities. Except as set forth herein or in any
Schedule attached hereto, to the knowledge of Stockholders, there
are no material liabilities of UCAR and the Subsidiaries other
than liabilities incurred since the Balance Sheet Date in the
ordinary course of business.
5.26 Entire Business. UCAR and the Subsidiaries own,
lease or have licenses or other contractual rights to use all of
the material tangible and intangible assets used by them in the
conduct of the Business as presently conducted by them except for
(i) assets used to provide services or goods to UCAR or a
Subsidiary pursuant to a contract, agreement or commitment set
forth in Schedule IV attached hereto or one of the Other Scheduled
Contracts, and (ii) pension or other funded employee benefit plan
assets. The contracts, agreements and commitments under which
such contractual rights have been granted are listed on Schedule
IV attached hereto or included among the Other Scheduled
Contracts.
5.27 Full Disclosure. Stockholders have made or caused
to be made available to Buyer, upon request, complete and accurate
copies of all documents listed in the Schedules attached hereto
and all files, records and papers related to all claims, actions,
suits, proceedings and investigations listed in the Schedules
attached hereto, in each case (i) other than documents, files,
records and papers which, in the reasonable opinion of
Stockholders, contain information (including, without limitation,
price and cost data on any basis other than an aggregate basis)
the disclosure of which to competitors of UCAR or any of the
Subsidiaries might be detrimental to UCAR or any of the
Subsidiaries and (ii) except to the extent that such access would
(A) violate the terms of any agreement to which UCAR or any of the
Subsidiaries is a party, any applicable law, ordinance, rule or
regulation or any order, writ, judgment, award, edict or decree of
any court of competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of competent
jurisdiction or (B) result in the loss of any attorney-client or
other privilege. Stockholders have not knowingly withheld any
documents, files, records, papers or related materials necessary
to make the representations and warranties set forth in Articles
3, 4 and 5 hereof, in the context in which they are made, not
misleading in any material respect. To the knowledge of
Stockholders, UCAR has not furnished any documents, files,
records, papers or related materials to the Buyer that contain any
untrue statement of a material fact.
5.28 Limitation on Representations. Except as set
forth in Articles 3 and 4 hereof or this Article 5, no
representations, warranties or guarantees have been, are being or
will be made by Union Carbide, Mitsubishi or UCAR as to the
quality, condition, character, size, quantity, type, earnings,
revenues, expenses, suitability or value of UCAR, the Subsidiaries
or any of the properties owned, leased or used by UCAR or any
Subsidiary and ALL REPRESENTATIONS, WARRANTIES OR GUARANTEES
IMPLIED OR OTHERWISE CREATED UNDER ANY APPLICABLE LAW ARE
EXPRESSLY DISCLAIMED BY THE STOCKHOLDERS.
5.29 Receivables.
(a) All of UCAR's and, to the knowledge of
Stockholders, the Subsidiaries' receivables have arisen only from
bona fide transactions in the ordinary course of business.
(b) As of the Balance Sheet Date there had not
been, and since the Balance Sheet Date there have not been, sales
of any receivables or other similar assets pursuant to (i) the
Asset Purchase and Sale Agreement, dated as of June 26, 1992,
among UCAR Carbon Company Inc., Omnibus Funding Corporation and
Manufacturers Hanover Agent Bank Services and the Secondary Asset
Purchase and Sale Agreement, dated as of June 26, 1992, among UCAR
Carbon Company Inc., Internationale Nederlanden Bank N.V. and
Manufacturers Hanover Agent Bank Services or (ii) any other
similar arrangement, nor have Stockholders entered into any other
similar arrangement that remains in effect as of the date hereof.
5.30 Limitations on Representations.
Notwithstanding anything contained herein to the
contrary, to the extent any representation or warranty contained
in Article 3, 4 or 5 is not true as a result of any action (i)
taken or omitted to be taken by the Stockholders, UCAR, or the
Subsidiaries at the request of the Buyer, or (ii) that is
necessary in connection with the consummation of the Transactions
(and disclosed to Buyer as contemplated by Article 6.2(a)), then
the failure of such representation or warranty to be true shall
not be deemed to be a violation or breach of any such
representation or warranty for all purposes hereof.
ARTICLE 6 - PRE-CLOSING COVENANTS
6.1 Conduct By Buyer.
(a) From the date hereof until the Closing, Buyer
shall refrain from taking any action which would cause any
representation or warranty contained in Article 2 hereof to be
untrue or incorrect in any material respect as of the Closing.
(b) If, for any reason (including, without
limitation, termination of this Agreement pursuant to Article 9
hereof), the Closing does not take place, Buyer will, and will
cause its officers, employees and other representatives to, keep
confidential and not use in any manner any information or
documents obtained from, Stockholders, UCAR or any of the
Subsidiaries concerning UCAR's or any of its Subsidiaries'
respective properties, businesses and operations and shall
promptly (i) return to UCAR all documents, papers, books, records
and other materials (and all copies thereof) obtained by any of
them from Stockholders, UCAR, or any of their respective
subsidiaries or Affiliates (including, without limitation, the
Subsidiaries) or any of the directors, officers, employees,
agents, representatives or consultants of Stockholders, UCAR or
any of their respective subsidiaries or Affiliates (including,
without limitation, the Subsidiaries) in connection with the
investigation and evaluation of the Transactions, and the
negotiation and preparation of this Agreement or the consummation
of the Transactions, (ii) destroy all copies of all analyses,
studies and other documents prepared by or for Buyer which contain
or reflect information contained in such documents, papers, books,
records and other materials or obtained in connection with visits
to the facilities of UCAR or any of the Subsidiaries and (iii)
furnish to Stockholders a certificate signed by an appropriate
authorized officer of Buyer to the effect that such destruction
has been completed.
(c) Buyer agrees to take all reasonable action that
is necessary or desirable prior to the Closing (other than actions
to be taken by the Stockholders, UCAR and its Subsidiaries) such
that the Lenders are prepared to lend the aggregate amount of the
Borrowings on the Closing Date.
6.2 Conduct by Stockholders and UCAR.
From the date hereof until the Closing,
(a) Stockholders shall, and shall cause UCAR and its
non-Foreign Subsidiaries and shall use their reasonable efforts to
cause the Foreign Subsidiaries to (i) refrain from taking any
action which would cause any representation or warranty contained
in Article 3, 4 or 5 hereof to be untrue or incorrect in any
material respect (or in any respect, in the case of the
representations or warranties contained in Article 5.22 or
5.29(b)) as of the Closing Date and (ii) notify Buyer of any
event, condition or circumstance occurring from the date hereof
through the Closing Date that would, or but for Section 5.30
would, constitute a violation or breach of any representation or
warranty or cause such representation or warranty to be untrue as
of the Closing Date (assuming such event, condition or
circumstance existed on the Closing Date);
(b) except as otherwise provided herein,
Stockholders shall not permit UCAR to amend or authorize any
amendment of the Certificate of Incorporation or the Bylaws of
UCAR prior to the Closing;
(c) except as Buyer shall otherwise agree in
writing, Stockholders, UCAR and their Affiliates shall not enter
into any new, or amend any existing, Benefit Plan or any other
agreement, program, or arrangement in connection therewith
(including any trust agreement, insurance contract or credit
facility) or grant any increases in compensation, other than in
the ordinary course of business or pursuant to promotions, in each
case consistent with past practice; and
(d) the Stockholders shall cause UCAR and its non-
Foreign Subsidiaries, and shall use their reasonable efforts to
cause the Foreign Subsidiaries, to take such reasonable action at
the request of the Buyer (to the extent such actions are
reasonably contemplated hereby) prior to the Closing that is
necessary or desirable such that the Borrowings and the other
Transactions are consummated on the Closing Date.
6.3 Conduct of the Business.
(a) From the date hereof until the Closing,
Stockholders shall cause UCAR and its non-Foreign Subsidiaries,
and shall use their reasonable efforts to cause the Foreign
Subsidiaries, to:
(i) employ the properties owned, leased or
used by them and conduct the Business only in the ordinary
course;
(ii) use all reasonable efforts to retain
their employees and preserve their business relationships;
(iii) refrain from entering into any contract
except in the ordinary course of business;
(iv) refrain from taking any action which
would cause any representation or warranty contained in
Article 3, 4 or 5 hereof to be untrue or incorrect in any
material respect as of the Closing;
(v) provide reasonable access by Buyer and
its officers, employees and other representatives to their
books, files, papers and records upon reasonable request with
due regard to minimizing interference with the conduct of the
Business by them; provided, however, that no such access
shall be provided (A) to technical, financial or operating
books, files, papers or records (including, without
limitation, price and cost data on any basis other than an
aggregate basis) which, in the reasonable opinion of
Stockholders, contain information the disclosure of which to
competitors of UCAR or any of the Subsidiaries might be
detrimental to UCAR or any of the Subsidiaries (but only to
the extent that the lack of access of Buyer or its officers,
employees and other representatives thereto would not
materially impair the ability of Buyer to evaluate the
accuracy of the representations and warranties set forth in
Articles 3, 4 and 5 hereof) or (B) to the extent that such
access would (1) violate the terms of any agreement to which
UCAR or any of the Subsidiaries is a party, any applicable
law, ordinance, rule or regulation or any order, writ,
judgment, award, edict or decree of any court of competent
jurisdiction or any governmental or quasi-governmental
agency, authority or instrumentality of competent
jurisdiction or (2) result in the loss of any attorney-client
or other privilege;
(vi) permit with reasonable frequency senior
management and representatives of Buyer and the sources of
Buyer's financing to meet with senior management of UCAR to
discuss the Business as presently conducted by UCAR and the
Subsidiaries; provided, that the Stockholders will be given
prior notice of all such meetings, and representatives of the
Stockholders will be permitted to attend all such meetings;
provided, further, that senior management of UCAR shall not
disclose during such discussions (A) any technical, financial
or operating information or data (including, without
limitation, price and cost data on any basis other than an
aggregate basis) the disclosure of which to competitors of
UCAR or any of the Subsidiaries would, in the reasonable
opinion of Stockholders, be detrimental to UCAR or any of the
Subsidiaries (but only to the extent that the non-disclosure
by the senior management of UCAR of such information or data
would not materially impair the ability of Buyer to evaluate
the accuracy of the representations and warranties set forth
in Articles 3, 4 and 5 hereof) or (B) any information or data
the disclosure of which would (1) violate the terms of any
agreement to which UCAR or any of the Subsidiaries is a
party, any applicable law, ordinance, rule or regulation or
any order, writ, judgment, award, edict or decree of any
court of competent jurisdiction or any governmental or quasi-
governmental agency, authority or instrumentality of
competent jurisdiction or (2) result in the loss of any
attorney-client or other privilege; and
(vii) refrain from making or revoking any
elections with respect to Taxes other than in the ordinary
course of business.
(b) Notwithstanding anything contained herein to the
contrary, no action by the Stockholders, UCAR or any of the
Subsidiaries taken pursuant to the request of the Buyer or that is
necessary in connection with the consummation of the Transactions
(and disclosed to Buyer with reasonable promptness) shall be
deemed a breach of any of the covenants contained in clauses (i)
through (iv) of Article 6.3(a) hereof.
6.4 Filings and Consents.
(a) Each Party shall, at its own cost and expense,
promptly file and thereafter diligently pursue any filing required
on its part under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and all rules and regulations adopted
thereunder (collectively, the "HSR Act") in connection with the
Transactions.
(b) Each Party shall, at its own cost and expense,
promptly file and thereafter diligently pursue any filing required
on its part under the European Union regulations, as amended, and
all rules and regulations adopted thereunder (collectively, the
"EU") in connection with the Transactions.
(c) Each Party shall, at its own cost and expense,
promptly file and thereafter diligently pursue any filing required
on its part under French, Canadian, Spanish and Italian laws, if
any, in connection with the transactions contemplated by this
Agreement.
(d) Stockholders shall use all reasonable efforts to
obtain the consents, approvals or other authorizations required to
be obtained from, make all filings required to be made with and
give all notices required to be given to any third party
(including, without limitation, governmental or quasi-governmental
agencies, authorities and instrumentalities of competent
jurisdiction) that are required on their respective parts in
connection with the consummation of the Transactions (other than
those contemplated by Articles 6.4(a), 6.4(b) and 6.4(c) hereof),
in each case if (but only if) the failure to obtain, give or make
such consent, approval, authorization or filing would have a
Material Adverse Effect (collectively, the "Required Consents").
(e) Each Party shall, upon request, cooperate with
the other Parties in connection with the performance of their
respective obligations under this Article 6.4.
6.5 Fulfillment of Conditions. Each party shall use all
reasonable efforts to fulfill or cause to be fulfilled the
conditions set forth in Articles 7 and 8 hereof. Without
limitation of the foregoing, each of the Parties shall have the
right to review and consult concerning the preparation by UCAR of
the Certificate referred to in Article 8(xi).
6.6 Supplemental Disclosure. The Stockholders shall have
the right from time to time prior to the Closing to supplement the
disclosure Schedules prepared by them or UCAR, with respect to any
matter hereafter arising which, if existing or known as of the
date of this Agreement, would have been required to be set forth
or described in such Schedule. Any such supplemental disclosure
will be deemed to have cured any breach of any representation or
warranty made in this Agreement, but will not be deemed to have
been disclosed as of the date of this Agreement for purposes of
determining whether or not the conditions set forth in Articles 7
and 8 hereof have been satisfied. The Stockholders shall also
have the right through November 23, 1994 to supplement the
disclosure Schedules; provided, that such supplemental disclosure
shall, in the aggregate, taken together with the Schedules
accompanying this Agreement when first executed (the "Original
Schedules"), not disclose any liens, claims or encumbrances which
would materially and adversely impair the value of the Lender's
collateral package with respect to the Borrowings or any state of
affairs representing a Material Adverse Effect, in either case,
not disclosed on the Original Schedules.
6.7 Limitation of Stockholders' Liabilities. From and
after the Closing Date, except as expressly provided for in this
Agreement or the agreements identified with an asterisk on
Schedule IV, (a) the Stockholders shall have no obligations or
liabilities whatsoever relating to the business, properties or
assets of UCAR and the Subsidiaries as the same may exist at the
Closing Date or arise thereafter and (b) the Buyer shall release,
indemnify and hold the Stockholders harmless from all such
obligations and liabilities (including the costs of defense
thereof and reasonable attorneys' fees and expenses) that are
alleged against or might otherwise be imposed on the Stockholders.
The Buyer shall cooperate with the Stockholders, both before and
after the Closing Date, by taking, and after Closing, by causing
the appropriate entity to take, all actions the Stockholders shall
reasonably request to effect the termination of any such
Stockholders' obligation or liability.
6.8 Tax Certificate. UCAR shall deliver to Mitsubishi
prior to the Closing the certificate referred to in Article 8(xi).
ARTICLE 7 - BUYER'S CONDITIONS TO CLOSING
The obligations of Buyer to consummate the Transactions are,
unless waived by Buyer, subject to the fulfillment, at or before
the Closing, of each of the following conditions:
(i) No statute or law, no rule or regulation
of a governmental agency, authority or instrumentality of
competent jurisdiction and no injunction or restraining order
of a court of competent jurisdiction shall be in effect which
prohibits, restricts or enjoins, and no suit, action or
proceeding shall be pending or threatened which seeks to
prohibit, restrict, enjoin, nullify, seek material damages
with respect to or otherwise materially adversely affect, the
consummation of the Transactions.
(ii) The applicable waiting period under the
HSR Act, including all extensions thereof, shall have expired
or been terminated.
(iii) The applicable waiting period under the
EU regulations, including all extensions thereof, shall have
expired or been terminated.
(iv) The applicable waiting period under
French, Canadian, Spanish and Italian laws, if any, including
all extensions thereof shall have expired or been terminated.
(v) Except for such changes as may occur in
the ordinary course of business or as may be permitted or
required pursuant to the terms hereof, the representations
and warranties of Stockholders set forth in Articles 3, 4,
and 5 hereof shall be true and correct in all material
respects on and as of the Closing Date with the same effect
as though such representations and warranties had been made
on and as of the Closing Date. The reference to "in all
material respects" in this condition is not intended to
broaden the scope of any exception for materiality contained
in any specific representation or warranty.
(vi) Stockholders shall have performed and
complied with all covenants and agreements required to be
performed or complied with by Stockholders under this
Agreement prior to or concurrently with the Closing in all
material respects. The reference to "in all material
respects" in this condition is not intended to broaden the
scope of any exception for materiality contained in any
covenant or agreement.
(vii) Buyer shall have received all
certificates and other documents, in form and substance
reasonably satisfactory to Buyer, required to be delivered to
Buyer at or before the Closing pursuant to this Agreement
duly executed by all necessary persons (other than Buyer).
(viii) Buyer shall have received the stock
certificates described in Article 1.4(a)(vii) hereof in
accordance with the terms of Article 1.4(a)(vii) hereof.
(ix) Buyer shall have received the
resignation of directors described in Article 1.4(a)(viii)
hereof.
(x) Stockholders and UCAR shall have
obtained the Required Consents.
(xi) Chemical Bank, on behalf of the Lenders,
shall not have declined to consummate the Borrowings as a
result of (i) "any material disruption of, or material
adverse change in, the financial, banking or capital markets"
or (ii) "any material adverse change in the assets, business,
properties, financial condition or results of operations of
UCAR and the Subsidiaries".
ARTICLE 8 - STOCKHOLDERS' AND UCAR'S CONDITIONS TO CLOSING
The obligations of Stockholders and UCAR to consummate the
Transactions are, unless waived by Stockholders, subject to the
fulfillment, at or before the Closing, of each of the following
conditions:
(i) No statute or law, no rule or regulation
of a governmental agency, authority or instrumentality of
competent jurisdiction and no injunction or restraining order
of a court of competent jurisdiction shall be in effect which
prohibits, restricts or enjoins, and no suit, action or
proceeding shall be pending or threatened which seeks to
prohibit, restrict, enjoin, nullify, seek material damages
with respect to or otherwise materially adversely affect, the
consummation of the Transactions.
(ii) The applicable waiting period under the
HSR Act, including all extensions thereof, shall have expired
or been terminated.
(iii) The applicable waiting period under the
EU regulations, including all extensions thereof, shall have
expired or been terminated.
(iv) The applicable waiting period under
French, Canadian, Spanish and Italian laws, if any, including
all extensions thereof shall have expired or been terminated.
(v) Except for such changes as may occur in
the ordinary course of business or as may be permitted or
required pursuant to the terms hereof, the representations
and warranties of Buyer set forth in Article 2 hereof shall
be true and correct in all material respects on and as of the
Closing Date with the same effect as though such
representations and warranties had been made on and as of the
Closing Date. The reference to "in all material respects" in
this condition is not intended to broaden the scope of any
exception for materiality contained in any specific
representation or warranty.
(vi) Buyer shall have performed and complied
with all covenants and agreements required to be performed or
complied with by Buyer under this Agreement prior to or
concurrently with the Closing in all material respects. The
reference to "in all material respects" in this condition is
not intended to broaden the scope of any exception for
materiality contained in any covenant or agreement.
(vii) Stockholders and UCAR shall have
received all certificates and other documents, in form and
substance reasonably satisfactory to Stockholders, required
to be delivered to Stockholders and UCAR at or before the
Closing pursuant to this Agreement duly executed by all
necessary persons (other than Stockholders and UCAR).
(viii) UCAR shall have received the Purchase
Price, Mitsubishi's shares of Class A Common Stock shall have
been redeemed by UCAR and cancelled, and Union Carbide shall
have received the Dividend in accordance with Article 1.3
hereof.
(ix) Stockholders and UCAR shall have
obtained the Required Consents.
(x) The Board of Directors of UCAR shall
have received a report, in form and substance, and from a
Person, satisfactory to it in the reasonable exercise of its
judgment, demonstrating that the surplus of UCAR for purposes
of the Delaware General Corporation Law is sufficient to pay
the Recapitalization Amount.
(xi) UCAR shall have delivered to Mitsubishi
the certificate described in Treasury Regulation section
1.897-2(h) under the Code with respect to the Redemption.
ARTICLE 9 - EFFECTIVENESS; TERMINATION; SURVIVAL OF AGREEMENT
9.1 Effectiveness. This Agreement shall become effective
upon the approval hereof by the Board of Directors of Mitsubishi.
9.2 Termination. Notwithstanding anything contained
herein to the contrary, this Agreement may be terminated:
(i) at the Closing or at any time prior
thereto, by mutual written agreement of Stockholders and
Buyer;
(ii) at any time after March 31, 1995 (the
"Termination Date") and prior to the Closing, by Buyer, if
(A) the Closing shall not have been consummated on or before
the Termination Date and (B) the failure to consummate the
Closing on or before the Termination Date did not result from
the failure by Buyer to perform or comply with any covenant
or agreement contained in this Agreement required to be
performed or complied with prior to the Closing by Buyer; or
(iii) at any time after the Termination Date
and prior to the Closing, by Union Carbide or Mitsubishi, if
(A) the Closing shall not have been consummated on or before
the Termination Date and (B) the failure to consummate the
Closing on or before the Termination Date did not result from
the failure by Union Carbide or Mitsubishi to perform or
comply with any covenant or agreement contained in this
Agreement required to be performed or complied with prior to
the Closing by Union Carbide or Mitsubishi.
If this Agreement so terminates, it shall become null and void and
have no further force or effect, except as provided in Article 9.3
hereof.
9.3 Survival after Termination. If this Agreement is
terminated in accordance with Article 9.2 hereof and the
Transactions are not consummated, this Agreement shall become null
and void and of no further force and effect, except for the
provisions of Articles 6.1(b), 13, 14, 15, 16, 17, 18 and 22;
provided, however, that none of the Parties shall have any
liability in respect of a termination of this Agreement.
ARTICLE 10 - TAX MATTERS; POST-CLOSING COVENANTS
10.1 Transactional Taxes and Costs.
(a) Stockholders shall be responsible for all sales,
transfer, conveyance, gains, stamp, value added or gross income
taxes (other than gross income taxes based on revenue or income of
UCAR or Buyer) or other taxes, duties, excises or governmental
charges, fees, imposts or assessments, and any interest or
penalties thereon, imposed by any taxing jurisdiction (the
foregoing are hereinafter referred to as "Transactional Taxes")
with respect to the Acquisition, the Dividend or the Redemption,
to the extent that such Transactional Taxes would have been due if
the Acquisition, the Dividend and the Redemption had been
structured as a sale of 75% of the Capital Stock owned by each of
the Stockholders (the "Stockholder Transactional Taxes"). UCAR
shall be responsible for all Transactional Taxes relating to the
Transactions other than the Stockholder Transactional Taxes. Each
Party shall provide the other Parties with appropriate exemption
certificates or direct pay certificates where possible, or shall
promptly pay and discharge any Transactional Taxes for which such
Party is responsible pursuant to the first two sentences of this
Article 10.1(a). The foregoing notwithstanding, in the event any
Party shall be required to pay any Transactional Taxes for which
any other Party is responsible pursuant to the first two sentences
of this Article 10.1(a), such other Party shall promptly reimburse
such Party and hold such Party harmless from any Transactional
Taxes paid by such Party on behalf of such other Party. In the
event any taxing jurisdiction subsequently determines that any
additional Transactional Taxes (including interest or penalties
thereon) are due, the Party responsible for such Transactional
Taxes pursuant to the first two sentences of this Article 10.1(a)
shall hold any other Party harmless therefrom.
(b) Notwithstanding anything to the contrary
contained in this Agreement, Union Carbide's assumption of
"Assumed UCAR Tax Liabilities" pursuant to Section 9.2 of the
Stock Purchase and Sale Agreement, dated November 9, 1990, among
Mitsubishi, Union Carbide, and UCAR Carbon Company, Inc. shall
continue in effect pursuant to its terms.
(c) Buyer will be responsible for and shall hold
Stockholders harmless from any Tax arising from any election by
Buyer under Section 338 of the Internal Revenue Code.
(d) UCAR shall be responsible for all recording fees
and notarial fees arising out of the sale of the Acquired Shares
or otherwise on account of this Agreement or the Transactions.
UCAR shall promptly pay and discharge such fees and shall promptly
reimburse Buyer for any amounts Buyer may have expended on such
fees.
10.2 Records Retained by Stockholders.
(a) Except as otherwise provided in Articles
10.2(b), 10.2(c) and 10.2(d) hereof or in any other agreement to
which UCAR or any of the Subsidiaries and Stockholders or any of
their respective subsidiaries are parties which are in each case
shown on Schedule IV, Stockholders shall deliver or cause to be
delivered to UCAR or the Subsidiaries within sixty (60) days after
the Closing, all books, records and files which pertain to the
Business as conducted by UCAR and the Subsidiaries, UCAR, any
Subsidiary or any of the properties owned, leased or used by UCAR
or any Subsidiary, to the extent such books and records relate
solely to the Business and do not contain any information
pertaining to the Stockholders or Stockholders' Affiliates (other
than UCAR and the Subsidiaries) and which are possessed by
Stockholders, or their respective subsidiaries or their respective
directors, officers, employees, agents, representatives or
nominees (the "Business Records").
(b) All Business Records which are (i) required by
Stockholders or their subsidiaries or their respective directors,
officers, employees, agents, representatives or nominees in
connection with any pending or threatened claim, suit, action,
proceeding or investigation or termination or (ii) subject to any
"Hold Order" issued pursuant to the Records Retention and
Protection Manual of Union Carbide (a complete and accurate copy
of which has been made available to Buyer) shall be retained by
Stockholders or such subsidiary, director, officer, employee,
agent, representative or nominee until the final termination of
such claim, suit, action, proceeding or investigation or
termination of such "Hold Order" as the case may be. Prior to
such termination, copies of such Business Records shall be
delivered to UCAR or the Subsidiaries. After such final
termination, such Business Records shall be delivered to UCAR or
the Subsidiaries.
(c) Nothing contained herein shall obligate or
require Stockholders to deliver or cause to be delivered to UCAR
or the Subsidiaries any Business Records which pertain to the
Transactions and the photocopies of Business Records contained in
the data room for the Transactions.
(d) All Business Records which contain information
relating to Stockholders or any of their respective subsidiaries
or Affiliates shall be retained by Stockholders or such subsidiary
or Affiliate and copies of such Business Records (from which such
information shall have been deleted) shall be delivered to UCAR or
the Subsidiaries.
10.3 Access by Stockholders. At any time and from time
to time after the Closing, upon reasonable request by
Stockholders, UCAR shall, and shall cause the Subsidiaries to, (i)
provide full access, during normal business hours, to Stockholders
and their respective subsidiaries and the officers, employees,
other representatives and counsel of Stockholders and their
respective subsidiaries to the facilities, books, records, files,
paper, data and information relating to UCAR, any Subsidiary or
any of the properties owned, leased or used by UCAR or any
Subsidiary and (ii) make their employees available to Stockholders
and their respective subsidiaries and the officers, employees,
other representatives and counsel of Stockholders and their
respective subsidiaries, in each case to the extent reasonably
necessary and within a reasonable time period in connection with
any tax, pension or employee benefit matter pertaining to
Stockholders or any of their respective subsidiaries or any Taxes
for which Stockholders are responsible under this Agreement, at no
charge to Stockholders or such subsidiaries, officers, employees,
other representatives or counsel; provided, however, that
Stockholders shall reimburse UCAR and the Subsidiaries for travel,
lodging, meal and other expenses directly and reasonably incurred
by such employees in connection with such request.
10.4 Preservation of Records. After the Closing, UCAR
shall, and shall cause the Subsidiaries to, preserve all books,
records, files, papers, data and information which is possessed by
it or them and which relates to UCAR or the Subsidiaries for (i) a
period of seven (7) years after the Closing and (ii) for such
longer period as may be required (A) by an agreement, law,
ordinance, rule, regulation or any order, writ, judgment,
stipulation, edict, award or decree known to UCAR or any of the
Subsidiaries or (B) in connection with any pending or threatened
claim, suit, action, proceeding or investigation (including,
without limitation, tax examinations and audits) known to UCAR or
any of the Subsidiaries. If, upon the expiration of such period,
UCAR or any Subsidiary desires to destroy any of such books,
records, files, papers, data or information, UCAR shall, or shall
cause such Subsidiary to, give written notice to that effect to
Stockholders not more than one hundred eighty (180) and not less
than ninety (90) days prior to such destruction. Stockholders
shall have the right, at their respective cost and expense, to
take possession of such books, records, files, papers, data or
information; provided, that Stockholders give written notice to
that effect to UCAR within ninety (90) days after such notice
shall have been given and takes such possession within one hundred
eighty (180) days thereafter. UCAR shall, and shall cause the
Subsidiaries to, cooperate with Stockholders in connection with
taking such possession.
10.5 Agreement Not To Compete. (a) Neither Union Carbide
nor Mitsubishi shall, or shall permit its Controlled Affiliates
(as defined below) to, directly or indirectly develop,
manufacture, service, market, sell or otherwise distribute Certain
Products (as defined below) in the UCAR Home Markets (as defined
below) at any time after the Closing Date until the Release Date
(as defined below).
(b) Notwithstanding the foregoing, Mitsubishi and
Union Carbide and their respective Controlled Affiliates may sell
or otherwise distribute Certain Products in the UCAR Home Markets
if appointed by UCAR or a Subsidiary as a distributor or other
agent of UCAR or a Subsidiary, on such terms and conditions as are
mutually agreed between the respective parties thereto; provided,
however, that such terms and conditions shall include the right of
any party to such distributorship or other agency to terminate at
any time.
(c) Except as otherwise provided in this Article
10.5, Union Carbide and Mitsubishi and their respective Affiliates
shall have the right to (1) engage in any and all businesses and
activities of any kind whatsoever, (2) use, lease and own any and
all assets, rights and properties of any kind whatsoever, however
used, leased or owned and wherever used, leased or owned, and (3)
receive compensation or profit therefrom for its or their own
account and without in any manner being obligated to disclose or
offer such businesses, activities, assets, rights, properties,
compensation or profit to the other Parties or their Affiliates.
(d) Nothing contained herein shall be deemed or
construed to restrict, limit or otherwise reduce the right of UCAR
and its Controlled Affiliates to engage in the Business anywhere
in the world at any time.
(e) Each of the Parties agrees that any breach of
this Article 10.5 by a Party would cause irreparable damage to the
other Parties and that, in the event of such breach, the other
Parties and their Affiliates shall have, in addition to any and
all other rights and remedies, the right to an injunction, an
order of specific performance or other equitable relief to prevent
or redress such breach.
(f) For purposes of this Article 10.5:
(i) "Certain Products" shall mean carbon or
graphite electrodes, carbon or graphite blocks (other than
NDK Blocks) (as defined below), flexible graphite, graphite
specialties (other than isotropic graphite), graphite anode
and calcined coal.
(ii) "Controlled Affiliate" shall mean, with
respect to any Person, any other Person which, directly or
indirectly, is controlled by such Person; provided, however,
that neither UCAR nor any of the Controlled Affiliates of
UCAR shall be deemed to be a "Controlled Affiliate" of Union
Carbide or Mitsubishi for the purposes hereof.
(iii) "NDK Blocks" shall mean carbon or
graphite blocks used as lining for furnaces, of substantially
the size and type presently manufactured by Nippon Electrode
Co., Ltd., a Japanese corporation.
(iv) "UCAR Home Markets" shall mean Austria,
Belgium, Brazil, Canada, Denmark, Switzerland, France,
Germany (including the territory formerly known as East
Germany), Greece, Iceland, Ireland, Italy, Luxembourg,
Mexico, the Netherlands, Norway, Portugal, South Africa,
Spain, Sweden, the United Kingdom, and the United States.
(v) "Release Date" shall mean (A) with
respect to Mitsubishi, the date that is four (4) years after
the Closing Date, and (B) with respect to Union Carbide, the
date that is two (2) years after the date upon which Union
Carbide is no longer represented on the UCAR Board of
Directors, shall beneficially own less than ten percent (10%)
of the issued and outstanding Capital Stock, and shall have
no contractual right (or shall have permanently waived any
contractual right) to recommend, nominate or have, or require
to be, elected any Director of UCAR, which shall in no event
be a date that is less than four (4) years after the Closing
Date.
ARTICLE 11 - EMPLOYEES AND BENEFITS
At the Closing, Buyer shall cause UCAR to continue to employ
the employees listed in Schedule X attached hereto (collectively,
the "Employee(s)") (i) in equivalent or greater positions, (ii) at
the same or greater wage rates, and (iii) with benefit plans,
compensation policies and practices which in the aggregate are
substantially equivalent to the Benefit Plans set forth on
Schedule XI attached hereto (the "Benefits"). Buyer agrees to
maintain the Benefits for at least two (2) years from and after
the Closing Date. Buyer shall accept and credit to all Employees
all previous service recognized by the UCAR Retirement Plan ("UCAR
Pension Plan") and Union Carbide benefit plans and compensation
practices under all of Buyer's benefit plans, compensation
policies and practices where such service is applicable.
(a) United States and Canada. In the event any
salaried Employee in the United States or Canada is terminated
involuntarily by Buyer or UCAR (other than for cause) within one
year of the Closing Date, in lieu of the regular layoff allowance,
such Employee will be provided those severance benefits listed in
Schedule XI for which such employee is eligible in addition to any
other benefits (other than the regular layoff allowance) to which
such Employee is entitled. The following provisions shall pertain
to the UCAR Pension Plan and the UCAR Carbon Savings Plan ("UCAR
Savings Plan") (collectively, the "UCAR Plans").
(1) Pension Plan. Buyer shall cause UCAR to
continue to maintain the UCAR Pension Plan for at least two
(2) years from and after the Closing Date. The UCAR Pension
Plan shall continue to recognize service and earnings
recognized under the Retirement Program Plan for Employees of
Union Carbide Corporation and its Participating Subsidiary
Companies ("UCC Plan") prior to February 25, 1991. No
transfer of assets from the UCC Plan to the UCAR Pension Plan
shall be made with respect to any Employee. Upon each
Employee's retirement from UCAR, the UCC Plan shall provide
to such Employee the benefits to which such Employee is
entitled under the UCC Plan as of the Closing Date, based on
earnings and service with UCAR prior to the Closing Date, but
only to the extent any obligation to recognize such service
and earnings exists prior to the Closing Date. UCAR may
reduce any benefit payable to such Employee under the UCAR
Pension Plan by the amount paid to such Employee under the
Union Carbide Plan. Union Carbide shall have the right to
suspend payment of benefits under the UCC Plan to any
Employee, or to any person who was an employee of Union
Carbide at any time during the twelve (12) month period
immediately preceding February 25, 1991 ("Former Employees"),
for any period during which such Employee or Former Employee
is or was either an employee of UCAR or, unless otherwise
agreed to in writing by Union Carbide, an independent
contractor or consultant performing duties for UCAR on a
substantially full-time basis. UCAR or Buyer shall notify
Union Carbide within ten (10) days of employment, as
employee, independent contractor or consultant, of any person
who was a Former Employee, or re-employment of any Employee
whose employment with UCAR terminates after the Closing Date.
(2) For purposes of Buyer's and UCAR's
obligations with respect to Employees under this Article 11,
former Employees shall be deemed to be Employees as of the
first date of employment with UCAR.
(3) Buyer shall continue to maintain the UCAR
Savings Plan for at least two (2) years from and after the
Closing Date.
(b) International. Schedule XVII attached hereto
sets forth the international benefit plans, compensation policies
and practices provided to Employees of UCAR and certain Foreign
Subsidiaries (collectively, the "International Plans"). Buyer
agrees to cause UCAR to maintain benefit plans, compensation
policies and practices which in the aggregate are substantially
equivalent to the International Plans for at least two (2) years
from and after the Closing Date.
ARTICLE 12 - SURVIVAL OF REPRESENTATIONS INDEMNIFICATION
12.1 Survival of Representations and Covenants of Buyer.
The representations and warranties set forth in Article 2 hereof
shall survive the execution, delivery and performance of this
Agreement and the consummation of the Transactions for a period of
eighteen (18) months following the Closing Date. Except as
otherwise provided in the next sentence, the covenants and
agreements of Buyer set forth in this Agreement shall survive such
execution, delivery, performance and consummation for a period of
eighteen (18) months following the Closing Date. Each covenant and
agreement of Buyer set forth in this Agreement which, by its
terms, is not required to be fully performed or complied with
prior to the Closing shall survive such execution, delivery,
performance and consummation for a period of eighteen (18) months
following the date by which such covenant or agreement is so
required to be fully performed or complied with. No suit, action
or proceeding may be commenced by Stockholders or UCAR with
respect to any claim arising out of or relating to such
warranties, representations, covenants or agreements after the
expiration of the period for which such representations,
warranties, covenants and agreements shall survive pursuant to
this Article 12.1 (the "Applicable Buyer Survival Period");
provided, however, that subject to this Article 12 and Article 22
hereof, Stockholders and UCAR shall have the right to commence a
suit, action or proceeding after the expiration of the Applicable
Buyer Survival Period with respect to claims arising out of or
relating to such representations, warranties, covenants or
agreements which shall have been asserted by Stockholders or UCAR
under Article 12.7 hereof before the expiration of the Applicable
Buyer Survival Period.
12.2 Survival of Representations and Covenants of Union
Carbide. The representations and warranties set forth in Articles
3 and 5 hereof shall survive the execution, delivery and
performance of this Agreement and the consummation of the
Transactions for a period of eighteen (18) months following the
Closing Date, except (i) in the case of representations and
warranties set forth in Article 5.9 as to which the period shall
be three years following the Closing Date and (ii) for the
indemnity set forth in Article 12.5(a)(iii) as to which the period
shall be ten years following the Closing Date. Except as
otherwise provided in the next sentence, the covenants and
agreements of Union Carbide set forth in this Agreement shall
survive such execution, delivery, performance and consummation for
a period of eighteen (18) months following the Closing Date. Each
covenant and agreement of Union Carbide set forth in this
Agreement which, by its terms, is not required to be fully
performed or complied with prior to the Closing shall survive such
execution, delivery, performance and consummation for a period of
eighteen (18) months following the date by which such covenant or
agreement is so required to be fully performed or complied with.
No suit, action or proceeding may be commenced by Buyer with
respect to any claim arising out of or relating to such
warranties, representations, covenants or agreements after the
expiration of the period for which such representations,
warranties, covenants and agreements shall survive pursuant to
this Article 12.2 (the "Applicable UCC Survival Period");
provided, however, that, subject to this Article 12 and Article 22
hereof, Buyer shall have the right to commence a suit, action or
proceeding after the expiration of the Applicable UCC Survival
Period with respect to claims arising out of or relating to such
representations, warranties, covenants and agreements which shall
have been asserted by Buyer under Article 12.7 hereof before the
expiration of the Applicable UCC Survival Period.
12.3 Survival of Representations and Covenants of
Mitsubishi. The representations and warranties set forth in
Articles 4 and 5 hereof shall survive the execution, delivery and
performance of this Agreement and the consummation of the
Transactions for a period of eighteen (18) months following the
Closing Date, except (i) in the case of representations and
warranties set forth in Article 5.9 as to which the period shall
be three years following the Closing Date and (ii) for the
indemnity set forth in Article 12.5(a)(iii) as to which the period
shall be ten years following the Closing Date. Except as
otherwise provided in the next sentence, the covenants and
agreements of Mitsubishi set forth in this Agreement shall survive
such execution, delivery, performance and consummation for a
period of eighteen (18) months following the Closing Date. Each
covenant and agreement of Mitsubishi set forth in this Agreement
which, by its terms, is not required to be fully performed or
complied with prior to the Closing shall survive such execution,
delivery, performance and consummation for a period of eighteen
(18) months following the date by which such covenant or agreement
is so required to be fully performed or complied with. No suit,
action or proceeding may be commenced by Buyer with respect to any
claim arising out of or relating to such warranties,
representations, covenants or agreements after the expiration of
the period for which such representations, warranties, covenants
and agreements shall survive pursuant to this Article 12.3 (the
"Applicable MC Survival Period"); provided, however, that, subject
to this Article 12 and Article 22 hereof, Buyer, shall have the
right to commence a suit, action or proceeding after the
expiration of the Applicable MC Survival Period with respect to
claims arising out of or relating to such representations,
warranties, covenants and agreements which shall have been
asserted by Buyer under Article 12.7 hereof before the expiration
of the Applicable MC Survival Period.
12.4 Indemnification by Buyer.
Subject to Articles 12.1, 12.7 and 22 hereof, Buyer shall
indemnify Stockholders and their respective directors, officers,
employees, affiliates, successors and assigns ("Stockholders'
Indemnitees") for, and shall hold, Stockholders' Indemnitees
harmless from and against, any and all damages, claims, losses,
liabilities and expenses (including, without limitation, interest,
penalties and reasonable legal, accounting and other expenses)
asserted against or incurred or sustained by Stockholders'
Indemnitees arising out of:
(i) any breach of any covenant or agreement
contained in Article 6,10 or 11 hereof by Buyer; or
(ii) any breach of any of the warranties or
representations set forth in Article 2 hereof.
12.5 Indemnification by Stockholders.
(a) Subject to Articles 12.2, 12.3, 12.5(d),
12.5(e), 12.7 and 22, Stockholders shall indemnify UCAR (to the
extent set forth below), Buyer, and Buyer's directors, officers,
employees, affiliates, successors and assigns (to the extent set
forth below) (collectively "Buyer's Indemnitees") for, and shall
hold Buyer's Indemnitees harmless from and against, any and all
damages, claims, losses, liabilities and expenses (including,
without limitation, interest, penalties and reasonable legal,
accounting and other expenses) asserted against or incurred or
sustained by Buyer's Indemnitees arising out of:
(i) any breach of any covenant or agreement
contained in Article 6 or 10 hereof by Stockholders (to the
extent such breach is not attributable to any action, delay
in acting or failure to act after the Closing by Buyer, UCAR
or their respective subsidiaries or Affiliates);
(ii) any breach of any of the warranties or
representations set forth in Article 5 hereof; or
(iii) any liabilities for personal injury or
property damage alleged to arise out of emissions from UCAR's
facility in Yabucoa, Puerto Rico.
(b) Subject to Articles 12.2, 12.3, 12.5(d),
12.5(e), 12.7 and 22 hereof Union Carbide shall indemnify Buyer's
Indemnitees for and shall hold Buyer's Indemnitees harmless from
and against, any and all damages, claims, losses, liabilities and
expenses (including, without limitation, interest, penalties and
reasonable legal, accounting and other expenses) asserted against
or incurred or sustained by Buyer's Indemnitees arising out of any
breach of any of the warranties or representations set forth in
Article 3 hereof.
(c) Subject to Articles 12.2, 12.3, 12.5(d),
12.5(e), 12.7 and 22 hereof Mitsubishi shall indemnify Buyer's
Indemnitees for and shall hold Buyer's Indemnitees harmless from
and against, any and all damages, claims, losses, liabilities and
expenses (including, without limitation, interest, penalties and
reasonable legal, accounting and other expenses) asserted against
or incurred or sustained by Buyer's Indemnitees arising out of any
breach of any of the warranties or representations set forth in
Article 4 hereof.
(d) Buyer's Indemnitees shall be entitled to
indemnification (i) under Article 12.5(a)(i) or (ii) with respect
to Taxes imposed on or measured by net income of UCAR or any
Subsidiary thereof ("Income Taxes") only when, and only with
respect to amounts by which, the aggregate amount of all claims,
damages, losses, liabilities and expenses for Income Taxes with
respect to which Buyer's Indemnitees would otherwise be entitled
to indemnification under Article 12.5(a)(i) or (ii) hereof with
respect to Income Taxes exceeds Ten Million U.S. Dollars
($10,000,000); (ii) under Article 12.5(a)(iii) hereof only when,
and only with respect to amounts by which, the aggregate amount of
all claims, damages, losses, liabilities and expenses with respect
to which Buyer's Indemnitees would otherwise be entitled to
indemnification under Article 12.5(a)(iii) hereof exceeds Twenty
Million U.S. Dollars ($20,000,000); and (iii) under Articles
12.5(a)(i) or (ii), (b) or (c) hereof with respect to items other
than Income Taxes only when, and only with respect to amounts by
which, the aggregate amount of all claims, damages, losses,
liabilities and expenses with respect to which Buyer's Indemnitees
would otherwise be entitled to indemnification under Articles
12.5(a)(i) or (ii), (b) and (c) hereof, with respect to items
other than Income Taxes, exceeds Ten Million U.S. Dollars
($10,000,000). In no event shall the aggregate amount of
indemnification to which Buyer's Indemnitees would otherwise be
entitled under Articles 12.5(a)(i), (a)(ii), (b) and (c) hereof,
with respect to items other than Income Taxes, hereof exceed Fifty
Million U.S. Dollars ($50,000,000). The limitations contained in
this Article 12.5(d) shall not apply to indemnities relating to
Articles 10.1(a) or 10.1(b).
(e) If any event shall occur or circumstance shall
exist which would otherwise entitle Buyer's Indemnitees to
indemnification under Articles 12.5(a), (b) or (c) hereof, no
loss, damage, claim, liability or expense shall be deemed to have
been asserted against or incurred or sustained by Buyer's
Indemnitees to the extent of any proceeds recovered or recoverable
by Buyer, UCAR or any of their respective subsidiaries or
Affiliates from any third party (including, without limitation,
any insurance company) with respect thereto. Buyer agrees (i) in
good faith, to diligently seek recovery, and to cause UCAR, Buyer
and their respective subsidiaries and Affiliates to diligently
seek to recover, at its and their cost and expense, from all third
parties (including, without limitation, all insurance companies)
with respect to all losses, claims, damages, liabilities and
expenses with respect to which Buyer's Indemnitees make or may
make a claim for indemnification hereunder and (ii) to keep
Stockholders fully and promptly informed of all material matters
related thereto. No insurance recovery by UCAR or any of its
Subsidiaries will reduce the limits on indemnification specified
in Article 12.5(d); provided, that in no way shall the foregoing
be construed to apply to any payment by a Stockholder under
Article 12.5, including payments by a Stockholder using the
proceeds from an insurance policy held by either of them or their
Affiliates.
(f) Payments pursuant to this Article 12.5 arising
out of any breach of any warranties or representations set forth
in Article 5 hereof or any covenants or agreements under this
Agreement relating to UCAR or any of its Subsidiaries shall be
made to UCAR. Other payments pursuant to this Article 12.5 shall
be made as Buyer shall direct.
(g) The indemnities provided by Stockholders under
this Article 12.5 with respect to Taxes shall not be diminished as
a result of any additional disclosure provided pursuant to Article
6.6 hereof after November 23, 1994.
(h) Notwithstanding anything to the contrary set
forth in this Agreement, if any Taxes are required to be withheld
(other than withholding Taxes under section 1445 of the Code), but
are not withheld, from a payment made to a Stockholder pursuant to
this Agreement, such Stockholder shall indemnify UCAR or Buyer and
shall hold UCAR or Buyer harmless from and against, any and all
damages, claims, losses, liabilities and expenses (including
without limitation, interest, penalties and reasonable legal,
accounting and other expenses) asserted against or sustained by
UCAR or Buyer as a result of UCAR or Buyer failing to withhold any
Taxes required to be withheld. If UCAR fails to withhold with
respect to the Redemption pursuant to section 1445 of the Code and
the IRS later asserts a claim against Buyer or UCAR with respect
to such failure to withhold, Mitsubishi shall indemnify Buyer or
UCAR, as the case may be, for any Taxes or interest thereon (and
associated legal, accounting and other expenses), but not for any
penalties, additions to Tax or interest thereon (and associated
legal, accounting and other expenses).
12.6 Indemnification by UCAR.
(a) As used herein, the term "Stockholders Group"
shall mean Mitsubishi, Union Carbide, their respective
subsidiaries, the shareholders, partners, directors, officers,
employees, agents, representatives and consultants of Mitsubishi,
Union Carbide and their respective subsidiaries and the
successors, transferees and assigns of Mitsubishi, Union Carbide,
their respective subsidiaries and the shareholders, partners,
directors, officers, employees, agents, representatives and
consultants of Mitsubishi, Union Carbide and their respective
subsidiaries.
(b) Except as otherwise provided in Article
12.6(c) hereof, after the Closing, UCAR shall, or shall cause its
subsidiaries to, indemnify the Stockholders Group for, and shall
hold, or shall cause its subsidiaries to hold, the Stockholders
Group harmless from, any and all claims, demands, allegations,
suits, actions, proceedings, investigations, liabilities,
obligations, losses, expenses, expenditures, costs, duties, fines,
fees, taxes, levies, imposts, charges, assessments, deficiencies,
penalties, damages, settlements and judgments of any kind or
nature whatsoever asserted against or incurred or sustained by any
or all of the members of the Stockholders Group arising out of,
related to or associated with UCAR, its subsidiaries or Affiliates
or the conduct of the Business, regardless of whether they are
reflected in any of the Schedules attached hereto, regardless of
whether they arise out of, relate to or are associated with events
occurring or circumstances existing before or after the Closing,
regardless of whether they are asserted, incurred or sustained
before or after the Closing, regardless of when they became fixed
or known, regardless of whom they are asserted by or against,
regardless of where they are asserted, incurred or sustained, and
regardless of whether they arise out of, relate to or are
associated with health, safety, the environment, personal injury,
contracts, property damage, employment, negligence, recklessness,
violation of law, rule or regulation, misrepresentation, strict
liability or product liability (collectively, the "Business
Liabilities").
(c) Notwithstanding anything contained in Article
12.6(b) hereof, any now existing contracts, agreements or
commitments or any agreement contemplated hereby to the contrary,
Stockholders agree that UCAR shall not be obligated to indemnify
or cause its or their respective subsidiaries or Affiliates to
indemnify any member of the Stockholder Group for, or to hold or
cause its subsidiaries or Affiliates to hold them harmless from,
any of the Business Liabilities under Article 12.6(b) hereof (i)
where indemnification in respect of the same Business Liabilities
would deprive Buyer or UCAR of the benefit of indemnification to
which it is entitled pursuant to Articles 12.5 (a), (b) and (c)
hereof or (ii) where such Business Liabilities arise out of a
breach by any of them of any contract, agreement or commitment
entered into by any of them with UCAR or any of its subsidiaries
or Affiliates after the date hereof.
12.7 Indemnification Procedure.
(a) Upon obtaining knowledge thereof, a Person who
may be entitled to indemnification hereunder (the "Indemnitee")
shall promptly give the Party who may be obligated to provide such
indemnification (the "Indemnitor") written notice of any Loss (as
defined in Article 12.7(b) hereof) which the Indemnitee has
determined has given or could give rise to a claim for
indemnification hereunder (a "Notice of Claim"). A Notice of Claim
shall specify in reasonable detail the nature and all known
particulars related to a Loss. The Indemnitor shall perform its
indemnification obligations in respect of a Loss described in a
Notice of Claim under Articles 12.4, 12.5, or 12.6 hereof, as the
case may be, within thirty (30) days after the Indemnitor shall
have received such Notice of Claim; provided, however, such
obligation shall be suspended (i) so long as the Indemnitor is in
good faith performing its obligations under Article 12.7(c) hereof
with respect to such Loss and (ii) in the case of a Notice of
Claim given by Buyer's Indemnitees, until Buyer's Indemnitees
shall have fully performed their respective obligations under
Article 12.5(c) hereof with respect to a Loss for which Buyer's
Indemnitees may be entitled to recovery from a third party
(including, without limitation, any insurance company).
(b) As used in this Article 12.7, the term "Loss"
shall mean a damage, claim, suit, notice, loss, liability,
expense, cost, tax, penalty or interest described in Articles
12.4, 12.5(a), 12.5(b) and 12.5(c), and one of the Business
Liabilities or a fee, commission, compensation or payment
described in Article 15.1 hereof, as the case may be.
(c) Subject to Articles 12.7(d), 12.7(e) and
12.7(f) hereof, the Indemnitor shall have the sole and exclusive
right and obligation in good faith and at its own cost and
expense, to cure, remediate, mitigate, remedy or otherwise handle
any event or circumstance which gives rise to a Loss (including
events and circumstances which can be cured, remediated, mitigated
or remedied through the expenditure of money and events and
circumstances which give rise to a Loss which can be measured in
terms of money), regardless of whether such Loss arises out of a
breach of or default under any representation, warranty, covenant
or agreement contained in this Agreement or otherwise. Such right
and obligation shall include, without limitation, (i) the right to
investigate any such event or circumstance, (ii) the sole and
exclusive right and obligation to cure, mitigate, remediate,
remedy and otherwise handle any such event or circumstance on such
terms and conditions and by such means as the Indemnitor may
determine, in its sole discretion, and (iii) the sole and
exclusive right to defend, contest or otherwise oppose any third
party claim, demand, suit, action or proceeding related to such
event or circumstance with legal counsel selected by it. The
Indemnitor shall promptly inform the Indemnitee of all material
developments related to any such event or circumstance.
Notwithstanding anything contained herein (other than Articles
12.7(d), 12.7(e) and 12.7(f), hereof) to the contrary, the
Indemnitee shall have the right, but not the obligation, to
participate, at its own cost and expense, in the defense, contest
or other opposition of any such third party claim, demand, suit,
action or proceeding through legal counsel selected by it and
shall have the right, but not the obligation, to assert any and
all cross-claims or counterclaims which it may have. So long as
the Indemnitor is in good faith performing its obligations under
this Article 12.7(c), the Indemnitee shall, and shall cause its
subsidiaries to, (i) at all times, at its and their own cost and
expense, cooperate in all reasonable ways with, make its and their
relevant files and records available for inspection and copying
by, make its and their employees reasonably available to and
otherwise render reasonable assistance to the Indemnitor upon
request and (ii) not compromise or settle any such claim, demand,
suit, action or proceeding without the prior written consent of
the Indemnitor. If the Indemnitor fails to perform its
obligations under this Article 12.7(c), the Indemnitee shall have
the right, but not the obligation, to take the actions which the
Indemnitor would have had the right to take in connection with the
performance of such obligations and, if the Indemnitee is entitled
to indemnification hereunder in respect of the event or
circumstance as to which the Indemnitee takes such actions, then
the Indemnitor shall also indemnify the Indemnitee for all of the
legal, accounting and other costs, fees and expenses reasonably
and actually incurred in connection therewith. If the Indemnitor
proposes to settle or compromise any such third party action,
demand, claim, suit or proceeding, the Indemnitor shall give
written notice to that effect (together with a statement in
reasonable detail of the terms and conditions of such settlement
or compromise) to the Indemnitee a reasonable time prior to
effecting such settlement or compromise. Notwithstanding anything
contained herein (other than Article 12.7(d) hereof) to the
contrary, the Indemnitee shall have the right (i) to object to the
settlement or compromise of any such third party action, demand,
claim, suit or proceeding whereupon (A) the Indemnitee will assume
the defense, contest or other opposition of any such third party
action, demand, claim, suit or proceeding for its own account and
as if it were the Indemnitor and (B) the Indemnitor shall be
released from any and all liability with respect to any such third
party action, demand, claim, suit or proceeding to the extent that
such liability exceeds the liability which the Indemnitor would
have had in respect of such a settlement or compromise; provided,
however, that the Indemnitor shall not be so released if the
reason for the Indemnitee's so objecting is that, in the
reasonable opinion of the Indemnitee, such settlement or
compromise would have a materially adverse effect on the conduct
of the Business by UCAR and the Subsidiaries as presently
conducted or upon the Indemnitee, or (ii) to assume, at any time
by giving written notice to that effect to the Indemnitor, the
cure, mitigation, remediation, remedy or other handling of such
event or circumstance and the defense, contest or other opposition
of any such third party action, demand, claim, suit or proceeding
for its own account whereupon the Indemnitor shall be released
from any and all liability with respect to such event or
circumstance and such third party action, demand, claim, suit or
proceeding.
(d) Stockholders shall have the right, at their
own cost and expense, to participate in the defense, contest or
other opposition of all of the actions, claims, demands, suits or
proceedings which involve events occurring or circumstances
existing prior to the Closing with respect to the Business or the
properties owned, leased or used by UCAR or any of the
Subsidiaries and which, in the sole opinion of Stockholders, might
have an adverse impact on Stockholders or their respective
subsidiaries or Affiliates. Stockholders shall give prompt
written notice to Buyer and UCAR of their election to exercise
such right. After the Closing, UCAR shall not, and shall not
permit the Subsidiaries to, settle or compromise any action,
demand, claim, suit or proceeding in respect of which Stockholders
shall have given such a notice without the prior written consent
of Stockholders. If Stockholders do not consent to such a
settlement or compromise, Stockholders will assume the defense,
contest or other opposition of such action, demand, claim, suit or
proceeding for their own account whereupon UCAR and the
Subsidiaries shall be released from any liability with respect to
such action, claim, demand, suit or proceeding to the extent that
such liability exceeds the liability which UCAR and the
Subsidiaries would have had in respect of such a settlement or
compromise. Except as otherwise provided in the preceding
sentence, neither such right nor the exercise thereof shall be
construed to modify, expand or enlarge the obligations or
liabilities of Stockholders hereunder in any respect.
(e) Each Party shall, and shall cause its
subsidiaries to, take all actions which may be necessary to enable
the Indemnitor to exercise its rights and perform its obligations
under Article 12.7(c) hereof.
(f) Notwithstanding anything contained herein to
the contrary, each Party shall use, and shall cause its
subsidiaries and Affiliates to use, all reasonable efforts to
mitigate any and all Losses, in respect of which it may be
entitled to indemnification hereunder.
ARTICLE 13 - PUBLICITY; CONFIDENTIALITY
13.1 Publicity. No Party shall or shall permit its
subsidiaries to issue any publicity, release or announcement
concerning the execution and delivery of this Agreement, the
provisions hereof or the Transactions without the prior written
approval of the form and content of such publicity, release or
announcement by the other Parties hereto; provided, however, that
no such approval shall be required when such publicity, release or
announcement is required by (i) any applicable law, ordinance,
rule or regulation, (ii) any applicable rules or regulations of a
national or foreign stock exchange or the Automated Quotation
System maintained by the National Association of Securities
Dealers, Inc. or (iii) any order, writ, judgment, award, edict or
decree of any court of competent jurisdiction or any governmental
or quasi-governmental agency, authority or instrumentality of
competent jurisdiction and, provided further, that, prior to
issuing any publicity, release or announcement without such prior
written approval, the Party issuing or whose subsidiary is issuing
such publicity, release or announcement shall have given
reasonable prior notice to the other Parties of such intended
issuance and, if requested by any of the other Parties, shall have
used reasonable efforts at its own cost and expense to obtain a
protective order or similar protection for the benefit of such
other Party.
13.2 Confidentiality.
(a) All data, reports, records and other
information of any kind received by a Party or the Affiliates,
subsidiaries, shareholders, directors, partners, officers,
employees, agents, representatives, consultants or lenders of a
Party (such Party being hereinafter referred to as the "Receiving
Party") from one of the other Parties or the Affiliates,
subsidiaries, shareholders, partners, directors, officers,
employees, agents, representatives, consultants or lenders of one
of the other Parties (such other Party being hereinafter referred
to as the "Delivering Party") under this Agreement or in
connection with the Transactions shall be treated as confidential
(collectively, "Confidential Information"). Except as otherwise
provided herein, the Receiving Party shall not use (and shall not
permit its Affiliates, subsidiaries, shareholders, directors,
officers, partners, employees, agents, representatives,
consultants or lenders to use) Confidential Information for its
own (or their own) benefit and shall use all reasonable efforts
(and shall cause its Affiliates, subsidiaries, shareholders,
partners, directors, officers, employees, agents, representatives,
consultants and lenders to use all reasonable efforts) to maintain
the confidentiality of Confidential Information. If the Receiving
Party or any of its Affiliates, subsidiaries, shareholders,
directors, officers, partners, employees, agents, representatives,
consultants or lenders is required to disclose Confidential
Information by or to any court of competent jurisdiction or any
governmental or quasi-governmental agency, authority or
instrumentality of competent jurisdiction, the Receiving Party
shall, prior to such disclosure, immediately notify the Delivering
Party of such requirement and all particulars related to such
requirement. The Delivering Party shall have the right, at its
expense, to object to such disclosure and to seek confidential
treatment of any Confidential Information to be so disclosed on
such terms as it shall determine.
(b) The restrictions set forth in Article 13.2(a)
hereof shall not apply to the use or disclosure of Confidential
Information to the extent, but only to the extent, (i) permitted
or required pursuant to any other agreement between or among the
Parties (or their respective subsidiaries and Affiliates), (ii)
necessary by a Party (or its subsidiaries or Affiliates) in
connection with exercising its (or their) rights or performing its
(or their) duties or obligations under this Agreement or any other
agreements, instruments and documents contemplated hereby or
thereby or the other agreements described in clause (i) of this
Article 13.2(b), (iii) contemplated by the last two (2) sentences
of Article 13.2(a) hereof or (iv) that the Receiving Party can
demonstrate Confidential Information (A) is or becomes generally
available to the public through no fault or neglect of the
Receiving Party, (B) is received in good faith on a non-
confidential basis from a third party who discloses such
Confidential Information without violating any obligations of
secrecy or confidentiality or (C) was already possessed at the
time of receipt as shown by prior dated written records. The
restrictions set forth in Article 13.2(a) hereof shall not apply
to the use or disclosure by UCAR or any of its subsidiaries or
Affiliates of Confidential Information which consists of data,
reports, records and information relating to the Business or the
ownership, leasing or use of the properties owned, leased or used
by UCAR or any of its subsidiaries or Affiliates and which is used
or disclosed in connection with the conduct of the Business.
(c) For the purposes of this Article 13.2, (i)
information which is specific shall not be deemed to be within an
exception set forth in Article 13.2(b) hereof merely because it is
embraced by general information which is within such an exception
and (ii) a combination of information shall not be deemed to be
within an exception set forth in Article 13.2(b) hereof merely
because individual aspects of such combination are within such an
exception unless the combination of information itself, its
principle of operation and its value or advantages are within such
an exception.
13.3 Survival. This Article 13 shall survive the
termination of this Agreement for any reason and the consummation
of the Transactions.
ARTICLE 14 - NOTICES
All notices required or permitted to be given pursuant to
this Agreement shall be given in writing in the English language,
shall be transmitted by personal delivery, by registered or
certified mail, return receipt requested, postage prepaid, or by
telecopier or other electronic means and shall be addressed as
follows:
When Mitsubishi is the intended recipient:
Mitsubishi Corporation
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo 100-86, Japan
Attention: General Manager of the Carbon Division
Telecopy No: (81-3) 3210-8357
When Union Carbide is the intended recipient:
Union Carbide Corporation
Corporate Acquisitions and Divestitures
39 Old Ridgebury Road
Danbury, Connecticut 06817
Attention: Mr. Robert F.X. Fusaro
Associate General Counsel
Telecopy No: (1-203)794-4423
When UCAR is the intended recipient:
UCAR International Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06817
Attention: President
Telecopy No: (1-203) 794-3180
When Buyer is the intended recipient:
UCAR International Acquisition Inc.
c/o Blackstone Capital Partners II
Merchant Banking Fund L.P.
118 North Bedford Road
Suite 300
Mount Kisco, New York 10549
Attention: Mr. David Stockman
Telecopy: (1-914) 241-3786
A Party may designate a new address to which notices required or
permitted to be given pursuant to this Agreement shall thereafter
be transmitted by giving written notice to that effect to the
other Parties. Each notice transmitted in the manner described in
this Article 14 shall be deemed to have been given, received and
become effective for all purposes at the time it shall have been
(i) delivered to the addressee as indicated by the return receipt
(if transmitted by mail), the affidavit of the messenger (if
transmitted by personal delivery) or the answer back or call back
(if transmitted by telecopier or other electronic means) or (ii)
presented for delivery to the addressee as so indicated during
normal business hours, if such delivery shall have been refused
for any reason.
ARTICLE 15 - BROKERAGE FEES; CERTAIN EXPENSES
15.1 Brokerage Fees. Each Party agrees to indemnify the
other Parties for, and to hold the other Parties harmless from,
any claim or liability for any fee, commission, compensation or
other payment by any broker, finder or similar agent who claims to
have been, or who was in fact, engaged by or on behalf of it in
connection with the Transactions in accordance with the procedure
set forth in Article 12.7 hereof. Without limiting the foregoing,
Stockholders agree to pay all fees and expenses of Goldman, Sachs
& Co. and CS First Boston Corporation relating to the
Transactions.
15.2 Certain Expenses. Except as otherwise provided in
this Agreement and regardless of whether the Transactions are
consummated, each Party agrees to pay all expenses, fees and costs
(including, without limitation, legal, accounting and consulting
expenses) incurred by it in connection with the Transactions.
ARTICLE 16 - GOVERNING LAW; FORUM
The validity, interpretation, performance and enforcement of
this Agreement shall be governed by the law of the State of New
York (without giving effect to the laws, rules or principles of
the State of New York regarding conflicts of laws). Each Party
agrees that any proceeding arising out of or relating to this
Agreement or the breach or threatened breach of this Agreement
shall be commenced and prosecuted in a court in the State of New
York. Each Party consents and submits to the non-exclusive
personal jurisdiction of any court in the State of New York in
respect of any such proceeding. Each Party consents to service of
process upon it with respect to any such proceeding by registered
mail, return receipt requested, and by any other means permitted
by applicable laws and rules. Each Party waives any objection
that it may now or hereafter have to the laying of venue of any
such proceeding in any court in the State of New York and any
claim that it may now or hereafter have that any such proceeding
in any court in the State of New York has been brought in an
inconvenient forum. Each Party waives trial by jury in any such
proceeding.
ARTICLE 17 - BINDING EFFECT; ASSIGNMENT; THIRD PARTY BENEFICIARIES
This Agreement shall be binding upon the Parties and their
respective successors and assigns and shall inure to the benefit
of the Parties and their respective successors and permitted
assigns. No Party shall assign any of its rights or delegate any
of its duties under this Agreement (by operation of law or
otherwise) without the prior written consent of the other Parties.
Any assignment of rights or delegation of duties under this
Agreement by a Party without the prior written consent of the
other Parties if such consent is required hereby, shall be void;
provided, that Buyer may, without such prior written consent,
assign all of its rights and obligations under this Agreement on
or prior to the Closing to one or more of its Affiliates; and
provided further, that Buyer or UCAR may without such prior
written consent, for collateral security purposes assign its
rights (but not its obligations) effective on or after the Closing
Date to providers of financing in connection with the
Transactions. No Person shall be, or be deemed to be, a third
party beneficiary of this Agreement.
ARTICLE 18 - ENTIRE AGREEMENT
This Agreement and the Schedules and Exhibits attached hereto
constitute the entire contract among the Parties with respect to
the subject matter hereof and cancel and supersede all of the
previous or contemporaneous contracts, representations, warranties
and understandings (whether oral or written), including without
limitation, the Counteroffer, dated November 14, 1994 from
Mitsubishi and Union Carbide to the Buyer, by, between or among
the Parties with respect to the subject matter hereof. Except as
otherwise provided in Articles 5.21(a) and 7(vi) hereof, all of
the Schedules attached hereto shall be deemed to be dated the date
hereof. Except for the representations and warranties expressly
set forth in this Agreement, Buyer disclaims reliance upon (i) any
representations, warranties or guarantees (whether express or
implied and whether oral or written) by Stockholders, UCAR, any of
the Subsidiaries or any of their respective Affiliates, officers,
employees, agents or representatives (including, without
limitation, any projections of future sales, revenues, expenses or
earnings and any statements regarding the prospects of the
Business) or (ii) any other information with respect to the
Business, UCAR or the Subsidiaries provided by or on behalf of
them. Buyer represents and warrants that it has relied on its own
projections in connection with the Transactions. Each Party
agrees that the other Parties have the right to rely upon the
representations, warranties, covenants and agreements of such
party contained in this Agreement. Except as otherwise provided
in Articles 20 and 21 hereof, nothing contained in any document or
instrument of conveyance, transfer, assignment or delivery
executed or delivered at the Closing pursuant to this Agreement
shall amend, extend, modify, renew or alter in any manner any
representation, warranty, covenant, agreement or indemnity
contained herein. Nothing contained in this Agreement or in any
of the Schedules or Exhibits attached hereto shall constitute or
be interpreted or construed as an admission by any Party or any of
its subsidiaries or Affiliates of liability to third parties,
whether under any foreign, federal, state or local laws, rules,
regulations or ordinances or otherwise, or as an admission that
any Party or any of its subsidiaries or Affiliates are in
violation of or have ever violated any such laws, rules,
regulations or ordinances.
ARTICLE 19 - FURTHER ASSURANCES
At any time and from time to time after the Closing, the
Parties shall execute, deliver and acknowledge such other
documents and take such further actions as may be reasonably
required in order to consummate the Transactions.
ARTICLE 20 - AMENDMENTS
No addition to, and no cancellation, renewal, extension,
modification or amendment of, this Agreement shall be binding upon
a Party unless such addition, cancellation, renewal, extension,
modification or amendment is set forth in a written instrument
which states that it adds to, amends, cancels, renews, extends or
modifies this Agreement and which is executed and delivered on
behalf of such Party by an officer of, or attorney-in-fact for,
such Party. No addition to, and no cancellation, renewal,
extension, modification or amendment of, the Tradename and
Trademark License Agreement, dated as of November 1, 1990, (the
"Trademark License") between Union Carbide and UCAR Carbon
Technology Corporation ("UCAR Technology"), by UCAR or UCAR
Technology, respectively, or to which UCAR or UCAR Technology,
respectively, is a party shall be effective unless Buyer shall
have given its prior written approval thereto. [Note: At the
Closing Date the Trademark License will have a remaining term of
not less than 20 years.]
ARTICLE 21 - WAIVERS
No waiver of any provision of this Agreement shall be binding
upon a Party unless such waiver is expressly set forth in a
written instrument which is executed and delivered on behalf of
such Party by an officer of, or attorney-in-fact for, such Party.
Such waiver shall be effective only to the extent specifically set
forth in such written instrument. Neither the exercise (from time
to time and at any time) by a Party of, nor the delay or failure
(at any time or for any period of time) to exercise, any right,
power or remedy shall constitute a waiver of the right to
exercise, or impair, limit or restrict the exercise of, such
right, power or remedy or any other right, power or remedy at any
time and from time to time thereafter. No waiver of any right,
power or remedy of a Party shall be deemed to be a waiver of any
other right, power or remedy of such Party or shall, except to the
extent so waived, impair, limit or restrict the exercise of such
right, power or remedy.
ARTICLE 22 - REMEDIES LIMITED
The sole and exclusive rights, powers and remedies of the
Parties, other than such injunctive or other equitable remedies as
may be available to a Party, for a breach of or default under this
Agreement (including, without limitation, a breach of or default
under any of the representations, warranties, covenants or
agreements contained in this Agreement) shall be termination under
Article 9 hereof and indemnification under Articles 12 and 15
hereof, in each case limited as set forth therein. None of the
Parties shall, for any reason or under any legal theory, be liable
for any special, indirect, incidental or consequential damages
arising out of any breach of or default under this Agreement, even
if informed of the possibility of such damages in advance.
ARTICLE 23 - HEADINGS; COUNTERPARTS
The headings set forth in this Agreement have been inserted
for convenience of reference only, shall not be considered a part
of this Agreement and shall not limit, modify or affect in any way
the meaning or interpretation of this Agreement. This Agreement
may be signed in any number of counterparts, each of which (when
executed and delivered) shall constitute an original instrument,
but all of which together shall constitute one and the same
instrument. This Agreement shall become effective and be deemed
to have been executed and delivered by all of the Parties at such
time as counterparts shall have been executed and delivered by
each of the Parties, regardless of whether each of the Parties has
executed the same counterpart. It shall not be necessary when
making proof of this Agreement to account for any counterpart
other than a sufficient number of counterparts which, when taken
together, contain signatures of all of the Parties.
ARTICLE 24 - SEVERABILITY
If any provision of this Agreement shall hereafter be held to
be invalid, unenforceable or illegal in whole or in part, in any
jurisdiction under any circumstances for any reason, (i) such
provision shall be reformed to the minimum extent necessary to
cause such provision to be valid, enforceable and legal while
preserving the intent of the Parties as expressed in, and the
benefits to the Parties provided by, this Agreement or (ii) if
such provision cannot be so reformed, such provision shall be
severed from this Agreement and an equitable adjustment shall be
made to this Agreement (including, without limitation, addition of
necessary further provisions to this Agreement) so as to give
effect to the intent as so expressed and the benefits so provided.
Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other
jurisdiction or under any other circumstances. Neither such
holding nor such reformation or severance shall affect or impair
the legality, validity or enforceability of any other provision of
this Agreement.
ARTICLE 25 - CERTAIN REFERENCES
25.1 Affiliate. As used herein, reference to an
affiliate means, with respect to any Person, any other Person
controlling, controlled by or under common control with, or the
parents, spouse, lineal descendants or beneficiaries of, such
Person. The term "control" (including the terms "controlling",
"controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause
the direction of management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
25.2 Knowledge. As used herein, references to knowledge
of Union Carbide, Mitsubishi or UCAR shall mean the actual
knowledge of a senior officer or a director of Union Carbide or
Mitsubishi, as the case may be, or of a director of UCAR or the
Chairman, Chief Executive Officer, President, Chief Financial
Officer, Chief Operating Officer, Secretary, Treasurer or a Vice
President of UCAR.
25.3 Person. As used herein, references to a person
shall mean an individual or an entity, including, without
limitation, a corporation, limited liability company, partnership,
limited liability partnership, joint venture, trust, joint stock
company, association, unincorporated organization or group acting
in concert.
ARTICLE 26 - INDEX TO DEFINED TERMS
The capitalized terms set forth below have been defined
herein in the respective Articles or other parts hereof set forth
below:
Defined Term Article
Acquired Shares 1.1(a)
Acquisition 1.1(a)
Adjustment Amount 1.5(a)
Affiliates 25.1
Agreement Preamble
Applicable Buyer Survival Period 12.1
Applicable MC Survival Period 12.3
Applicable UCC Survival Period 12.2
Arbitrator 1.5(e)
Audited Financial Statements 5.8(a)
Balance Sheet Date 5.8(b)
Benefits 11.1
Benefit Plan 5.21(b)(i)
Borrowings 1.1(b)
Business 2nd Whereas
Business Records 10.2(a)
Business Liabilities 12.6(b)
Buyer Preamble
Buyer's Indemnitees 12.5(a)
Capital Stock 1st Whereas
CERCLA 5.17(a)(vi)
Class A Common Stock 5.6
Class B Common Stock 5.6
Closing 1.2(a)
Closing Date 1.2(a)
Closing Place 1.2(a)
Code 5.21(b)(ii)
Confidential Information 13.2(a)
Contaminant 5.17(d)(i)
Deferral Date 1.2(a)
Delivering Party 13.2(a)
Dividend 1.1(b)
Documents 1.6
Employee(s) 11.1
Environment and Environmental 5.17(d)(ii)
EPA 5.17(a)(vi)
ERISA Affiliate 5.21(b)(iii)
ERISA 5.21(b)(iv)
EU 6.4(b)
Foreign Subsidiary 1.2(a)
Former Employees 11.1(a)
Hold Order 10.2(b)(ii)
HS&EA Laws 5.17(d)(iii)
HS&EA Liabilities and Costs 5.17(d)(iv)
HS&EA Permits 5.17(d)(v)
HSR Act 6.4(a)
Income Taxes 12.5(d)(i)
Indemnitee 12.7(a)
Indemnitor 12.7(a)
International Plans 11.1(b)
IRS 5.21(b)(vi)
Knowledge 25.2
Leased Real Property 5.10(a)
Lenders 1.1(b)
Loss 12.7(b)
Material Adverse Effect 5.1
Mitsubishi Preamble
Net Indebtedness 1.5(b)
Net Worth 1.5(b)
New Non-Foreign Subsidiary 1.2(a)
New Foreign Subsidiaries 1.2(b)(ii)
Notice of Claim 12.7(a)
Notice of Dispute 1.5(d)
Original Schedules 6.6
Other Scheduled Contracts 5.13
Owned Real Property 5.10(a)
Parties 4th Whereas
Party 4th Whereas
PBGC 5.21(b)(v)
Peat Marwick 5.8(a)
Pension Plan 5.21(b)(vii)
Person 25.3
Post Closing 1.5(g)
Purchase Price 1.1(a)
Real Property 5.10(a)
Real Property Leases 5.10(a)
Recapitalization Amount 1.1(b)
Receiving Party 13.2(a)
Redeemed Shares 1.1(b)
Redemption 1.1(b)
Redemption Price 1.1(b)
Release 5.17(d)(vi)
Remedial Action 5.17(d)(vii)
Repayment 1.1(b)
Required Consents 6.4(d)
Statement 1.5(c)
Stockholder Transactional Taxes 10.1(a)
Stockholders 1st Whereas
Stockholders Indemnitees 12.4
Stockholders Group 12.6(a)
Subsidiaries 5.3(i)
Subsidiary 5.3(i)
Tax 5.9(c)
Taxes 5.9(c)
Tax Return 5.9(d)
Termination Date 9.1(ii)
Trademark License 20
Transactional Taxes 10.1(a)
Transactions 1.1(b)
TSCA 5.17(a)(viii)
Unaudited Financial Statements 5.8(b)
UCAR Preamble
UCAR Pension Plan 11.1
UCAR Plans 11.1(a)
UCAR Savings Plan 11.1(a)
UCAR Technology 20
UCC Plan 11.1(a)(1)
Union Carbide Preamble
IN WITNESS WHEREOF, the Parties have duly executed and
delivered this Agreement as of the date first above written.
UNION CARBIDE CORPORATION
By: /s/ Robert D. Kennedy
Name: Robert D. Kennedy
Title: Chairman and Chief Executive Officer
MITSUBISHI CORPORATION
By: /s/ Hiro Kawamura
Name: Hiro Kawamura
Title: Managing Director
UCAR INTERNATIONAL INC.
By: /s/ Robert P. Krass
Name: Robert P. Krass
Title: President and Chief Executive Officer
UCAR INTERNATIONAL ACQUISITION INC.
By: /s/ Peter G. Peterson
Name: Peter G. Peterson
Title: Chairman
GUARANTY
The undersigned unilaterally, unconditionally and irrevocably
guarantee to the Stockholders the full and timely performance by
Buyer or its assigns of all obligations of Buyer and such assigns
under the Recapitalization and Stock Purchase and Sale Agreement
dated as of November 14, 1994, among Union Carbide Corporation,
Mitsubishi Corporation, UCAR International Inc., and UCAR
International Acquisition Inc., including, without limitation, all
obligations for the payment of all damages, costs and expenses
which may become payable in accordance therewith; provided that
the obligations of the undersigned pursuant to this guaranty shall
be limited in amount by the aggregate sum of Eighty Million
Dollars ($80,000,000). This Guaranty has been duly authorized,
executed and delivered by the undersigned and constitutes a legal,
valid and binding agreement enforceable against the undersigned in
accordance with its terms, except insofar as enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws which
may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The undersigned
unconditionally waive any and all notices of any nature in
connection with their guaranty obligations pursuant to this
Guaranty and also unconditionally waive any and all rights they
might otherwise have to require that the Stockholders first make a
demand or institute a proceeding against the Buyer or any other
person, entity or enterprise, or to resort to any security or
other guaranty, as conditions to the obligations of the
undersigned under this Guaranty.
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: Blackstone Management
Associates II L.P.,
General Partner
By: /s/ Peter G. Peterson
Name: Peter G. Peterson
Title: General Partner
By: /s/ Stephen A. Scharzman
Name: Stephen A. Schwarzman
Title: General Partner
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
By: Blackstone Management
Associates II L.P.,
General Partner
By: /s/ Peter G. Peterson
Name: Peter G. Peterson
Title: General Partner
By: /s/ Stephen A. Schwarzman
Name: Stephen A. Schwarzman
Title: General Partner
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on
Form S-3 (Nos. 33-26185, 33-55560 and 33-63412) and the
Registration Statements on Form S-8 (File Nos. 2-90419, 33-22125,
33-38714 and 33-53573) of Union Carbide Corporation of our report
dated January 24, 1994 relating to the consolidated financial
statements of UOP and its subsidiaries appearing on page 17 of
Union Carbide Corporation's Annual Report on Form 10-K for the
year ended December 31, 1993, which is incorporated by reference
in this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Chicago, Illinois
March 6, 1995
