<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 1996
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ISP HOLDINGS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6719 51-0376469
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
ISP HOLDINGS INC.
818 WASHINGTON STREET
WILMINGTON, DELAWARE 19801
(302) 428-0847
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
RICHARD A. WEINBERG, ESQ.
ISP MANAGEMENT COMPANY, INC.
1361 ALPS ROAD
WAYNE, NEW JERSEY 07470
(201) 628-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
With a copy to:
STEPHEN E. JACOBS, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
(212) 310-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER NOTE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Series B 9% Senior Notes due 2003............ $325,000,000 99.721% $324,093,250 $ 98,210
Series B 9 3/4% Senior Notes due 2002........ $199,871,000 100% $199,871,000 $ 60,567
Total Registration Fee....................... $158,777
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 13, 1996
PROSPECTUS
OFFER FOR
ALL OUTSTANDING 9% SENIOR NOTES DUE 2003
IN EXCHANGE FOR SERIES B 9% SENIOR NOTES DUE 2003
AND
ALL OUTSTANDING 9 3/4% SENIOR NOTES DUE 2002
IN EXCHANGE FOR SERIES B 9 3/4% SENIOR NOTES DUE 2002
OF
ISP HOLDINGS INC.
EACH OF THESE EXCHANGE OFFERS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1997.
------------------------
ISP Holdings Inc., a Delaware corporation ('ISP Holdings'), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (each of which constitutes an 'Exchange
Offer' and both of which together constitute the 'Exchange Offers'), to exchange
(i) $1,000 principal amount of its Series B 9% Senior Notes due 2003 (the 'New
9% Notes') for each $1,000 principal amount of its 9% Senior Notes due 2003 (the
'Old 9% Notes'), of which an aggregate principal amount of $325,000,000 is
outstanding, and (ii) $1,000 principal amount of its Series B 9 3/4% Senior
Notes due 2002 (the 'New 9 3/4% Notes') for each $1,000 principal amount of its
9 3/4% Senior Notes due 2002 (the 'Old 9 3/4% Notes'), of which an aggregate
principal amount of $199,871,000 is outstanding.
The form and terms of the New 9% Notes are identical to the form and terms
of the Old 9% Notes except that the New 9% Notes have been registered under the
Securities Act of 1933, as amended (the 'Securities Act'), and will not bear any
legends restricting the transfer thereof. The New 9% Notes will evidence the
same debt as the Old 9% Notes and will be issued pursuant to, and entitled to
the benefits of, the Indenture governing the Old 9% Notes (the '9% Note
Indenture').
The form and terms of the New 9 3/4% Notes are identical to the form and
terms of the Old 9 3/4% Notes except that the New 9 3/4% Notes have been
registered under the Securities Act, and will not bear any legends restricting
the transfer thereof. The New 9 3/4% Notes will evidence the same debt as the
Old 9 3/4% Notes and will be issued pursuant to, and entitled to the benefits
of, the Indenture governing the Old 9 3/4% Notes (the '9 3/4% Note Indenture').
The covenants in the 9% Note Indenture are substantially similar to the
covenants in the 9 3/4% Note Indenture. See 'Description of the New Notes.'
The Exchange Offers are being made in order to satisfy certain contractual
obligations of ISP Holdings. There will be no cash proceeds to ISP Holdings from
the exchanges pursuant to the Exchange Offers. See 'The Exchange Offers' and
'Description of the New Notes.' As used herein, (i) the term '9% Notes' means
THE Old 9% Notes and the New 9% Notes, treated as a single class, (ii) the term
'9 3/4% Notes' means the Old 9 3/4% Notes and the New 9 3/4% Notes, treated as a
single class, (iii) the term 'Old Notes' means, collectively, the Old 9% Notes
and the Old 9 3/4% Notes, (iv) the term 'New Notes' means, collectively, the New
9% Notes and the New 9 3/4% Notes, (v) the term 'Notes' means, collectively, the
9% Notes and the 9 3/4% Notes and (vi) the term 'Indentures' means the 9% Note
Indenture and the 9 3/4% Note Indenture.
(continued on next page)
------------------------
SEE 'RISK FACTORS' BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE
OFFERS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 199 .
<PAGE>
(Continued from front cover)
The New Notes will bear interest from and including their respective dates
of issuance. Holders whose Old Notes are accepted for exchange will receive
accrued interest thereon to, but not including, the date of issuance of such New
Notes, such interest to be payable with the first interest payment on such New
Notes, but will not receive any payment in respect of interest on such Old Notes
accrued after the issuance of such New Notes.
ISP Holdings will accept for exchange any and all Old Notes validly
tendered and not withdrawn prior to 12:00 midnight, New York City time, on
________, 1997 unless extended (as so extended, the 'Expiration Date'). Tenders
of Old Notes may be withdrawn at any time prior to the Expiration Date. The
Exchange Offers are subject to certain customary conditions. See 'The Exchange
Offers.'
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the 'Commission') to third parties, ISP Holdings believes
that the New Notes issued pursuant to the Exchange Offers may be offered for
resale, resold and otherwise transferred by a holder thereof (other than any
such holder that is an 'affiliate' of ISP Holdings within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business, such holder
is not engaging in or does not intend to engage in a distribution of such New
Notes and such holder has no arrangement with any person to participate in the
distribution of such New Notes. Any holder who tenders in either Exchange Offer
for the purpose of participating in a distribution of New Notes cannot rely on
such interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. Each broker-dealer that
receives New Notes for its own account pursuant to either Exchange Offer must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Notes. The letter of
transmittal accompanying this Prospectus (the 'Letter of Transmittal') states
that, by so acknowledging and by delivering a prospectus meeting the
requirements of the Securities Act, a broker-dealer will not be deemed to admit
that it is an 'underwriter' within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New 9% Notes received in
exchange for Old 9% Notes or resales of New 9 3/4% Notes received in exchange
for Old 9 3/4% Notes, in each case where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. ISP Holdings has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See 'Plan of Distribution.'
The Notes are redeemable, in whole or in part, at the option of ISP
Holdings at any time on or after October 15, 1999 at the redemption prices
(expressed as percentages of principal amount) set forth herein, plus accrued
and unpaid interest to the redemption date. In the event that prior to October
15, 1999, a sale of common stock of ISP Holdings or certain of its subsidiaries
shall occur, ISP Holdings will have the option to redeem the Notes using the net
cash proceeds received therefrom by ISP Holdings as provided, and subject to the
limitations set forth, in the Indentures.
Each of the New 9% Notes and the New 9 3/4% Notes will be senior unsecured
obligations of ISP Holdings, will rank pari passu with all other unsecured and
unsubordinated obligations of ISP Holdings and will rank pari passu with each
other. ISP Holdings is a holding company which has no subordinated obligations;
consequently, the New Notes, at the time of issuance, will not be senior to any
obligations of ISP Holdings. Upon consummation of the Exchange Offers, the only
outstanding indebtedness for money borrowed of ISP Holdings will be the Notes.
As of September 29, 1996, the outstanding indebtedness for money borrowed of the
subsidiaries of ISP Holdings was $361.4 million and the other outstanding
liabilities reflected on ISP Holdings' consolidated balance sheet, including
trade payables and accrued expenses, was $226.1 million, not including $770.3
million of net noncurrent liabilities of discontinued operations. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operation.' The New Notes will be effectively subordinated to all liabilities of
such subsidiaries. As of September 29, 1996, after giving pro forma effect to
the Transactions (as defined), the outstanding consolidated indebtedness of ISP
Holdings and its then-existing subsidiaries would have been $812.2 million. The
Indentures limit, among other things, the incurrence of additional Debt (as
defined) and the issuance of Preferred Stock (as defined) by ISP Holdings and
its subsidiaries. See 'Risk Factors--Holding Company Structure and Related
Considerations' and 'Description of the New Notes--Certain Covenants.'
Prior to the Exchange Offers, there has been no public market for the
Notes. ISP Holdings does not intend to list the New 9% Notes or the New 9 3/4%
Notes on any securities exchange or to seek approval for quotation through any
automated quotation system and there can be no assurance that an active public
market for the New 9% Notes or the New 9 3/4% Notes will develop.
Neither Exchange Offer is conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to such Exchange Offer.
<PAGE>
EXPLANATORY NOTE
ISP Holdings is currently a wholly owned subsidiary of GAF Corporation
('GAF'), and Building Materials Corporation of America ('BMCA'), U.S. Intec,
Inc. ('USI') and GAF Chemicals Corporation ('GCC') are currently wholly owned
subsidiaries of ISP Holdings. In addition to its Chemicals Business (defined
below), ISP Holdings, through BMCA and USI, is currently a leading national
manufacturer of a broad line of asphalt roofing products and accessories for the
residential and commercial roofing markets (such businesses, collectively, the
'Building Materials Business'). GCC owns an investment in Rhone-Poulenc
Surfactants & Specialties L.P., a Delaware partnership which operates, among
other businesses, GCC's former surfactants chemicals business (the 'Surfactants
Partnership').
Subject to the satisfaction of certain conditions, GAF intends to effect a
series of transactions involving GAF's subsidiaries and certain assets of GAF's
subsidiaries (such transactions, collectively, the 'Spin Off Transactions') that
will result in, among other things, the capital stock of ISP Holdings (whose
principal asset will be approximately 83% of the issued and outstanding capital
stock of International Specialty Products Inc. ('ISP')) being distributed to the
stockholders of GAF. As a result of such distribution, ISP Holdings and ISP will
no longer be direct or indirect subsidiaries of GAF, and the Building Materials
Business and the assets of GCC will no longer be assets of ISP Holdings. See
'The Spin Off Transactions.'
Due to the likelihood of satisfying the conditions to the Spin Off
Transactions prior to the distribution of this Prospectus to the holders of the
Old Notes, except as otherwise provided herein, the information contained in
this Prospectus reflects the consummation of the Spin Off Transactions.
Accordingly, the financial information with respect to those companies that will
not be subsidiaries of ISP Holdings after giving effect to the Spin Off
Transactions, including BMCA, USI and GCC, has been accounted for as
discontinued operations. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Consolidated Financial Statements
included elsewhere in this Prospectus.
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS. AS
USED IN THIS PROSPECTUS, THE COMPANY MEANS ISP HOLDINGS INC. ('ISP HOLDINGS')
AND ITS CONSOLIDATED SUBSIDIARIES AND PREDECESSORS, UNLESS THE CONTEXT OTHERWISE
REQUIRES.
THE COMPANY
ISP HOLDINGS
The business of ISP Holdings consists of owning approximately 83% of the
issued and outstanding common stock of ISP. The remaining 17% of the outstanding
ISP common stock is publicly held and traded on the New York Stock Exchange. ISP
Holdings was formed in 1996 in order to consummate the ISP Holdings Transactions
(as defined herein), which were consummated on October 18, 1996. See 'The ISP
Holdings Transactions.' Prior to the Spin Off Transactions, ISP Holdings was a
direct wholly owned subsidiary of GAF. GAF is controlled by Samuel J. Heyman,
Chairman and Chief Executive Officer of GAF, ISP Holdings, ISP and BMCA. As a
result of the Spin Off Transactions, the outstanding common stock of ISP
Holdings is now held directly by the stockholders of GAF. Mr. Heyman continues
to control both ISP Holdings and GAF. See 'Security Ownership of Certain
Beneficial Owners and Management.' GAF was organized by Mr. Heyman for the
purpose of effecting the acquisition in March 1989 of the predecessor company to
GAF in a management-led buyout. ISP Holdings' principal executive offices are
located at 818 Washington Street, Wilmington, Delaware 19801 (telephone (302)
428-0847).
The financial information concerning ISP Holdings contained in this
Prospectus has been prepared on a basis which retroactively reflects the
formation of ISP Holdings.
ISP
ISP, through its direct and indirect subsidiaries, is a leading
multinational manufacturer of specialty chemicals, mineral products, filter
products and advanced materials (such businesses conducted through the direct
and indirect subsidiaries of ISP, collectively, the 'Chemicals Business'). ISP
produces and markets more than 325 specialty chemicals. These products are sold
in domestic and international markets, primarily for use in
1
<PAGE>
branded consumer products manufactured by multinational companies engaged in
relatively non-cyclical industries such as cosmetics and personal care,
pharmaceuticals, health-related products and beverages. ISP believes that it is
one of the two largest manufacturers of many of the specialty chemicals, mineral
products and advanced materials it produces.
ISP emphasizes sales of higher margin specialty chemicals to niche markets.
These products, while often representing a relatively small portion of its
customers' production costs, generally constitute key ingredients in the end
products in which they are used. ISP believes it has been able to sustain its
market share positions for many of its specialty chemicals by establishing and
maintaining long-term relationships with its customers, working closely with its
customers to develop specialty chemicals tailored to their specific needs,
emphasizing sales for use in branded products that typically are not
reformulated during their life cycles. In addition, because of the specialized
nature of ISP's specialty chemicals and the fact that certain of such chemicals
are sold primarily to relatively non-cyclical industries, ISP believes that
demand for such chemicals is less affected by changes in economic conditions
than is the case with commodity chemical products. See 'Business--ISP.'
During the years ended December 31, 1995 and December 31, 1994 and the nine
months ended September 29, 1996 and October 1, 1995, ISP had net sales of $689
million, $600 million, $544.1 million and $530.3 million, respectively, and
operating income of $106.1 million, $72.5 million, $98.2 million and $81.2
million, respectively.
ISP's strategy for future growth involves (i) the introduction of new
products and the development of new applications for existing products, (ii)
geographic expansion and penetration of new markets, and (iii) selected
acquisitions of businesses which complement ISP's existing businesses. See
'Business--ISP--Strategy.'
* * * * *
Statements contained herein as to the Company's competitive position are
based on industry information which the Company believes to be reliable.
2
<PAGE>
THE SPIN OFF TRANSACTIONS
GENERAL
On , 1997, GAF effected the Spin Off Transactions which
resulted in the common stock of ISP Holdings (whose principal asset is
approximately 83% of the issued and outstanding common stock of ISP) being
distributed to the stockholders of GAF. As a result of such distribution, ISP
Holdings and ISP are no longer direct or indirect subsidiaries of GAF, while
certain other assets and liabilities relating to the Building Materials
Business, including liabilities for asbestos-related claims, remain part of GAF,
but are not assets or liabilities of ISP Holdings. For information regarding the
Building Materials Business, see 'Available Information.'
Prior to consummation of the Spin Off Transactions, GAF received a ruling
(the 'IRS Ruling') from the Internal Revenue Service (the 'IRS') to the effect
that the Spin Off Transactions will not result in recognition of income by GAF
or any members of GAF's federal consolidated tax group (the 'GAF Tax Group').
The IRS Ruling was conditioned upon the accuracy of certain representations
contained in GAF's request for such ruling as to certain facts and circumstances
with respect to the Spin Off Transactions. The GAF Tax Group, which prior to the
Spin Off Transactions included ISP Holdings and ISP, would suffer adverse tax
consequences if the Spin Off Transactions did not qualify as 'tax-free spin
offs.' See 'Risk Factors--Additional Risks Related to the Spin Off
Transactions.' Also see 'Certain Relationships--Mutual Indemnification.'
Prior to consummation of the Spin Off Transactions, GAF also received an
opinion of Houlihan Lokey Howard & Zukin ('HLHZ') regarding the solvency of GAF
and the other companies that engaged in distributions pursuant to the Spin Off
Transactions. See 'The Spin Off Transactions' for a description of such opinion
and the reviews, analyses and inquiries made by HLHZ and the financial
projections, forecasts and other representations provided by GAF and certain of
its subsidiaries and relied upon by HLHZ in rendering such opinion.
THE ISP HOLDINGS TRANSACTIONS
The Tender Offer, the Old Exchange Offer and the 9% Note Offering (each as
defined below) and the application of the proceeds therefrom are collectively
referred to herein as the 'ISP Holdings Transactions' and, together with the
Spin Off Transactions, the 'Transactions.'
TENDER OFFER
On October 18, 1996, ISP Holdings consummated a cash tender offer and
consent solicitation (the 'Tender Offer') for all of the Senior Discount Notes
and Series B Senior Discount Notes due 1998 (the 'Discount Notes') of G-I
Holdings Inc., a wholly owned subsidiary of ISP Holdings prior to consummation
of the Spin Off Transactions ('G-I Holdings'). Approximately 99% of the
outstanding Discount Notes were tendered pursuant to the Tender Offer and
approximately $6.3 million in aggregate principal amount at maturity remain
outstanding. In connection with such offer to purchase, ISP Holdings also
obtained the consent of the tendering holders of the Discount Notes to certain
amendments (the 'Discount Note Amendments') to the Indenture dated as of October
5, 1993 (the 'Discount Note Indenture') between G-I Holdings and the Bank of New
York, as trustee, governing the Discount Notes. The Discount Note Amendments
modified or eliminated certain restrictive covenants contained in the Discount
Note Indenture, including those covenants that would have prohibited the Spin
Off Transactions. Pursuant to the Tender Offer, ISP Holdings paid an aggregate
purchase price of approximately $376.3 million with the proceeds of the 9% Note
Offering and the Repurchase as described below.
Concurrently with the consummation of the Tender Offer, ISP Holdings made a
loan to ISP in the amount of $73.2 million (the 'ISP Loan') and G-I Holdings
purchased for cash from ISP Holdings Discount Notes tendered pursuant to the
Tender Offer (the 'Repurchase') in an amount equal to $133 million, which was
sufficient, together with the net proceeds of the 9% Note Offering (after giving
effect to the ISP Loan), to allow ISP Holdings to consummate the Tender Offer
and to pay expenses in connection with the ISP Holdings Transactions. All
remaining Discount Notes validly tendered and purchased in the Tender Offer by
ISP Holdings (approximately $277.0 million at maturity) were held by ISP
Holdings and remained outstanding as obligations of G-I Holdings until
immediately prior to consummation of the Spin Off Transactions, at which time
they were contributed to G-I Holdings as a capital contribution and cancelled by
G-I Holdings. In addition, immediately prior to such capital contribution, at
the time of the Spin Off Transactions, G-I Holdings purchased from ISP Holdings
Discount Notes for an aggregate amount equal to $ , representing the
sum of $45 million and
3
<PAGE>
the amount of fees and expenses of ISP Holdings related to the Spin Off
Transactions (not including those fees and expenses already paid by ISP Holdings
related to the ISP Holdings Transactions). All Discount Notes so purchased were
cancelled by G-I Holdings.
OLD EXCHANGE OFFER
On October 18, 1996, ISP Holdings consummated an offer to exchange (the
'Old Exchange Offer') $1,000 principal amount of the Old 9 3/4% Notes for each
$1,000 principal amount of G-I Holdings' Series B 10% Senior Notes due 2006 (the
'10% Notes'). Approximately 99% of the outstanding 10% Notes were tendered
pursuant to the Old Exchange Offer and approximately $0.1 million in aggregate
principal amount remain outstanding. All 10% Notes validly tendered and accepted
in the Old Exchange Offer were held by ISP Holdings and remained outstanding as
obligations of G-I Holdings until immediately prior to consummation of the Spin
Off Transactions, at which time such 10% Notes were contributed to G-I Holdings
by ISP Holdings as a capital contribution and cancelled by G-I Holdings. In
connection with such exchange offer, ISP Holdings also obtained the consent of
the tendering holders of the 10% Notes to certain amendments (the '10% Note
Amendments') to the Indenture dated as of February 14, 1996 (the '10% Note
Indenture') between G-I Holdings and the Bank of New York, as trustee, governing
the 10% Notes. The 10% Note Amendments modified or eliminated certain
restrictive covenants contained in the 10% Note Indenture, including those
covenants that would have prohibited the Spin Off Transactions.
THE 9% NOTE OFFERING
On October 18, 1996, ISP Holdings issued and sold $325 million in aggregate
principal amount of the Old 9% Notes in a private placement (the '9% Note
Offering').
4
<PAGE>
THE EXCHANGE OFFERS
The Exchange Offers are being made with respect to all of ISP Holdings'
outstanding 9% Senior Notes due 2003 (the 'Old 9% Notes') and 9 3/4% Senior
Notes due 2002 (the 'Old 9 3/4% Notes'). The form and terms of each issue of New
Notes are the same as the form and terms of the respective issue of Old Notes,
except that, in each case, the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof. Each issue of New Notes will evidence the same debt as the respective
issue of Old Notes and will be entitled to the benefits of the Indenture
pursuant to which such Old Notes were issued. The Old Notes and the New Notes
are sometimes referred to collectively herein as the 'Notes.' See 'Description
of the New Notes.'
<TABLE>
<S> <C>
The Exchange Offers....................... (i) $1,000 principal amount of New 9% Notes in exchange for each
$1,000 principal amount of Old 9% Notes. As of the date hereof,
$325,000,000 aggregate principal amount of the Old 9% Notes are
outstanding. The terms of the New 9% Notes and the Old 9% Notes are
substantially identical.
(ii) $1,000 principal amount of New 9 3/4% Notes in exchange for each
$1,000 principal amount of Old 9 3/4% Notes. As of the date hereof,
$199,871,000 aggregate principal amount of the Old 9 3/4% Notes are
outstanding. The terms of the New 9 3/4% Notes and the Old 9 3/4%
Notes are substantially identical.
Based on an interpretation by the staff of the Commission set forth
in no-action letters issued to third parties, ISP Holdings believes
that New Notes issued pursuant to the Exchange Offers in exchange
for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than any such holder that is
an 'affiliate' of ISP Holdings within the meaning of Rule 405
promulgated under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities
Act, provided that (i) such New Notes are acquired in the ordinary
course of business of such holder, (ii) such holder is not engaging
in or does not intend to engage in a distribution of such New
Notes, and (iii) such holder does not have an arrangement or
understanding with any person to participate in the distribution of
such New Notes. Any holder who tenders in the Exchange Offers for
the purpose of participating in a distribution of the New Notes
cannot rely on such interpretation by the staff of the Commission
and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary
resale transaction. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it
will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Notes.
See 'The Exchange Offers--Purpose and Effect' and 'Plan of
Distribution.'
Registration Agreements................... (i) The Old 9% Notes were issued by ISP Holdings on October 18, 1996
in the 9% Note Offering. In connection therewith, ISP Holdings
agreed to use its best efforts to cause a registration statement to
become effective with respect to an exchange offer of a new
security for the Old 9% Notes (the '9% Note
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Registration Agreement'). See 'The Exchange Offers--Purpose and
Effect.'
(ii) The Old 9 3/4% Notes were issued pursuant to a private placement
by ISP Holdings on October 18, 1996 in the Old Exchange Offer. In
connection therewith, ISP Holdings agreed to use its best efforts
to cause a registration statement to become effective with respect
to an exchange offer of a new security for the Old 9 3/4% Notes
(the '9 3/4% Note Registration Agreement' and, together with the 9%
Note Registration Agreement, the 'Registration Agreements'). See
'The Exchange Offers--Purpose and Effect.'
Expiration Date........................... Each Exchange Offer will expire at 12:00 midnight, New York City
time, on , 1997, or at such later date or time to
which it is extended (as so extended, the 'Expiration Date'). ISP
Holdings does not intend to extend either Exchange Offer, although
it reserves the right to do so.
Withdrawal................................ The tender of Old Notes pursuant to either Exchange Offer may be
withdrawn at any time prior to 12:00 midnight, New York City time,
on the Expiration Date. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or
termination of the Exchange Offers.
Interest on the New Notes and
Old Notes............................... (i) The 9% Notes will pay interest on the principal thereof at the
rate of 9% per annum, payable on April 15 and October 15 each year,
commencing on April 15, 1997, to the persons who are registered
holders on the immediately preceding April 1 and October 1. See
'Description of the New Notes--Principal, Maturity and Interest.'
(ii) The 9 3/4% Notes will pay interest on the principal thereof at
the rate of 9 3/4% per annum, payable on February 15 and August 15
each year, commencing on February 15, 1997, to the persons who are
registered holders on the immediately preceding February 1 and
August 1. See 'Description of the New Notes--Principal, Maturity
and Interest.'
Conditions to the Exchange Offers......... The Exchange Offers are subject to certain customary conditions, each
of which may be waived by ISP Holdings. Neither Exchange Offer is
conditioned upon any principal amount of Old Notes being tendered
for exchange pursuant to such Exchange Offer. See 'The Exchange
Offers--Conditions.'
Procedures for Tendering Old Notes........ Each holder of Old Notes wishing to accept the applicable Exchange
Offer must complete, sign and date the applicable Letter of
Transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such facsimile, together
with such Old Notes and any other required documentation, to The
Bank of New York (the 'Exchange Agent') at the address set forth
herein. Tendered Old Notes must be received by the Exchange Agent
by 12:00 midnight, New York City time, on the Expiration Date. By
executing the Letter of Transmittal, each
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
holder will represent to the Company that, among other things, (i)
the New Notes acquired pursuant to the applicable Exchange Offer
are being obtained in the ordinary course of business of such
holder, (ii) the holder is not engaging in and does not intend to
engage in a distribution of such New Notes, (iii) the holder does
not have an arrangement or understanding with any person to
participate in the distribution of such New Notes, and (iv) the
holder is not an 'affiliate,' as defined under Rule 405 promulgated
under the Securities Act, of the Company. Pursuant to the
Registration Agreements, the Company is required to file a
registration statement for a continuous offering pursuant to Rule
415 under the Securities Act in respect of the Old Notes of any
holder that would not receive freely tradeable New Notes in either
Exchange Offer or is ineligible to participate in such Exchange
Offer and indicates that it wishes to have its Old Notes registered
under the Securities Act. See 'The Exchange Offers--Procedures for
Tendering.'
Book-Entry Transfer....................... The Exchange Agent will make a request to establish separate accounts
with respect to the Old Notes at the Book-Entry Transfer Facility
(as defined herein) for purposes of the Exchange Offers within two
business days after receipt of this Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by
causing the Book-Entry Transfer to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Old Notes may be effected
through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at its
address set forth herein on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied
with.
Special Procedures for
Beneficial Owner........................ Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee
(with respect to each issue of New Notes, each, a 'Registered
Holder') and who wishes to tender such Old Notes should contact the
Registered Holder promptly and instruct such Registered Holder to
tender on such beneficial owner's behalf. If such beneficial owner
wishes to tender on such owner's own behalf, such owner must, prior
to completing and executing the Letter of Transmittal and
delivering such owner's Old Notes, either make appropriate
arrangements to register ownership of the Old Notes in such
beneficial owner's name or obtain a properly completed bond power
from the Registered Holder. The transfer of registered ownership
may take considerable time. See 'The Exchange Offers--Procedures
for Tendering.'
Guaranteed Delivery Procedures............ If a Registered Holder of the applicable issue of Old Notes desires
to tender such Old Notes and the Old Notes are not immediately
available, or time will not permit such holder's Old Notes or other
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected according to
the guaranteed delivery procedures set forth in 'The Exchange
Offers--Guaranteed Delivery Procedures.'
Acceptance of Old Notes and Delivery of
New Notes............................... The Company will accept for exchange any and all Old Notes which are
properly tendered in the Exchange Offers prior to 12:00 midnight,
New York City time, on the Expiration Date. The New Notes issued
pursuant to the Exchange Offers will be delivered promptly
following the Expiration Date. See 'The Exchange Offers--Terms of
the Exchange Offers.'
Exchange Agent............................ The Bank of New York is serving as the Exchange Agent in connection
with the Exchange Offers.
Consequences of Failure to
Exchange................................ The liquidity of the market for a holder's Old Notes could be
adversely affected upon completion of the relevant Exchange Offer
if such holder does not participate in such Exchange Offer. See
'The Exchange Offers--Consequences of Failure to Exchange.'
Federal Income Tax Consequences........... The exchange pursuant to either Exchange Offer should not be a
taxable event for federal income tax purposes. See 'Certain Federal
Income Tax Considerations.'
</TABLE>
8
<PAGE>
TERMS OF THE NEW NOTES
<TABLE>
<S> <C>
Issuer.................................... ISP Holdings Inc.
Issues.................................... (i) Up to $325,000,000 aggregate principal amount at maturity of
Series B 9% Senior Notes due 2003 (the 'New 9% Notes').
(ii) Up to $199,871,000 aggregate principal amount at maturity of
Series B 9 3/4% Senior Notes due 2002 (the 'New 9 3/4% Notes').
Maturities................................ (i) October 15, 2003, with respect to the New 9% Notes.
(ii) February 15, 2002, with respect to the New 9 3/4% Notes.
Interest and Interest Payment Dates....... (i) The New 9% Notes will accrue interest at the rate of 9% per annum
accruing from the date of issuance or the most recent interest
payment date to which interest has been paid.
(ii) The New 9 3/4% Notes will accrue interest at the rate of 9 3/4%
per annum accruing from the date of issuance or the most recent
interest payment date to which interest has been paid.
Optional Redemption....................... Each of the New 9% Notes and the New 9 3/4% Notes is redeemable, in
whole or in part, at the option of ISP Holdings at any time on or
after October 15, 1999 at the redemption prices (expressed as
percentages of principal amount) set forth herein, plus accrued and
unpaid interest to the redemption date. In addition, prior to
October 15, 1999, an amount of each issue of New Notes representing
an aggregate of up to 50% of the then outstanding amount of such
issue of New Notes will be redeemable at the option of ISP Holdings
from the net cash proceeds of an issuance of common stock of ISP
Holdings or an issuance or sale of Common Stock of ISP, at 109% in
the case of the New 9% Notes, or 109.75% in the case of the New
9 3/4% Notes, of the principal amount thereof plus accrued interest
thereon to the date of redemption, provided that, after giving
effect to any such redemption, not less than a majority of the
principal amount of such 9% Notes or 9 3/4% Notes, as the case may
be, originally issued would be outstanding.
Change of Control Put and Call............ Upon the occurrence of a Change of Control (as defined), each holder
of New Notes will have the right to require the Company to
repurchase such holder's New Notes at a purchase price of 101% of
the principal amount of such New Notes (or, if lower, the
applicable redemption prices then in effect under the provisions
described in the first and fourth paragraphs under 'Description of
the New Notes--Optional Redemption'), plus accrued and unpaid
interest, if any, to the repurchase date, and the Company will have
the option to redeem the New Notes in whole at a redemption price
equal to the then outstanding principal amount, plus the Applicable
Premium (as defined), plus accrued and unpaid interest, if any, to
the redemption date.
Ranking and Holding Company Structure..... Each of the New 9% Notes and the New 9 3/4% will be senior unsecured
obligations of ISP Holdings and will rank pari passu with all other
unsecured and unsubordinated obligations of ISP Holdings and will
rank pari passu with each other. Immediately
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
following the issuance of the New Notes, ISP Holdings will not have
any indebtedness for money borrowed that ranks pari passu with, or
senior to, the Notes or any subordinated obligations. Upon
consummation of the Exchange Offers, the only outstanding
indebtedness for money borrowed of ISP Holdings will be the 9%
Notes and the 9 3/4% Notes.
ISP Holdings is a holding company, and therefore the New Notes will
be effectively subordinated to all existing and future liabilities,
including indebtedness, of subsidiaries of ISP Holdings. As of
September 29, 1996, such subsidiaries had outstanding indebtedness
for money borrowed of $361.4 million and other outstanding
liabilities reflected on ISP Holdings' consolidated balance sheet,
including trade payables and accrued expenses, of $226.1 million,
not including $770.3 million of net noncurrent liabilities of
discontinued operations. The Indentures governing the Notes (the
'Indentures') limit, among other things, the incurrence of
additional Debt (as defined) and the issuance of Preferred Stock
(as defined) by ISP Holdings and its subsidiaries. See 'Risk
Factors--Holding Company Structure and Related Considerations' and
'Description of the New Notes--Certain Covenants.'
Certain Covenants......................... The Indentures limit the Company and its subsidiaries from incurring
additional Debt, issuing Preferred Stock and incurring Liens (as
defined). The Indentures also contain covenants that, among other
things, limit the ability of the Company and its subsidiaries to
pay certain dividends or make certain other Restricted Payments (as
defined) and Restricted Investments (as defined), engage in
transactions with Affiliates (as defined) and agree to certain
additional limitations on dividends and other payment restrictions
affecting subsidiaries. The Indentures also limit the ability of
the Company to consolidate or merge with, or transfer all or
substantially all of its assets to, another person. However, all
such covenants are subject to a number of important qualifications
and exceptions. The Indentures permitted the consummation of the
Spin Off Transactions and, as a result of the Spin Off
Transactions, G-I Holdings and its subsidiaries, including BMCA,
are no longer subsidiaries of ISP Holdings and therefore are not
subject to the restrictions contained in the Indentures. See
'Description of the New Notes--Certain Covenants.'
Registration Rights....................... ISP Holdings has agreed to use its best efforts to cause to become
effective by February 14, 1997 a registration statement with
respect to the Exchange Offers. In the event that the Exchange
Offers are not completed by April 16, 1997, ISP Holdings will use
its best efforts to cause to become effective a shelf registration
statement with respect to the resale of the Old Notes and to keep
such shelf registration statement effective until three years after
the date of original issuance of the Old Notes.
If by April 16, 1997 (i) the Exchange Offer with respect to an issue
of Old Notes is not completed and (ii) no shelf registration
statement with respect to the resale of such Old Notes is declared
effective, additional interest will accrue on such Old Notes from
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
and including April 16, 1997 until but excluding the earlier of (i)
the completion of the Exchange Offer and (ii) the effective date of
such shelf registration statement. Such additional interest will be
payable in cash semiannually in arrears on April 15 and October 15
in the case of the 9% Notes, or February 15 and August 15, in the
case of the 9 3/4% Notes, at a rate per annum equal to 0.50% of the
aggregate principal amount outstanding of such issue of Old Notes.
See 'Description of the New Notes--Principal, Maturity and
Interest' and 'The Exchange Offers--Purpose and Effect.'
Use of Proceeds........................... There will be no cash proceeds to ISP Holdings from the exchanges
pursuant to the Exchange Offers.
Risk Factors.............................. Prospective holders of the New Notes should carefully consider the
specific factors set forth under 'Risk Factors,' as well as the
other information and data included in this Prospectus.
</TABLE>
11
<PAGE>
SUMMARY FINANCIAL DATA
Set forth below are summary consolidated financial data of ISP Holdings and
its subsidiaries. The results of any interim period are not necessarily
indicative of the results to be expected for the full year. The pro forma
balance sheet data give effect to the Transactions as if they had been completed
as of September 29, 1996. The pro forma operating data give effect to the
Transactions as if they had been completed as of January 1, 1995, in the case of
the year ended December 31, 1995 and the nine months ended October 1, 1995, and
as of January 1, 1996, in the case of the nine months ended September 29, 1996.
The Exchange Offers will not affect the amount of the Company's long-term debt
or stockholder's equity. The pro forma financial information does not purport to
project the financial position or the results of operations for any future
period or to represent what the financial position or results of operations
would have been if the Transactions had been completed at the dates indicated.
All financial data relating to ISP Holdings and its subsidiaries contained
herein have been prepared to retroactively reflect the formation of ISP
Holdings.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ------------------------------
-------------------------- OCT. 1, 1995 SEPT. 29, 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
------ ------ ------ ------------ --------------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.................................................. $548.3 $600.0 $689.0 $530.3 $544.1
Operating income........................................... 65.1 99.2 127.1 99.2 105.7
Interest expense........................................... 24.5 28.7 33.1 24.8 21.9
Income from continuing operations before income taxes and
extraordinary item....................................... 49.8 72.5 106.1 81.2 98.2
Income from continuing operations before extraordinary
item..................................................... 23.8 37.1 55.1 41.8 51.8
Ratio of earnings to fixed charges(1)...................... 2.83 3.32 4.06 4.08 5.23
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 29, 1996
---------------------------------------
PRO FORMA (GIVING EFFECT
DECEMBER 31, ACTUAL TO THE TRANSACTIONS)
1995 (UNAUDITED) (UNAUDITED)
------------ ----------- ------------------------
(IN MILLIONS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and short-term investments.................................. $ 150.0 $ 111.7 $ 156.7
Total working capital............................................ 290.0 413.0 220.9
Total assets..................................................... 1,460.4 1,537.3 1,361.1
Long-term debt less current maturities(2)........................ 280.3 239.8 789.3
Total stockholder's equity (deficit)............................. (1.7) 61.7 196.4
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ----------------------------------
-------------------------- OCT. 1, 1995 SEPT. 29, 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
------ ------ ------ -------------- ----------------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation........................................... $ 28.7 $ 32.8 $ 36.0 $ 26.7 $ 28.2
Goodwill amortization.................................. 13.9 13.4 13.2 9.9 9.9
Capital expenditures and acquisitions.................. 62.9 31.1 38.9 26.6 35.7
Adjusted EBITDA(3)..................................... 167.5 225.8 245.6 190.8 219.8
Ratio of Adjusted EBITDA to Adjusted Interest
Expense(3)........................................... 2.32 2.36 2.16 2.27 2.47
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, ------------------------------
1995 OCT. 1, 1995 SEPT. 29, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------- --------------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C>
PRO FORMA OPERATING DATA(4):
Interest Expense............................................................ $ 78.8 $59.1 $ 56.2
Income from continuing operations........................................... 25.3 19.5 29.4
Ratio of earnings to fixed charges(1)....................................... 1.79 1.80 2.16
Ratio of Adjusted EBITDA to Adjusted Interest Expense(3).................... 2.32 2.37 2.83
</TABLE>
- ------------------
(1) For purposes of these computations, earnings consist of income from
continuing operations before income taxes, minority interest and
extraordinary items plus fixed charges. Fixed charges consist of interest on
indebtedness (including amortization of debt issuance costs) plus that
portion of lease rental expense representative of interest (estimated to be
one-third of lease rental expense).
(2) See 'Capitalization' and Note 8 to Consolidated Financial Statements.
(3) The Adjusted EBITDA data relate to debt covenants under the Indentures. The
calculation of the ratio of Adjusted EBITDA to Adjusted Interest Expense has
been performed in accordance with the definitions in the Indentures. See
'Description of the New Notes.' Accordingly, Adjusted EBITDA is calculated
as income from continuing operations before income taxes, plus income (loss)
from discontinued operations before income taxes, less extraordinary items,
increased by interest expense, depreciation and goodwill amortization and
excluding equity in earnings of the GAF-Huls joint venture and Surfactants
Partnership income, except to the extent distributed in cash. Adjusted
Interest Expense is calculated as total interest expense excluding interest
expense on non-recourse debt related to the Surfactants Partnership.
Certain restrictions exist as to the amounts available for making loans,
paying dividends and otherwise making distributions to ISP Holdings by ISP,
which restrictions are not, in accordance with the Indentures, given effect
in the foregoing calculations. See 'Risk Factors--Holding Company Structure
and Related Considerations.'
The details of the calculations of Adjusted EBITDA and Adjusted Interest
Expense are set forth in the table on the following page.
(4) For an explanation of adjustments to arrive at 'Pro Forma Operating Data,'
see 'Notes to Selected Financial Data.'
13
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
------------------------
NINE MONTHS ENDED YEAR NINE MONTHS
-------------------------- ENDED ENDED
YEAR ENDED DECEMBER 31, OCT. 1, SEPT. 29, DEC. 31, OCT. 1,
------------------------------ 1995 1996 1995 1995
1993 1994 1995 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- ------------ ----------- -----------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing
operations before
income taxes and
extraordinary item............. $ 49,823 $ 72,484 $106,102 $ 81,205 $ 98,202 $ 60,352 $ 46,892
Add (Deduct):
Loss from discontinued
operations before
income taxes................... (15,649) (7,430) (39,642) (23,826) (25,414) -- --
Less:
Extraordinary items............ -- (1,237) -- -- -- -- --
Add Continuing Operations:
Interest expense............... 24,500 28,676 33,091 24,821 21,879 78,841 59,134
Depreciation................... 28,737 32,753 35,960 26,698 28,183 35,960 26,698
Goodwill amortization.......... 13,856 13,400 13,223 9,922 9,900 13,223 9,922
Add Discontinued Operations:
Interest expense............... 88,636 93,968 112,460 83,160 91,056 -- --
Depreciation................... 14,649 16,965 20,421 14,644 18,168 -- --
Goodwill amortization.......... 619 1,041 1,148 783 1,154 -- --
Less:
Surfactants Partnership
income, gross................. (42,920) (51,190) (32,380) (24,285) (24,218) -- --
Equity in earnings
of joint venture............ (2,051) (2,034) (5,413) (2,950) (4,948) (5,413) (2,950)
Add:
Distributions from
Surfactants
Partnership.................. 1,951 24,024 295 221 154 -- --
Dividends received
from joint venture........... 5,377 4,363 310 310 5,689 310 310
-------- -------- -------- ----------- ------------ ----------- -----------
Adjusted EBITDA................. $167,528 $225,783 $245,575 $ 190,703 $219,805 $ 183,273 $ 140,006
-------- -------- -------- ----------- ------------ ----------- -----------
-------- -------- -------- ----------- ------------ ----------- -----------
Interest expense-
continuing
operations..................... $ 24,500 $ 28,676 $ 33,091 $ 24,821 $ 21,879 $ 78,841 $ 59,134
Interest expense-
discontinued
operations..................... 88,636 93,968 112,460 83,160 91,056 -- --
-------- -------- -------- ----------- ------------ ----------- -----------
Total interest
expense........................ 113,136 122,644 145,551 107,981 112,935 78,841 59,134
Less:
Interest expense
on non-recourse
debt.......................... (40,969) (27,166) (32,085) (24,064) (24,064) -- --
-------- -------- -------- ----------- ------------ ----------- -----------
Adjusted Interest
Expense........................ $ 72,167 $ 95,478 $113,466 $ 83,917 $ 88,871 $ 78,841 $ 59,134
-------- -------- -------- ----------- ------------ ----------- -----------
-------- -------- -------- ----------- ------------ ----------- -----------
<CAPTION>
NINE MONTHS
ENDED
SEPT. 29,
1996
(UNAUDITED)
-----------
<S> <C>
Income from continuing operations
before income taxes and
extraordinary item............. $ 63,889
Add (Deduct):
Loss from discontinued
operations before income
taxes........................ --
Less:
Extraordinary items............ --
Add Continuing Operations:
Interest expense............... 56,192
Depreciation................... 28,183
Goodwill amortization.......... 9,900
Add Discontinued Operations:
Interest expense............... --
Depreciation................... --
Goodwill amortization.......... --
Less:
Surfactants Partnership income,
gross........................ --
Equity in earnings of joint
venture...................... (4,948)
Add:
Distributions from Surfactants
Partnership.................. --
Dividends received from joint
venture...................... 5,689
-----------
Adjusted EBITDA.................. $ 158,905
-----------
-----------
Interest expense-continuing
operations..................... $ 56,192
Interest expense-discontinued
operations..................... --
-----------
Total interest expense........... 56,192
Less:
Interest expense on
non-recourse debt............ --
-----------
Adjusted Interest Expense........ $ 56,192
-----------
-----------
</TABLE>
As an indicator of the Company's operating performance, the foregoing
supplemental financial information should not be considered as an alternative to
net income or any other measure of performance under generally accepted
accounting principles.
14
<PAGE>
RISK FACTORS
In addition to the other matters described in this Prospectus, the
following risk factors should be carefully considered by each holder of Old
Notes before accepting the applicable Exchange Offer, although the risk factors
set forth below are generally applicable to the Old Notes as well as the New
Notes.
SUBSTANTIAL LEVERAGE
The Company has substantial consolidated debt outstanding. At September 29,
1996, the Company had total outstanding consolidated long-term debt of $239.8
million and total common stockholder's equity of $61.7 million. At September 29,
1996, on a pro forma basis, after giving effect to the Transactions, the Company
would have had total outstanding consolidated long-term debt of $789.3 million
and total common stockholder's equity of $196.4 million. The Exchange Offers
will not affect the amount of the Company's long-term debt or shareholder's
equity. The substantial leverage of the Company has important consequences for
holders of the Notes, including the risk that the Company may not generate
sufficient cash flow from operations to pay principal and interest on its
indebtedness or to invest in its businesses. While the Company believes, based
upon its historical and anticipated performance, that it should be able to
satisfy its obligations (including interest on and principal of the Notes) from
operations and appropriate financings and otherwise, no assurance to that effect
can be given. While other measures to raise cash to satisfy obligations include
potential sales of assets or equity, the Company's ability to raise funds by
selling either assets or equity or debt securities is dependent on results of
operations and market conditions. In addition, if ISP Holdings owns less than
80% of the common stock, par value $.01 per share (the 'ISP Common Stock'), of
ISP, payments pursuant to its Tax Sharing Agreement with ISP (the 'ISP Holdings
Tax Sharing Agreement') would not be available to ISP Holdings. See 'Tax Sharing
Agreement.' In the event that the Company is unable to refinance indebtedness or
raise funds through sales of assets or equity or debt securities or otherwise,
its ability to pay principal of and interest on the Notes would be adversely
affected. See Note 8 of Notes to Consolidated Financial Statements and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Financial Condition.'
CHANGE OF CONTROL; ACCELERATION OF DEBT
ISP and its principal domestic subsidiaries are parties to a Credit
Agreement, dated July 26, 1996 (the 'ISP Credit Agreement'), with The Chase
Manhattan Bank, as Agent, and the banks named therein, that provides for a $400
million unsecured revolving credit facility, $75 million of which may be made
available for commercial and standby letters of credit. It is an event of
default under the ISP Credit Agreement if at any time, among other things, (i)
any person or group of related persons (other than Samuel J. Heyman and his
affiliates) shall, on any date, control at least as much of the voting stock of
ISP as is owned, directly or indirectly, by Mr. Heyman and his affiliates on
such date, (ii) Mr. Heyman and his affiliates, directly or indirectly, shall own
less than 25% of the voting stock of ISP outstanding on any date and any other
person or group of related persons shall control an amount of voting stock
greater than one half of the amount of voting stock of ISP owned by Mr. Heyman
and his affiliates on such date, or (iii) Mr. Heyman and his affiliates shall,
on any date, cease to own, directly or indirectly, at least 10% of the voting
stock of ISP outstanding on such date. If a change of control as described in
the ISP Credit Agreement occurs, the revolving credit facilities could be
terminated and the loans thereunder accelerated, an event which could also cause
the $200 million principal amount of 9% Senior Notes due 1999 of ISP (the 'ISP
Notes') to be accelerated. See 'Capitalization.' Such an event would have a
material adverse impact on ISP and ISP Holdings. Samuel J. Heyman, Chairman and
Chief Executive Officer of GAF, ISP Holdings, G-I Holdings, ISP and BMCA,
beneficially owns approximately 83% of the issued and outstanding ISP Common
Stock. Based on publicly available information, ISP Holdings believes that no
unrelated third party beneficially owns 5% or more of the issued and outstanding
ISP Common Stock.
HOLDING COMPANY STRUCTURE AND RELATED CONSIDERATIONS
ISP Holdings is a holding company with no business operations of its own.
ISP Holdings' principal sources of funds to pay interest and principal with
respect to the Notes, to redeem or repurchase Notes upon the occurrence of a
Change of Control or otherwise and to pay its other obligations, will be,
principally, dividends and loans from ISP, payments pursuant to the ISP Holdings
Tax Sharing Agreement, borrowings, refinancing of indebtedness or capital
contributions or loans from its affiliates or stockholders. None of the
affiliates or
15
<PAGE>
stockholders of ISP Holdings, including ISP, will be required to make any
capital contributions or other payments to ISP Holdings with respect to ISP
Holdings' obligations on the Notes or any of its other obligations, and the
obligations of ISP Holdings with respect to the Notes will not be guaranteed by
any affiliate of ISP Holdings or any other person. There can be no assurance
that any of the foregoing actions could be effected on satisfactory terms, that
they would be sufficient to enable ISP Holdings to make any payments in respect
of the Notes when required or that any of such actions would be permitted by the
terms of debt or other instruments of the affiliates or stockholders of ISP
Holdings then in effect.
The ISP Credit Agreement and the indenture governing the ISP Notes contain
restrictions on payments, including loans and advances, from ISP and its
subsidiaries to its parent corporations. Such restrictions limit the
availability of dividends and other payments from ISP, which would provide cash
to ISP Holdings to service its obligations, including interest on the Notes. In
addition, the ISP Credit Agreement limits ISP from making loans to, or providing
letters of credit for the benefit of, affiliates, including ISP Holdings, in
excess of $75 million outstanding at any time. As of September 29, 1996, after
giving effect to the most restrictive of the aforementioned restrictions, it
would have been permissible for ISP to pay dividends in the aggregate amount of
$79.9 million, of which $66.4 million would have been available to ISP Holdings,
and to make loans to affiliates of $72.7 million. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Financial Condition' and Note 8 of Notes to Consolidated Financial Statements.
The events that will constitute a Change of Control under the Indentures
may also constitute events of default or repurchase right events under certain
debt instruments of ISP and its subsidiaries. See '--Change of Control;
Acceleration of Debt.' In addition, if ISP Holdings owns less than 80% of ISP
Common Stock, payments pursuant to the ISP Holdings Tax Sharing Agreement would
not be available to ISP Holdings. See 'Tax Sharing Agreement.'
Any right of ISP Holdings and its creditors, including holders of the
Notes, to participate in the assets of any of ISP Holdings' subsidiaries upon
any liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors, including trade creditors (except
to the extent ISP Holdings may itself be a creditor of such subsidiary).
Accordingly, the Notes will be effectively subordinated to all liabilities of
ISP Holdings' subsidiaries, including trade payables.
ACETYLENE SUPPLY
The primary raw material used by ISP in the manufacture of its specialty
chemicals is acetylene. Acetylene is available from a limited number of
suppliers and, because of its instability, can only be transported short
distances. Acetylene is obtained by ISP for domestic use from two unaffiliated
suppliers, each using a different production technology, pursuant to long-term
supply contracts. In the event of a substantial interruption in the supply of
acetylene from current sources, no assurances can be made that ISP would be able
to obtain as much acetylene from other sources as would be necessary to meet its
supply requirements. A substantial interruption of ISP's supply of acetylene
would have a material adverse effect on the business and operations of the
Company as approximately 85-90% of the sales of ISP's specialty chemicals are
derived from acetylene which is either purchased in the United States as a raw
material or is purchased in the form of butanediol from GAF-Huls Chemie GmbH, a
joint venture between Huls AG and ISP ('GAF-Huls'). ISP has a long-standing
agreement with GAF-Huls to import butanediol into the United States for use as a
feedstock for the production of ISP's solvents and polymers. ISP has not
experienced an interruption of its acetylene supply that has had a material
adverse effect on its sales of specialty chemicals. See
'Business--ISP--Specialty Chemicals--Raw Materials.'
FOREIGN CURRENCY FLUCTUATIONS
Approximately 50% of the Company's net sales and 54% of its operating
income in 1995 was attributable to its international operations. Fluctuations in
the value of foreign currencies may cause the Company's U.S. dollar denominated
sales and profits to decrease or increase without relation to the actual sales
or profits of its international operations. For a discussion of the Company's
international operations, see 'Business--ISP--Specialty
Chemicals--International Operations,' and for a discussion of the Company's
policy to manage its foreign currency exposure, see 'Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Financial Condition.'
16
<PAGE>
SALES TO SIGNIFICANT CUSTOMERS
In 1995, BMCA purchased approximately $45.7 million of mineral products
from ISP, representing approximately 7% of ISP's total net sales and
approximately 53% of ISP's net sales of mineral products. No other customer
accounted for more than 5% of ISP's total net sales in 1995. BMCA purchases from
ISP all of its colored roofing granule requirements (except for the requirements
of BMCA's California roofing plant) under a requirements contract which was
renewed for 1997 and is subject to annual renewal unless terminated by ISP or
BMCA. In December 1995, USI commenced purchasing from ISP substantially all of
its requirements for colored roofing granules (except for the requirements of
USI's Stockton, California and Corvallis, Oregon plants) pursuant to a
requirements contract which expires December 31, 1997. During the period in 1995
after USI's acquisition by an affiliate of G-I Holdings, USI purchased
approximately $0.1 million of mineral products from ISP. The consummation of the
Spin Off Transactions, which resulted in BMCA and USI no longer being
subsidiaries of ISP Holdings, did not affect the terms of such requirements
contracts. A substantial decrease in business from BMCA would have an adverse
impact on ISP's financial condition and results of operations.
REGULATION; ENVIRONMENTAL CONSIDERATIONS
The Company, together with other companies, is a party to a variety of
proceedings and lawsuits involving environmental matters ('Environmental
Claims') under the Comprehensive Environmental Response Compensation and
Liability Act ('CERCLA') and similar state laws, in which recovery is sought for
the cost of cleanup of contaminated sites, a number of which are in the early
stages or have been dormant for protracted periods.
For additional information relating to environmental litigation involving
the Company, see 'Business--Environmental Litigation.'
The enactment by federal, state or local governments of new laws or
regulations or a change in the interpretation of existing laws or regulations
relating to environmental matters could increase the cost of producing the
products manufactured by the Company or otherwise adversely affect the demand
for its products and may require additional expenditures. See
'Business--Environmental Compliance.'
CONTROLLING STOCKHOLDER
ISP Holdings is controlled by Samuel J. Heyman, Chairman and Chief
Executive Officer of GAF, ISP Holdings, G-I Holdings, ISP and BMCA. Accordingly,
Mr. Heyman has the ability to elect the entire Board of Directors of each of
such companies and determine the outcome of any other matter submitted to their
respective stockholders for approval. In particular, subject to the terms of the
Indentures, Mr. Heyman has the ability to effect certain corporate transactions,
including mergers, consolidations and the sale of all or substantially all of
ISP Holdings' or its subsidiaries' assets. See 'Security Ownership of Certain
Beneficial Owners and Management' and 'Risk Factors--Change of Control;
Acceleration of Debt.'
ADDITIONAL RISKS RELATED TO THE SPIN OFF TRANSACTIONS
If a court in a lawsuit by an unpaid creditor or a representative of
creditors, such as a trustee in bankruptcy, were to find that prior to or
immediately after the Spin Off Transactions were effected, GAF, ISP Holdings, G
Industries Corp. ('G Industries'), a wholly owned subsidiary of G-I Holdings,
GCC or G-I Holdings was insolvent, engaged in a business or transaction for
which such entity's remaining assets constituted unreasonably small capital,
intended to incur, or believed it would incur, debts beyond its ability to pay
as such debts matured or if such company was found to be at the time of the
consummation of the Spin Off Transactions, a defendant in civil actions
(including those asserting asbestos-related claims) that resulted in judgments
which such company was or became unable to satisfy, such court may be asked to
void the Spin Off Transactions (in whole or in part) as a fraudulent conveyance
and require that, among other things, the stockholders that received a
distribution return the distribution, including the common stock of ISP Holdings
(in whole or in part), to the distributing company. In such event, the assets of
GAF distributed in the Spin Off Transactions, including the capital stock of ISP
Holdings and ISP, could be subject to claims of such creditors, including
asbestos claimants. The measure of insolvency for purposes of the foregoing will
vary depending upon the jurisdiction whose law is being applied. Generally,
however, GAF, ISP Holdings, G Industries, GCC or G-I Holdings would be
considered insolvent if
17
<PAGE>
the fair value of their respective assets were less than the amount of their
respective liabilities or if they incurred debt beyond their ability to repay
such debt as it matures. In addition, under Section 170 of the Delaware General
Corporation Law (which is applicable to all corporations that made a
distribution as part of the Spin Off Transactions) a corporation generally may
make distributions to its stockholders only out of its surplus (net assets minus
capital) and not out of capital and in the event that all or part of the Spin
Off Transactions were found unlawful under Section 170, such distributions may
be recaptured for the benefit of creditors.
As a condition to the consummation of the Spin Off Transactions, the Board
of Directors of GAF, ISP Holdings, GCC, G-I Holdings and G Industries received a
satisfactory opinion from HLHZ regarding the solvency of such companies and the
satisfaction of certain standards regarding the permissibility of certain
distributions contemplated by the Spin Off Transactions under Section 170 of the
Delaware General Corporation Law. HLHZ rendered such an opinion to the Boards of
Directors of each of such companies on the date of the distribution of the
capital stock of ISP Holdings to GAF's stockholders. See 'The Spin Off
Transactions.' There is no certainty, however, that a court would reach the same
conclusions set forth in such opinion in determining whether GAF, ISP Holdings,
GCC, G-I Holdings or G Industries was insolvent at the time of, or after giving
effect to, the Spin Off Transactions. See 'The Spin Off Transactions' for a
description of the reviews, analyses and inquiries made by HLHZ and the
financial projections, forecasts and other representations provided by GAF and
relied upon by HLHZ in rendering such opinion.
In November 1996, GAF received the IRS Ruling to the effect that the Spin
Off Transactions will not result in recognition of income by any members of the
GAF Tax Group. The IRS Ruling was conditioned upon the accuracy of certain
representations contained in GAF's request therefor as to certain facts and
circumstances with respect to the Spin Off Transactions. If the Spin Off
Transactions did not qualify as 'tax-free spin offs' under the Internal Revenue
Code, the GAF Tax Group would recognize gain, but not loss, as if the common
stock of ISP Holdings, G-I Holdings and ISP were sold at the fair market value
thereof. The gain recognized will be an amount equal to the fair market value of
the ISP Holdings common stock, G-I Holdings common stock and ISP Common Stock in
excess of the adjusted tax basis in such shares of common stock as determined
immediately prior to the Spin Off Transactions. The tax on the income would be
payable by GAF. To the extent not paid by GAF, each member of the GAF Tax Group
as it existed prior to the Spin Off Transactions (including ISP Holdings, ISP
and their respective subsidiaries) would be jointly and severally liable for
such tax liability. See 'Certain Relationships--Mutual Indemnification.'
As a matter of federal tax law, ISP Holdings, ISP and their subsidiaries
would be jointly and severally liable for any tax liability for any year in
which they were members of the GAF Tax Group. GAF, G-I Holdings, G Industries
and GCC have agreed to indemnify ISP Holdings, ISP and their subsidiaries for
all tax liabilities of the indemnifying companies, including any liability with
respect to the Spin Off Transactions. See 'Tax Sharing Agreement.'
ABSENCE OF A PUBLIC MARKET
Prior to the exchange of the New Notes offered hereby, there has been no
public market for any of the Notes, and there can be no assurance as to (i) the
liquidity of any such market that may develop, (ii) the ability of the holders
of New Notes to sell their New Notes or (iii) the price at which the holders of
New Notes would be able to sell their New Notes. If such a market were to exist,
the New Notes could trade at prices that may be higher or lower than their
principal amount or purchase price, depending on many factors, including
prevailing interest rates, the market for similar notes, and the financial
performance of ISP Holdings and its subsidiaries. ISP Holdings does not intend
to list the New 9% Notes or the New 9 3/4% Notes on any securities exchange or
to seek approval for quotations through any automated quotation system and no
active market for the New Notes is currently anticipated. There is no assurance
as to the liquidity of the trading market for the New Notes. Bear, Stearns & Co.
Inc. has advised ISP Holdings that it currently anticipates making a secondary
market for the New Notes, but is not obligated to do so and any such market
making, if commenced, may be discontinued at any time without notice.
18
<PAGE>
EXCHANGE OFFER PROCEDURES
Issuance of the New 9% Notes in exchange for Old 9% Notes and New 9 3/4% Notes
in exchange for Old 9 3/4% Notes pursuant to the Exchange Offers will be made
only after a timely receipt by the Exchange Agent of certificates for such Old
Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. All
questions as to the validity, form, eligibility (including time of receipt)
and acceptance of Old Notes tendered for exchange will be determined by ISP
Holdings in its sole discretion, which determination will be final and binding
on all parties. Therefore, holders of each issue of Old Notes desiring to
tender such Old Notes in exchange for the applicable issue of New Notes should
allow sufficient time to ensure timely delivery. Old Notes that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offers, continue to be subject to the existing restrictions upon
transfer thereof and ISP Holdings will have no further obligation to provide for
the registration under the Securities Act of such Old Notes except as described
herein. See 'The Exchange Offers--Purpose and Effect.' In addition, any holder
of Old Notes who tenders in the applicable Exchange Offer for the purpose of
participating in a distribution of the applicable New Notes will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See 'Plan of
Distribution.' To the extent that Old Notes are tendered and accepted in either
Exchange Offer, the trading market for untendered and tendered but unaccepted
Old Notes could be adversely affected. ISP Holdings does not intend to extend
either Exchange Offer although it reserves the right to do so. See 'The Exchange
Offers.'
19
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of ISP
Holdings as of September 29, 1996 and as adjusted on a pro forma basis to give
effect to the Transactions. This table should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 29, 1996
---------------------------
ACTUAL PRO FORMA(1)
----------- ------------
(THOUSANDS)
<S> <C> <C>
Short-term Debt and current maturities of Long-term Debt:
Current maturities of long-term debt................................................ $ 361 $ 361
Loan payable to affiliate........................................................... 17,797 --
Short-term debt..................................................................... 22,518 22,518
----------- ------------
Total............................................................................ $ 40,676 $ 22,879
----------- ------------
----------- ------------
Long-term Debt (excluding current maturities): (2)
9% Senior Notes due 2003............................................................ $ -- $324,093
9 3/4% Senior Notes due 2002........................................................ -- 199,871
9% ISP Senior Notes Due 1999........................................................ 200,000 200,000
Borrowings under revolving credit facilities........................................ -- 25,577(3)
Obligations on mortgaged properties................................................. 38,125 38,125
Obligations under capital leases.................................................... 1,635 1,635
Long-term note payable to affiliate................................................. 80,977 --
----------- ------------
Total Long-term Debt............................................................. $ 320,737 $789,301
----------- ------------
----------- ------------
Shareholder's Equity (Deficit):
Capital stock and additional paid-in capital........................................ $ 118,516 $244,780
Excess of purchase price over adjusted historical cost of the predecessor company
shares owned by GAF stockholders................................................. (72,605) (63,483)
Retained earnings................................................................... 1,924 1,924
Cumulative translation adjustment and other......................................... 13,818 13,211
----------- ------------
Total Shareholder's Equity....................................................... $ 61,653 $196,432
----------- ------------
----------- ------------
Total Capitalization................................................................ $ 382,390 $985,733
----------- ------------
----------- ------------
</TABLE>
- ------------------
(1) For an explanation of the assumptions used to arrive at such pro forma
information, see 'Notes to Selected Financial Data.'
(2) For a description of long-term debt, see Note 8 to Consolidated Financial
Statements.
(3) Reflects borrowings of $25.6 million under the ISP Credit Agreement used to
repay loans owed by ISP to G-I Holdings as of September 29, 1996.
20
<PAGE>
SELECTED FINANCIAL DATA
Set forth below are selected consolidated financial data of the Company. A
predecessor company to GAF was acquired on March 29, 1989 in a management-led
buyout (the 'GAF Acquisition'). Accordingly, a step up in asset values to fair
value was required by the purchase method of accounting. As a result, financial
data for periods subsequent to the GAF Acquisition reflect non-cash charges
consisting of goodwill amortization and depreciation of increased asset values.
Such non-cash charges amounted to $22, $22, $22.6, $22.6, $22.5, $16.8 and $16.8
million for the years 1991, 1992, 1993, 1994 and 1995 and the first nine months
of 1995 and 1996, respectively. The results of any interim period are not
necessarily indicative of the results to be expected for the full year.
The pro forma balance sheet data give effect to the Transactions as if they
had been completed as of September 29, 1996. The pro forma operating data give
effect to the Transactions as if they had been completed as of January 1, 1995,
in the case of the year ended December 31, 1995 and the nine months ended
October 1, 1995, and as of January 1, 1996, in the case of the nine months ended
September 29, 1996. The Exchange Offers will not affect the amount of the
Company's long-term debt or stockholder's equity. The pro forma financial
information does not purport to project the financial position or the results of
operations for any future period or to represent what the financial position or
results of operations would have been if the Transactions had been completed at
the dates indicated. All financial data relating to ISP Holdings and its
subsidiaries contained herein have been prepared to retroactively reflect the
formation of ISP Holdings. See Notes 14 and 16 to Consolidated Financial
Statements.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
YEAR ENDED DECEMBER 31, OCT. 1, SEPT. 29,
-------------------------------------- 1995 1996
1991 1992 1993 1994 1995 (UNAUDITED) (UNAUDITED)
------ ------ ------ ------ ------ ----------- -----------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Net sales......................................... $525.8 $570.8 $548.3 $600.0 $689.0 $ 530.3 $ 544.1
Operating income.................................. 121.9 107.7 65.1 99.2 127.1 99.2 105.7
Interest expense.................................. 52.7 30.6 24.5 28.7 33.1 24.8 21.9
Income from continuing operations before income
taxes and extraordinary items.................. 75.7 85.8 49.8 72.5 106.1 81.2 98.2
Income from continuing operations before
extraordinary items and cumulative
effect of accounting change.................... 46.2 47.5 23.8 37.1 55.1 41.8 51.8
Ratio of earnings to fixed charges(1)............. 2.48 3.78 2.83 3.32 4.06 4.08 5.23
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 29, 1996
--------------------------------------
DECEMBER 31, PRO FORMA (GIVING EFFECT
---------------------------------------------------- ACTUAL TO THE TRANSACTIONS)
1991 1992 1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- -------- -------- ----------- ------------------------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and short-term
investments................ $ 10.1 $ 81.7 $ 82.8 $ 77.4 $ 150.0 $ 111.7 $ 156.7
Total working capital........ 178.6 257.1 143.9 228.0 290.0 413.0 220.9
Total assets................. 1,235.0 1,348.2 1,309.0 1,357.5 1,460.4 1,537.3 1,361.1
Long-term debt less current
maturities(2).............. 131.4 493.0 367.7 285.4 280.3 239.8 789.3
Stockholder's equity
(deficit).................. 156.2 (42.6) (42.6) (15.8) (1.7) 61.7 196.4
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------------
---------------------------------------------------- OCT. 1, 1995 SEPT. 29, 1996
1991 1992 1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- -------- -------- ------------ --------------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Data:
Depreciation.......................... $ 23.2 $ 25.6 $ 28.7 $ 32.8 $ 36.0 $ 26.7 $ 28.2
Goodwill amortization................. 13.8 13.7 13.9 13.4 13.2 9.9 9.9
Capital expenditures and
acquisitions........................ 34.4 70.5 62.9 31.1 38.9 26.6 35.7
Adjusted EBITDA(3).................... 207.3 207.2 167.5 225.8 245.6 190.7 219.8
Ratio of Adjusted EBITDA to Adjusted
Interest Expense(3)................. 2.14 2.95 2.32 2.36 2.16 2.27 2.47
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
YEAR ENDED OCT. 1, SEPT. 29,
DECEMBER 31, 1995 1995 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------- ----------- -----------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C>
Pro Forma Operating Data(4):
Interest expense.................................................. $78.8 $59.1 $56.2
Income from continuing operations................................. 25.3 19.5 29.4
Ratio of earnings to fixed charges(1)............................. 1.79 1.80 2.16
Ratio of Adjusted EBITDA to Adjusted Interest Expense(3).......... 2.32 2.37 2.83
</TABLE>
- ------------------
(1) For purposes of these computations, earning consist of income (loss) from
continuing operations before income taxes, minority interest, extraordinary
items and cumulative effect of accounting change, plus fixed charges. Fixed
charges consist of interest on indebtedness (including amortization of debt
issuance costs) plus that portion of lease rental expense representative of
interest (estimated to be one-third of lease rental expense).
(2) See 'Capitalization' and Note 8 to Consolidated Financial Statements.
(3) The Adjusted EBITDA data relates to debt covenants under the Indentures. The
calculation of the ratio of Adjusted EBITDA to Adjusted Interest Expense has
been performed in accordance with the definitions in the Indentures. See
'Description of the New Notes.' Accordingly, Adjusted EBITDA is calculated
as income from continuing operations before income taxes, plus income (loss)
from discontinued operations before income taxes, less extraordinary items,
increased by interest expense, depreciation and goodwill amortization and
excluding equity in earnings of the GAF-Huls joint venture and Surfactants
Partnership income except to the extent distributed in cash. Adjusted
Interest Expense is calculated as total interest expense excluding interest
expense on non-recourse debt related to the Surfactants Partnership. Certain
restrictions exist as to the amounts available for making loans, paying
dividends and otherwise making distributions to ISP Holdings. See 'Risk
Factors--Holding Company Structure and Related Considerations.' See 'Summary
Financial Data' for the details of the calculations of Adjusted EBITDA and
Adjusted Interest Expense. As an indicator of the Company's operating
performance, such supplemental financial information should not be
considered as an alternative to net income or any other measure of
performance under generally accepted accounting principles.
(4) The Pro Forma Operating Data have been prepared assuming that the ISP
Holdings Transactions and the Spin Off Transactions were consummated as of
the beginning of the respective periods presented. The effect of such
assumptions was to decrease the Company's pro forma income from continuing
operations before income taxes by $45.7, $34.3 and $34.3 million for the
year 1995 and the first nine months of 1995 and 1996, respectively. As a
result, the Company's pro forma provision for income taxes decreased by $16,
$12 and $12 million for the year 1995 and the first nine months of 1995 and
1996, respectively, based on an effective marginal income tax rate of 35%.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ISP Holdings is currently a wholly owned subsidiary of GAF. Subject to the
satisfaction of certain conditions, GAF intends to effect the Spin Off
Transactions that will result in, among other things, the capital stock of ISP
Holdings (whose principal asset will be approximately 83% of the issued and
outstanding capital stock of ISP) being distributed to the stockholders of GAF.
As a result of such distribution, ISP Holdings and ISP will no longer be direct
or indirect subsidiaries of GAF, and the Building Materials Business and the
assets and liabilities of GCC will no longer be assets and liabilities of ISP
Holdings. See 'The Spin Off Transactions.'
Accordingly, the Building Materials Business and the assets and liabilities
of GCC, as well as the assets and liabilities of GAF Broadcasting Company, Inc.
(which was sold in August 1996) have been classified as 'Discontinued
Operations' within the financial statements for all periods presented. The
following discussion is on a continuing operations basis.
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements which appear elsewhere in this Prospectus.
As used herein, the term 'Company' refers to ISP Holdings and its consolidated
subsidiaries. All financial data contained herein have been prepared on a basis
which retroactively reflects the formation of ISP Holdings as discussed in the
consolidated financial statements.
Set forth below are net sales and operating income for each of ISP
Holdings' business segments related to continuing operations for the years 1993,
1994 and 1995 and the first nine months of 1995 and 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ------------------------------
-------------------------- OCT. 1, 1995 SEPT. 29, 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
------ ------ ------ ------------ --------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net Sales:
Specialty Chemicals................................... $434.5 $482.4 $556.9 $432.8 $445.4
Mineral Products...................................... 81.3 81.1 86.1 67.3 65.5
Other................................................. 32.5 36.5 46.0 30.2 33.2
------ ------ ------ ------------ -------
Total.............................................. $548.3 $600.0 $689.0 $530.3 $544.1
------ ------ ------ ------------ -------
------ ------ ------ ------------ -------
Operating Income:
Specialty Chemicals................................... $ 59.8 $ 79.9 $105.5 $ 81.4 $ 91.1
Mineral Products...................................... 16.9 14.6 16.3 14.0 12.9
Other................................................. 2.2 4.7 5.3 3.8 1.7
Provision for restructuring........................... (13.8) -- -- -- --
------ ------ ------ ------------ -------
Total.............................................. $ 65.1 $ 99.2 $127.1 $ 99.2 $105.7
------ ------ ------ ------------ -------
------ ------ ------ ------------ -------
</TABLE>
RESULTS OF OPERATIONS
FIRST NINE MONTHS OF 1996 COMPARED WITH FIRST NINE MONTHS OF 1995
For the first nine months of 1996, the Company recorded income from
continuing operations of $51.8 million compared with $41.8 million for the first
nine months of 1995. The 24% increase in income from continuing operations was
the result of higher operating and other income, as well as reduced interest
expense and higher equity income from GAF-Huls.
Net sales for the first nine months of 1996 were $544.1 million versus
$530.3 million for the same period in 1995. The sales growth was attributable to
increased sales of specialty chemicals (up $12.6 million), primarily reflecting
increased sales volumes and higher sales prices, and also reflected higher
filter products sales (up $2.7 million) due to increased sales volumes. The
increase in sales resulted from higher sales in the U.S., Europe and the Western
Hemisphere, partially offset by lower sales in the Asia-Pacific region and the
unfavorable effect ($6.7 million) of the stronger U.S. dollar relative to other
currencies in certain areas of the world. Sales for the mineral products
business decreased by $1.8 million (3%) due to lower sales volumes resulting
from a lost customer and adverse winter weather conditions in the first quarter
of 1996.
23
<PAGE>
Operating income for the first nine months of 1996 increased by 7% to
$105.7 million from last year's $99.2 million. The increase in operating income
was due to higher specialty chemicals operating income (up $9.7 million or 12%),
partially offset by lower mineral and filter products results (down $1.1 million
and $2.4 million, respectively). The higher specialty chemicals operating income
resulted primarily from the higher sales levels and improved gross margins (up
2.9 percentage points) due to improved pricing and continued benefits from the
Company's re-engineering program.
Interest expense was $21.9 million for the first nine months of 1996, a 12%
decrease compared with $24.8 million for the same period last year. The decrease
reflected lower interest rates and lower average borrowings. Other income, net
was $9.4 million for the first nine months of 1996 compared with $3.9 million
last year, the increase resulting primarily from higher investment income and
gains associated with the Company's program to hedge certain of its foreign
currency exposures.
1995 COMPARED WITH 1994
The Company recorded income from continuing operations before extraordinary
item in 1995 of $55.1 million compared with $37.1 million in 1994. The 48%
improvement in results for 1995 reflected higher operating income (up $27.9
million), $3.4 million higher equity income from GAF-Huls, and a $6.8 million
increase in other income, partially offset by a $4.4 million increase in
interest expense.
Sales for 1995 were $689 million compared with $600 million for 1994. The
15% sales growth was attributable to increased sales in all product lines,
particularly specialty chemicals (up $74.5 million), and reflected double-digit
sales increases in all regions of the world. The sales increase was primarily
the result of increased sales volumes in all product lines and higher selling
prices, and, to a lesser extent, the favorable effect ($14.3 million) of the
weaker U.S. dollar relative to other currencies in certain areas of the world.
Operating income for 1995 increased by 28% to $127.1 million compared with
$99.2 million for 1994. The increase was attributable to higher sales in all
product lines and improved gross margins (up 1.1 percentage points) due
primarily to higher selling prices, partially offset by higher manufacturing
costs. Operating income for the specialty chemicals business increased by $25.6
million (32%), reflecting the above factors. Selling, general and administrative
expenses for 1995 increased $14.4 million (12%) over 1994 due to operating
expenses associated with higher sales levels; however, such expenses as a
percent of sales have decreased from 23% in 1993 to 19.9% and 19.5% in 1994 and
1995, respectively, primarily as a result of the Company's cost reduction and
productivity programs announced in 1993. The Company's operating margin improved
from 16.5% in 1994 to 18.4% in 1995.
Of the $27.9 million increase in operating income in 1995, domestic
operating income increased by $16.6 million, due primarily to higher selling
prices and increased volumes for specialty chemicals, as well as improved gross
margins, operating income for the European region increased by $12.2 million as
a result of higher sales levels and improved gross margins, operating income for
the Asia-Pacific region increased by $.8 million with higher sales volumes
partially offset by increased expenses associated with the Company's geographic
expansion program, and operating income from other foreign operations declined
by $1.7 million as higher sales were offset by additional expenses attributable
to the geographic expansion program and a nonrecurring 1994 benefit resulting
from the Brazilian government's economic program.
Interest expense for 1995 was $33.1 million, an increase of $4.4 million
from $28.7 million in 1994. The increase was primarily the result of higher
interest rates.
Other income (expense), net, comprises net investment income, foreign
exchange gains/losses resulting from the revaluation of foreign
currency-denominated accounts receivable and payable as a result of changes in
exchange rates, and other nonoperating and nonrecurring items of income and
expense. Other income was $6.7 million in 1995 compared with other expense of
$.1 million in 1994. The increase in 1995 was due principally to higher net
investment income (up $10.5 million).
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1994 COMPARED WITH 1993
The Company recorded income from continuing operations before extraordinary
item in 1994 of $37.1 million compared with $23.8 million in 1993. The 56%
improvement in results for 1994 reflected higher operating income (up $34.1
million) partially offset by a $4.2 million increase in interest expense and a
reduction of $7.3 million in other income (expense), net. Income from continuing
operations in 1993 reflected a retroactive income tax provision of $2.9 million,
representing the effect of a 1% increase in the Federal corporate income tax
rate on the Company's net deferred tax liability as of December 31, 1992, and a
pre-tax provision of $13.8 million, primarily related to the Company's cost
reduction program.
Sales for 1994 were $600 million, a 9% increase compared with $548.3
million for 1993. The sales growth reflected increased sales in most product
lines, primarily specialty chemicals (up 11%) and filters (up 12%), in all
regions of the world, mainly due to higher volumes and, to a lesser extent, a
favorable foreign exchange effect of $4.1 million.
Operating income for 1994 was $99.2 million compared with $65.1 million for
1993. The improvement was attributable to increased sales volumes and lower
selling, general and administrative expenses, and the absence of the $13.8
million restructuring charge mentioned above, partially offset by lower gross
profit margins due mainly to higher manufacturing costs for specialty chemicals
(up approximately $8 million primarily as a result of raw material cost
increases), and lower operating income from mineral products. Selling, general
and administrative expenses for 1994 were $119.7 million, down 5% from 1993,
primarily as a result of the Company's cost reduction and productivity programs.
The $13.8 million restructuring charge in 1993 was established to cover costs
associated with severance and related benefits, professional fees, relocations,
and discontinuation of products. Management believes that the Company's cost
reduction and productivity programs have resulted in significantly reduced
operating expenses. The remaining liability as of December 31, 1995 was
approximately $4.7 million and is anticipated to be expended over the next
several years.
Of the $34.1 million increase in operating income in 1994, domestic
operating income increased by $22 million due primarily to higher export sales
to all regions, lower operating expenses and the absence of the prior year's
restructuring charge, operating income from Europe increased by $7.5 million,
and operating income from other foreign operations increased by $4.6 million,
mainly in the Asia-Pacific region, in each case after giving effect to a portion
of the $13.8 million restructuring charge in 1993. See Note 12 to Consolidated
Financial Statements.
Interest expense for 1994 was $28.7 million, an increase of $4.2 millon
from $24.5 million in 1993. The increase was due primarily to higher interest
rates and, to a lesser extent, higher outstanding borrowings.
Other expense was $.1 million in 1994 compared with other income of $7.2
million in 1993. The decrease in 1994 was due primarily to lower net investment
income (down $6.7 million). See Note 1 to Consolidated Financial Statements.
LIQUIDITY AND FINANCIAL CONDITION
ISP Holdings is essentially a holding company without independent
businesses or operations and, as such, is dependent upon the cash flow of its
approximately 83%-owned subsidiary, ISP, in order to satisfy its obligations.
See Note 16 to Consolidated Financial Statements for a discussion of a
subsequent event related to the debt obligations of ISP Holdings. ISP Holdings
expects to satisfy such obligations from, among other things, refinancings of
debt, dividends and loans from ISP, as to which there are restrictions under the
ISP Credit Agreement (defined below) and the indenture relating to the ISP
Notes, payments pursuant to the Tax Sharing Agreement between ISP Holdings and
ISP and debt financings. As of September 29, 1996, after giving effect to the
most restrictive of the aforementioned restrictions, it would have been
permissible for ISP to pay dividends in the aggregate amount of $79.9 million,
of which $66.4 million would have been available to ISP Holdings, and to make
loans to affiliates of $72.7 million.
In addition, as ISP's stock price appreciates, ISP Holdings may at some
future time consider selling shares of ISP Common Stock, although it has no
current intention to do so. If ISP Holdings were to own less than 80% of the
outstanding ISP Common Stock, payments pursuant to the ISP Holdings Tax Sharing
Agreement would not be available to it.
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During the first nine months of 1996, the Company on a consolidated basis
generated cash from continuing operations of $76.5 million, used $83.0 million
of cash for discontinued operations, invested $35.7 million in capital
expenditures and an acquisition, generated $24.3 million from net sales of
available-for-sale and held-to-maturity securities, and generated $89.5 million
in cash from the sale of WAXQ-FM (a discontinued operation), for a net cash
inflow of $71.0 million before financing activities. Working capital increased
by $3.0 million, primarily reflecting a $20.6 million increase in accounts
receivable due to higher sales in September 1996 versus December 1995, offset by
a $9.7 million reduction in inventories and an $8.8 million increase in accounts
payable and accrued liabilities. Cash from operations in the first nine months
of 1996 included $5.7 million in dividends received from GAF-Huls.
Net cash used in financing activities totaled $89.8 million for the first
nine months of 1996, primarily reflecting a $40.8 million reduction in
borrowings under the Company's bank credit agreements, a $19.1 million decrease
in loans from an affiliate, a $14 million decrease in short-term borrowings and
dividends and net distributions of $6.4 million to the Company's parent company,
GAF. Financing activities also reflected $10.4 million in repurchases by ISP of
its common stock. ISP has adopted a program to repurchase up to a total of
4,500,000 shares of its common stock from time to time in the open market. As of
September 29, 1996, 3,099,300 shares had been repurchased pursuant to the
program.
As a result of the foregoing factors, cash and cash equivalents decreased
by $18.2 million during the first nine months of 1996 to $13 million (excluding
$94.6 million of available-for-sale securities and $4.1 million of
held-to-maturity securities).
During 1995, the Company on a consolidated basis generated cash from
operations of $133.1 million, including cash from continuing operations of
$105.0 million, and reinvested $139.3 million for capital programs and net
purchases of available-for-sale and held-to-maturity securities, for a net cash
outflow of $6.1 million before financing activities. Cash from operations in
1995 included a $7.9 million reduction in the cash surrender value of
Company-owned insurance policies. Cash invested in additional working capital
totaled $5.1 million during 1995. This principally reflected a $10.9 million
increase in receivables due to higher sales levels, partially offset by $2.5
million higher payables and accrued liabilities.
Net cash used in financing activities in 1995 totaled $25.5 million,
primarily reflecting $28.2 million in dividends and net distributions paid to
GAF, principally to fund the redemption by GAF of its outstanding preferred
stock, $16.6 million in repurchases by ISP of its common stock pursuant to its
share repurchase program, a $15.2 million decrease in loans from an affiliate,
and $5.6 million in repayments of long-term debt. The above items of cash
utilization were partially offset by $36.2 million of additional short-term
borrowings and $3.8 million from the sale of receivables.
As a result of the foregoing factors, cash and cash equivalents decreased
by $31.6 million during 1995 to $31.3 million (excluding $114.1 million of
available-for-sale securities and $4.6 million of held-to-maturity securities).
As of September 29, 1996, the Company's scheduled repayments of long-term
debt for the twelve months ending September 30, 1997 aggregated $.4 million.
On July 26, 1996, ISP entered into a new five-year revolving credit
facility (the 'ISP Credit Agreement') with a group of banks, which provides for
loans of up to $400 million and letters of credit of up to $75 million (see Note
8 to Consolidated Financial Statements).
Borrowings by ISP Holdings and ISP are subject to the application of
certain financial covenants contained in the Indentures and the ISP Credit
Agreement. As of September 29, 1996, on a pro forma basis after giving effect to
the ISP Holdings Transaction, ISP Holdings and ISP were in compliance with such
covenants.
The Company's investment strategy is to seek to earn returns in excess of
money market rates on its available cash while minimizing market risks. There
can be no assurance that the Company will be successful in implementing such
strategy. The Company invests primarily in hedged utility programs,
international and domestic convertible arbitrage, and securities of companies
involved in acquisition or reorganization transactions, including at times,
common stock short positions which are offsets against long positions in
securities which are expected, under certain circumstances, to be exchanged or
converted into the short positions. With respect to its equity positions, the
Company is exposed to the risk of market loss. See Note 1 to Consolidated
Financial Statements.
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ISP intends to acquire or develop a European manufacturing facility to meet
the needs of ISP's European business. While the originally anticipated
commencement date of the European project has been deferred because ISP has been
able to implement cost-efficient capacity expansions at its existing
manufacturing facilities, based upon its current analysis of additional
opportunities for expansion of existing capacity, end-use demand, and other
relevant factors, ISP intends to proceed with the project by the end of 1997.
Costs capitalized to date related to this project are included in 'Construction
in progress.' ISP anticipates utilizing internally generated funds, existing
credit facilities and/or independent financing to fund the cost of the project.
Fluctuations in the value of foreign currencies may cause U.S. dollar
translated amounts to change in comparison with previous periods and,
accordingly, the Company cannot estimate in any meaningful way the possible
effect of such fluctuations upon future income. The Company has a policy to
manage these exposures to minimize the effects of fluctuations in foreign
currencies, including entering into foreign exchange contracts in order to hedge
its exposure. In respect of its foreign exchange contracts, the Company
recognized a gain of $5.1 million during the first nine months of 1996 and
losses of $7.4 million and $6.6 million during the years ended December 31, 1995
and 1994, respectively. At September 29, 1996, the equivalent U.S. dollar fair
value of outstanding forward foreign exchange contracts was $175.3 million, and
the amount of deferred gains and losses on such instruments was a net gain of
$2.3 million. The equivalent U.S. dollar fair value of foreign exchange
contracts outstanding as of September 29, 1996 as a hedge of non-local currency
loans was $28.6 million, representing 100% of the Company's foreign currency
exposure with respect to such loans. See Note 1 to Consolidated Financial
Statements.
The objectives of the Company in utilizing interest rate swap agreements
are to lower funding costs, diversify sources of funding and manage interest
rate exposure. As of September 29, 1996, the total notional amount of interest
rate swaps outstanding for continuing operations was $200 million and the amount
of underlying debt relating to such swaps was $200 million. By utilizing
interest rate swap agreements, the Company reduced its interest expense related
to continuing operations by $2.3 million in the first nine months of 1996, $1.8
million in 1995 and $5.3 million in 1994. See Note 8 to Consolidated Financial
Statements.
The Company does not believe that inflation has had a material effect on
its results of operations during the past three years and the nine months ended
September 29, 1996. However, there can be no assurance that the Company's
business will not be affected by inflation in the future.
In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
relating to accounting for impairment of long-lived assets, which is required to
be adopted in 1996. The Company does not anticipate that the implementation of
SFAS No. 121 will have a material effect on the Company's results of operations
or financial position.
ISP has received conditional site designation from the New Jersey Hazardous
Waste Facilities Siting Commission for the construction of a hazardous waste
treatment, storage and disposal facility at its Linden, New Jersey property,
which designation has been appealed to the courts by the City of Linden. ISP
estimates that the cost of constructing the facility will be approximately $100
million and, if approved, the facility is anticipated to be in operation three
years after commencement of construction. ISP anticipates utilizing internally
generated cash and/or seeking project or other independent financing therefor.
Accordingly, ISP would not expect such facility to impact materially its
liquidity or capital resources.
The Company, together with other companies, is a party to a variety of
administrative proceedings and lawsuits involving environmental matters. See
'Business--Environmental Litigation' for further discussion, which is
incorporated herein by reference.
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THE SPIN OFF TRANSACTIONS
General. On , 1997, GAF effected a series of transactions
involving GAF's subsidiaries and certain assets of GAF's subsidiaries that
resulted, among other things, in the capital stock of ISP Holdings (whose
principal asset is approximately 83% of the issued and outstanding capital stock
of ISP) being distributed to the stockholders of GAF. As a result of such
distribution, ISP Holdings and ISP are no longer direct or indirect subsidiaries
of GAF, while BMCA and USI and certain other assets and liabilities, including
liabilities for asbestos-related claims, remain part of GAF, but are not assets
or liabilities of ISP Holdings. Among other things, as part of the Spin Off
Transactions:
1. ISP borrowed $ under the ISP Credit Agreement (after
giving effect to utilization of proceeds of the ISP Loan) in order
to repay to G-I Holdings all amounts owed by ISP to G-I Holdings;
2. G-I Holdings purchased Discount Notes from ISP Holdings for an
aggregate cash purchase price equal to $ , representing
the sum of $45 million plus an amount sufficient to pay ISP
Holdings' fees and expenses related to the Spin Off Transactions
(not including those fees and expenses already paid by ISP
Holdings related to the ISP Holdings Transactions);
3. All Discount Notes purchased in the Tender Offer by ISP Holdings
(other than those Discount Notes sold to G-I Holdings pursuant to
the Repurchase or as provided in paragraph 2 above) and all 10%
Notes accepted in the Old Exchange Offer by ISP Holdings were
contributed to G-I Holdings by ISP Holdings as a capital
contribution and cancelled by G-I Holdings;
4. Through a series of distributions, all shares of ISP Common Stock
owned by GAF and its subsidiaries, including GCC, were distributed
to ISP Holdings;
5. ISP Holdings distributed all of the outstanding capital stock of
G-I Holdings to GAF; and
6. The capital stock of ISP Holdings was distributed to the
stockholders of GAF.
IRS Ruling. In November 1996, GAF received the IRS Ruling. The IRS Ruling
was conditioned upon the accuracy of certain representations contained in GAF's
request therefor as to certain facts and circumstances with respect to the Spin
Off Transactions. If the Spin Off Transactions do not qualify as 'tax-free spin
offs' under the Internal Revenue Code, the GAF Tax Group would recognize gain,
but not loss, as if the common stock of ISP Holdings, G-I Holdings and ISP was
sold at the fair market value thereof. The gain recognized would be an amount
equal to the fair market value of the ISP Holdings common stock, G-I Holdings
common stock and ISP Common Stock in excess of the adjusted tax basis in such
shares of common stock as determined immediately prior to the Spin Off
Transactions. The tax on the income would be payable by GAF. To the extent not
paid by GAF, each member of the GAF Tax Group as it existed prior to the Spin
Off Transactions (including ISP Holdings, ISP and their respective subsidiaries)
would be jointly and severally liable for such tax liability. See 'Certain
Relationships--Mutual Indemnification.'
HLHZ Opinion. As a condition to the consummation of the Spin Off
Transactions, the Boards of Directors of GAF, ISP Holdings, GCC, G-I Holdings
and G Industries received a satisfactory opinion regarding the solvency of such
companies and the permissibility of certain distributions contemplated by the
Spin Off Transactions under Section 170 of the Delaware General Corporation Law.
In written opinions dated September 12, 1996 and December , 1996, HLHZ stated
that, based upon the considerations set forth therein and on other factors it
deemed relevant, both before and after giving effect to the Transactions, with
respect to each of GAF, ISP Holdings, GCC, G-I Holdings and G Industries, in
each case on a stand alone and consolidated basis, (a) the fair value and
present fair saleable value of such company's aggregate assets exceed and would
exceed such company's stated liabilities and identified contingent liabilities;
(b) such company is and would be able to pay its debts as they mature; (c) the
capital remaining in such company after the Spin Off Transactions is not and
would not be unreasonably small for the business in which such company is
engaged, as management has indicated it is now conducted and is proposed to be
conducted following consummation of the Spin Off Transactions; and (d) the
excess of the fair value of aggregate assets of such company over the sum of the
stated liabilities and identified contingent liabilities of such company plus
the stated capital of such company, equals or exceeds and would equal or exceed
the value of the assets transferred to stockholders of such company in the Spin
Off Transactions.
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In rendering its opinions, HLHZ made such reviews, analyses and inquiries
as it deemed necessary and appropriate under the circumstances, including a
review of G-I Holdings' annual reports and filings with the Commission, a review
of material agreements, meetings with members of the senior management of GAF
and its then subsidiaries (the 'GAF Group') to discuss operations, financial
condition, future prospects and projected operations and performance, visits to
certain facilities and business offices of the GAF Group, review of forecasts
and projections prepared by management, and review of other publicly available
financial data for G-I Holdings, BMCA and ISP and certain companies that HLHZ
deems comparable to ISP Holdings.
HLHZ relied upon and assumed, without verification, that the financial
forecasts and projections had been reasonably prepared and reflected the best
currently available estimates of the future financial results and condition of
the GAF Group, and that there had been no material change in the assets,
financial condition, business or prospects of the GAF Group since the date the
most recent financial statements were made available to HLHZ. In addition, HLHZ
relied upon and assumed, without verification, the accuracy of the stated amount
of contingent liabilities identified to them and valued by GAF, including with
respect to current and future asbestos claims and cash flows.
In addition, HLHZ did not independently verify the accuracy and
completeness of the information supplied to it, and did not make any physical
inspection or independent appraisal of any of the properties or assets of any
member of the GAF Group. HLHZ's opinions were based on business, economic,
market and other conditions as they existed and could be evaluated at the date
its opinions were rendered.
GAF engaged HLHZ and paid HLHZ a fee of $175,000 for services rendered in
connection with the Spin Off Transactions, including services it has conducted
to render its opinions.
THE ISP HOLDINGS TRANSACTIONS
THE TENDER OFFER
On October 18, 1996, ISP Holdings consummated the Tender Offer for all of
the outstanding Discount Notes. Approximately 99% of the outstanding Discount
Notes were tendered pursuant to the Tender Offer and approximately $6.3 million
in aggregate principal amount remain outstanding. All Discount Notes validly
tendered and purchased in the Tender Offer, other than Discount Notes purchased
by G-I Holdings from ISP Holdings, were contributed to G-I Holdings by ISP
Holdings as a capital contribution in connection with the consummation of the
Spin Off Transactions and cancelled by G-I Holdings. In connection with such
offer to purchase, ISP Holdings obtained the consent of the tendering holders of
the Discount Notes to the Discount Note Amendments which modified or eliminated
certain of the restrictive covenants contained in the Discount Note Indenture,
including those covenants that would have prohibited the Spin Off Transactions.
Concurrently with the consummation of the Tender Offer, ISP Holdings made
the ISP Loan to ISP and G-I Holdings effected the Repurchase, the proceeds of
which were used by ISP Holdings, together with the net proceeds of the 9% Note
Offering (after giving effect to the ISP Loan), to consummate the Tender Offer
and to pay expenses in connection with the ISP Holdings Transactions.
THE OLD EXCHANGE OFFER
On October 18, 1996, ISP Holdings consummated the Old Exchange Offer
pursuant to which approximately 99% of the outstanding 10% Notes were tendered
in exchange for the Old 9 3/4% Notes. In connection with such exchange offer,
ISP Holdings obtained the consent of the tendering holders of the 10% Notes to
the 10% Note Amendments, which modified or eliminated certain of the restrictive
covenants contained in the 10% Note Indenture, including those covenants that
would have prohibited the Spin Off Transactions. All 10% Notes validly tendered
and accepted in the Old Exchange Offer were contributed to G-I Holdings by ISP
Holdings as a capital contribution in connection with the consummation of the
Spin Off Transactions and cancelled by G-I Holdings.
THE 9% NOTE OFFERING
On October 18, 1996, ISP Holdings issued and sold $325 million in aggregate
principal amount of the Old 9% Notes in the 9% Note Offering.
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BUSINESS
ISP HOLDINGS
The business of ISP Holdings consists of owning approximately 83% of the
issued and outstanding capital stock of ISP. The remaining 17% of the
outstanding ISP Common Stock is publicly held and traded on the New York Stock
Exchange. ISP Holdings was formed in 1996 in order to consummate the ISP
Holdings Transactions. ISP Holdings is controlled by Samuel J. Heyman, Chairman
and Chief Executive Officer of GAF, ISP Holdings, G-I Holdings, ISP and BMCA.
Mr. Heyman also controls GAF and its subsidiaries. See 'Security Ownership of
Certain Beneficial Owners and Management.'
ISP
ISP is a leading multinational manufacturer of specialty chemicals, mineral
products, filter products and advanced materials.
ISP, incorporated in Delaware in 1991, operates its business exclusively
through 19 domestic subsidiaries, including ISP Chemicals Inc., ISP Technologies
Inc., ISP Van Dyk Inc. and ISP Fine Chemicals Inc., 36 international
subsidiaries and GAF-Huls, the joint venture with Huls AG, in which ISP has a
50% interest.
SPECIALTY CHEMICALS
o Products and Markets. ISP manufactures more than 325 specialty chemicals
having numerous applications in consumer and industrial products. ISP uses
proprietary technology to convert various raw materials, through a chain of one
or more processing steps, into increasingly complex and higher value added
specialty products to meet specific customer requirements. More than 200 of
ISP's specialty chemical products are derived from acetylene, including
intermediates, solvents, vinyl ethers, and polymers, and sales of these products
represent the majority of ISP's specialty chemical sales.
ISP's specialty chemicals consist of nine main groups of products: vinyl
ether polymers, polyvinyl pyrrolidone polymers, solvents, intermediates,
specialty preservatives, sunscreens, emollients, pearlescent pigments and fine
chemicals.
Vinyl ether polymers are used by the cosmetics, personal care,
pharmaceutical and health-related industries, primarily in hair care and dental
care products. Vinyl ether monomers and oligomers are used in coatings and inks
for both consumer and industrial products.
Polyvinyl pyrrolidone (PVP) polymers are used primarily in cosmetics,
personal care, pharmaceutical and health-related products, food and beverages,
and detergent formulations. Examples are drug and vitamin tablet binders and
disintegrants; clarifiers and chill-hazing elimination agents for beer, wine and
fruit juices; microbiocidal products for human and veterinary applications; hair
care products such as hair sprays, mousses, conditioners, gels and glazes;
ingredients in water-resistant mascaras, sunscreens and lipsticks; specialty
coatings, adhesives, ink jet inks and media for consumer and industrial
applications; and dispersants and binders in agricultural chemical formulations.
Solvents are sold to customers for use in agricultural chemicals,
pharmaceuticals, coatings, wire enamels, adhesives, plastics, electronics
coating and cleaning applications, petroleum extraction and specialty cleaners.
ISP's family of solvents includes, among others, N-methyl-2-pyrrolidone,
gamma-butyrolactone, 2-pyrrolidone and tetrahydrofuran, many of which are used
by ISP as raw materials in the manufacture of monomers and polymers.
Intermediates are manufactured primarily for use by ISP as raw materials in
manufacturing solvents and polymers. Some intermediates are also sold to
customers for use in the manufacture of engineering plastics and elastomers,
agricultural chemicals, oil production auxiliaries and other products.
Butanediol, an intermediate produced by ISP, is an essential raw material in the
manufacture of polybutylene terephthalate ('PBT') thermoplastic resins and
polyurethane elastomers, which are used in the automotive, electronics and
appliance industries.
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Specialty preservatives are proprietary products that are marketed
worldwide to the cosmetics, personal care and household industries. ISP sells a
number of preservative products, including Germall(Registered) 115,
Germall(Registered) II, Germaben(Registered) II, Germaben(Registered) II-E,
Suttocide(Registered) A and LiquaPar(Registered) Oil. Uses include infant care
preparations, eye and facial makeup, after-shave and nail, bath, hair and skin
preparations.
ISP Van Dyk Inc. produces three multifunctional specialty chemical product
lines which ISP markets primarily to the cosmetics and personal care
industry--ultraviolet absorber chemicals, the principal active ingredients in
sunscreens; pearlescent pigments, which provide the pearly or lustrous color in
lipsticks, eye shadows and other cosmetics; and emollients and emulsifiers,
which are used as moisturizing and softening agents in a variety of creams and
lotions, hair care products and other cosmetics. ISP Van Dyk's
Escalol(Registered), Pearl-Glo(Registered)and Ceraphyl(Registered) products are
widely recognized for their respective sunscreen, pigment and emollient
properties.
ISP Fine Chemicals Inc. produces a broad range of pharmaceutical
intermediates, biological buffers, pheromones and several bulk active
pharmaceuticals which serve the pharmaceutical, biotechnology, agricultural and
chemical process industries. Fine chemicals are extremely specialized products,
made in small quantities, which because of their complexity can be priced at
several hundred to several thousand dollars per kilogram. ISP Fine Chemicals
Inc. also provides a custom manufacturing capability serving the pharmaceutical,
biotechnology, agricultural and chemical process industries.
o Marketing and Sales. ISP markets its specialty chemicals through a
worldwide marketing and sales force, typically chemists or chemical engineers,
who work closely with ISP's customers to familiarize themselves with their
customers' products, manufacturing processes and markets. ISP conducts its
marketing and domestic sales from ISP's headquarters in Wayne, New Jersey and
regional offices strategically located throughout the United States.
o International Operations. ISP markets all of its specialty chemicals
worldwide. ISP conducts its international operations through 36 subsidiaries and
43 sales offices located in Western and Eastern Europe, Canada, Latin America
and the Asia-Pacific region. Services of local distributors are also used to
reach markets that might otherwise be unavailable to ISP.
ISP had in excess of 60% of its international sales in 1995 in countries in
Western Europe and Japan which are subject to currency exchange rate fluctuation
risks. For a discussion of the Company's policy regarding the management of
these risks, see 'Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Financial Condition.' Other countries
in which the Company has sales are subject to additional risks, including high
rates of inflation, exchange controls, government expropriation and general
instability.
International sales in 1995 of ISP's specialty chemicals, excluding sales
by GAF-Huls, were approximately 45% of ISP's total 1995 sales. GAF-Huls, a joint
venture in which ISP holds a 50% interest, produces certain intermediates and
solvents. The GAF-Huls plant is located in Marl, Germany.
o Raw Materials. Because of the multi-step processes required to
manufacture ISP's specialty chemicals, ISP believes that its raw material costs
represent a smaller percentage of the cost of goods sold than for most other
chemical companies. It is estimated that approximately one-third of ISP's
manufacturing costs are for raw materials (including energy and packaging). As a
result, fluctuations in the pricing of raw materials have less impact on ISP
than on those chemical companies for which raw materials costs represent a
larger percent of manufacturing costs.
The principal raw materials used in the manufacture of ISP's specialty
chemicals are acetylene, methanol and methylamine. Most of these raw materials
are obtained from outside sources pursuant to long-term supply agreements.
Acetylene, a significant raw material used in the production of most of ISP's
specialty chemicals, is obtained by ISP for domestic use from two unaffiliated
suppliers pursuant to long-term supply contracts. At ISP's Texas City and
Seadrift, Texas plants, acetylene is supplied via pipeline by a neighboring
large multinational company that generates this raw material as a by-product
from ethylene manufacture. At ISP's Calvert City, Kentucky facility, acetylene
is supplied via pipeline by a neighboring company that generates it from calcium
carbide. The acetylene utilized by GAF-Huls is produced by Huls AG, using a
proprietary electric arc process, sourced from various hydrocarbon feedstocks.
ISP believes that this diversity of supply sources, using a number
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of production technologies (ethylene by-product, calcium carbide and electric
arc), provides the Company with a reliable supply of acetylene. In the event of
a substantial interruption in the supply of acetylene from current sources, no
assurances can be made that ISP would be able to obtain as much acetylene from
other sources as would be necessary to meet its supply requirements. ISP has a
long-standing agreement with GAF-Huls to import butanediol into the United
States for use as a feedstock for the production of ISP's solvents and polymers.
ISP has not experienced an interruption of its acetylene supply that has had a
material adverse effect on its sales of specialty chemicals. With regard to raw
materials other than acetylene, ISP believes that in the event of a supply
interruption it could obtain adequate supplies from alternate sources.
Natural gas and raw materials derived from petroleum are used in many of
ISP's manufacturing processes and, consequently, the price and availability of
petroleum and natural gas could be material to ISP's operations. During 1995,
crude oil and natural gas supplies remained ample, while prices demonstrated
small seasonal and weather-related variations. The same was true for
petroleum-derived raw materials during the first nine months of 1996. While
there were significant price increases for natural gas in January 1996 due to
increased demand as a result of harsh weather conditions, pricing eased in the
following months.
Methanol, which, due to a shortage of supply, experienced a substantial
increase in price in the latter half of 1994 and the first half of 1995,
experienced a significant decline in price in the second half of 1995 (to levels
below the lowest prices encountered in 1994), as a result of increases in
capacity by methanol suppliers. During the first nine months of 1996, methanol
availability remained ample and prices remained relatively constant and in line
with prices encountered during the second half of 1995. Due to the substantial
increases in methanol capacity, ISP believes, although there can be no
assurance, that the market conditions which caused the sudden rise in methanol
prices will not reoccur in the near future.
o Strategy. ISP's strategy for future growth involves (i) the introduction
of new products and the development of new applications for existing products,
(ii) geographic expansion and penetration of new markets and (iii) the selected
acquisition of businesses which complement ISP's existing businesses.
ISP continued in 1995 its emphasis on the development of new products and
new applications for existing products. ISP expanded the development of its
broad product line for the hair care industry, where it believes there are
attractive opportunities for environmentally-friendly chemicals. In this regard,
ISP has been involved over the past several years in an intensive effort to
tailor its family of products for the hair care industry so as to enable its
customers to meet stringent regulatory requirements mandating reduction of
volatile organic compounds ('VOCs'), while at the same time improving the
performance characteristics of these products in order to satisfy consumer
preferences. To this end, ISP has introduced since the beginning of 1994 a
number of new products for the hair care industry, including the following:
Gantrez(Registered) A-425, a hair spray polymer whose molecular weight has been
optimized in order to allow manufacturers to satisfy 80% VOC requirements while
enhancing the performance characteristics of ISP's current Gantrez(Registered)
products and providing for formulations covering a wide range of desired
properties from natural to stiff feel, so as to appeal to different consumer
styles which tend to vary from one region of the world to another;
Gafquat(Registered) HSi and PVP/Si-10 encapsulated silicone products, which
combine ISP's Gafquat(Registered) and PVP products with silicone to provide a
silky feel for use in hair conditioners, shampoos and mousses; and
H2OLD(Trademark) EP-1, a versatile polymer for use in low VOC or alcohol-free
formulations for hair sprays, mousses and gels and designed so as to satisfy a
preference on the part of certain consumers. ISP also introduced the next
generation of its successful Gafquat(Registered) product, a hair styling
conditioner that provides improved holding characteristics, especially at high
humidity levels. In addition, ISP has recently introduced and began selling in
1996 a new hair protectant product, Escalol(Registered)HP-610, which helps
protect hair from the damaging effects of the sun.
In addition to new products for the hair care industry, ISP has introduced
since the beginning of 1994 a number of other new products for use in the
cosmetics, skin care, household, industrial and institutional cleaner,
agricultural and oil and gas industries, examples of which include the
following: Stabileze(Registered) QM, a quick mix viscosity enhancing polymer
that provides desired controlled thickening properties in skin and hair care
formulations; PVP K-30A, a cosmetic grade PVP specifically designed for skin
care use in mascara and eye liners; Cerasynt(Registered) IP-V and
Cerasynt(Registered) SD-V, vegetable-based emulsifiers for hair and skin
care; a family of PVP anionic copolymers with applications in a variety of
personal care, specialty industrial coatings, and household, industrial and
institutional cleaner uses; and a family of agricultural adjuvant products,
utilizing ISP's new
32
<PAGE>
proprietary microemulsion technology which provide pesticides, herbicides,
fungicides and other related agricultural chemicals with greater adherence,
thereby improving performance and reducing environmental risk.
ISP has also focused its research and development efforts on the
improvement of manufacturing efficiency at its plants. The efforts to increase
productivity, reduce waste and inefficiency and improve the overall quality of
ISP's manufacturing operations have yielded increased manufacturing capacity
with minimal capital investment, while providing for manufacturing cost savings.
ISP's specialty chemicals business has continued its emphasis on increased
geographic penetration, with particular focus on the Asia-Pacific and Latin
American regions. In order to further the geographic expansion of its specialty
chemicals business, ISP has opened since the beginning of 1994 new sales and
marketing operations, and/or added to its existing presence where it could
increase market penetration, in more locations than in any comparable period in
the history of its business, with operations having been opened or substantially
augmented in Beijing, Chengdu, Shanghai and Guangzhou, China; Moscow; Buenos
Aires; Bombay; Warsaw; Bangkok and Jakarta. ISP is increasing its geographic
penetration throughout the world not only with the opening of sales and
marketing operations, but also as a result of the increased specialization of
its sales force along industry lines, the hiring of additional technical staff
to assist ISP's sales force, and a substantial increase in sales staff.
In addition, ISP's strategy is to acquire niche businesses with
characteristics similar to ISP's, involving high value-added products,
significant market shares and barriers to entry, and product lines which
complement ISP's own products. Furthermore, the acquired product lines can be
expanded by use of ISP's technology, marketing expertise and worldwide
distribution network.
MINERAL PRODUCTS
o Products and Markets. ISP manufactures mineral products consisting of
ceramic-coated colored roofing granules, which are produced from rock deposits
that are mined and crushed at ISP's quarries and are colored and coated using a
proprietary process. ISP's mineral roofing granules are sold primarily to the
North American roofing industry for use in the manufacture of asphalt roofing
shingles, for which they provide weather resistance, decorative coloring, heat
deflection and increased weight. ISP is the second largest of only two major
suppliers of colored roofing granules in North America, the other being
Minnesota Mining & Manufacturing Company. ISP also markets granule by-products
for use in the construction and maintenance of fast dry, clay-like tennis
courts.
ISP estimates that more than 80% of the asphalt shingles currently produced
by the roofing industry are sold for the reroofing/replacement market, in which
demand is driven not by the pace of new home construction but by the needs of
homeowners to replace existing roofs. Homeowners generally replace their roofs
either because they are worn, thereby creating concerns as to weather-tightness,
or because of the homeowners' desire to upgrade the appearance of their homes.
ISP estimates that the balance of the roofing industry's asphalt shingle
production historically has been sold primarily for use in new housing
construction. Sales of ISP's colored mineral granules have benefitted from a
trend toward the increased use of heavyweight, three-dimensional laminated
roofing shingles which results in both functional and aesthetic improvements,
which require, on average, approximately 60% more granules than traditional
three-tab, lightweight roofing shingles.
o Marketing and Sales. BMCA purchases 100% of its colored roofing granule
requirements from ISP (except for the requirements of its California roofing
plant which are supplied by a third party). These purchases constituted
approximately one-half of ISP's mineral products net sales in 1995. Sales to
BMCA were made under a requirements contract which was renewed for one year
effective January 1, 1997 and is subject to annual renewal unless terminated by
BMCA or ISP. In addition, in December 1995, USI commenced purchasing
substantially all of its requirements for colored roofing granules from ISP
(except for the requirements of its Stockton, California and Corvallis, Oregon
plants which are supplied by a third party) pursuant to a requirements contract
which expires December 31, 1997. See 'Certain Relationships.'
o Raw Materials. ISP owns rock deposits that have specific performance
characteristics, including weatherability, the ability to reflect UV light,
abrasion-resistance, non-staining characteristics and the ability to absorb
pigments. ISP owns three quarries, each with proven reserves, based on current
production levels, of more than 20 years.
33
<PAGE>
FILTER PRODUCTS AND ADVANCED MATERIALS
ISP manufactures and sells filter products, consisting of pressure filter
vessels, filter bags and filter systems, and sells cartridges and cartridge
housings. These filter products are designed for the removal of macroscopic
contaminants in the treatment of process liquids, with the paint, automotive,
chemical, pharmaceutical, petroleum and food and beverage industries accounting
for more than 90% of ISP's 1995 net sales of filter products.
ISP manufactures pressure filter vessels at manufacturing facilities in
Brazil, Canada and Germany, which serve both local and international markets.
ISP also manufactures filter bags in Belgium, Canada, Singapore, Brazil and the
United States and supplies filter products worldwide through its subsidiaries,
sales offices and distributors.
ISP manufactures a variety of advanced materials, consisting of high-purity
carbonyl iron powders, sold under ISP's trademark Micropowder(Trademark), used
in a variety of advanced technology applications for the aerospace and defense,
electronics, powder metallurgy, pharmaceutical and food industries. Using
proprietary technology, ISP manufactures more than 50 different grades of
Micropowder(Trademark) iron, one of which is sold under the trademark
Ferronyl(Registered), for use as a vitamin supplement.
The primary markets for ISP's Micropowder(Trademark) are the domestic
defense industry, which employs these products in a variety of coating systems
for stealth purposes in aircraft and naval ships, and the emerging metal
injection molding segment of the powder metallurgy industry. ISP is the sole
domestic manufacturer of carbonyl iron powders.
ISP manufactures a line of processless, electronically imaged film products
including Rad-Sure(Registered), which is a radiation sensitive film strip
affixed to blood bags to indicate whether or not they have been properly
irradiated.
COMPETITION
ISP believes that it is either the first or second largest seller worldwide
of its specialty chemicals derived from acetylene other than butanediol and
tetrahydrofuran. Butanediol, which ISP produces primarily for use as a raw
material, is also manufactured by a limited number of companies in the United
States, Germany, Japan and Korea. Tetrahydrofuran is manufactured by a number of
companies throughout the world. While there are companies, other than ISP and
its principal competitor, that manufacture a limited number of ISP's other
specialty chemicals, the market position of these companies is much smaller than
that of ISP (other than as to solvents and intermediates, with respect to which
there is a significant third competitor). In addition to ISP's competition as
noted above, there are other companies that produce substitutable products for a
number of ISP's specialty chemicals. These companies compete with ISP in the
personal care, pharmaceutical, beverage preservative and industrial markets and
have the effect of limiting ISP's market penetration and pricing flexibility.
Beginning in 1994, ISP experienced a dramatic improvement in the severe
competitive conditions which had adversely affected ISP's intermediates and
solvents business during the three preceding years as a result of an additional
competitor having entered the market in 1991. As a result of improved worldwide
demand for ISP's intermediates and solvents products coming principally, with
respect to intermediates, from PBT engineering plastic producers for an
increasingly wide range of both automotive and electrical component applications
and, with respect to solvents, from increased demand for a number of existing
and new applications, together with a regulatory and customer-driven trend to
replace chlorinated and other volatile solvents with ISP's safer solvent,
N-methyl-2-pyrrolidone ('NMP'), industry-wide capacity utilization rates for
these products substantially increased in 1994, 1995 and 1996. As a result,
while butanediol ('B1D') and NMP prices had declined fairly substantially from
the beginning of 1992 to mid-1994, higher capacity utilization rates, together
with substantial price increases of methanol, enabled ISP to implement worldwide
price increases in 1994 and 1995, establishing B1D prices at levels higher than
in the recent past and reversing a significant portion of the previous decline
in NMP prices. Future competitive conditions will depend in large measure on
future worldwide demand for ISP's customers' end-use products and the impact of
the anticipated entrance of a new competitor in the B1D and NMP European markets
in 1997.
With regard to its mineral products, ISP has only one major and one smaller
competitor and believes that competition has been limited by: (i) the
substantial capital expenditures associated with the construction of new
34
<PAGE>
mineral processing and coloring plants and the acquisition of suitable rock
reserves; (ii) the limited availability of proven rock sources; (iii) the
complexity associated with the construction of a mineral processing and coloring
plant, together with the technical know-how required to operate such a plant;
(iv) the need to obtain, prior to commencing operations, reliable data over a
substantial period of time regarding the weathering of granules in order to
assure the quality and durability of the product; and (v) the difficulty in
obtaining the necessary permits to mine and operate a quarry.
With respect to filter products, ISP competes with a number of companies
worldwide. With respect to advanced materials, ISP is the sole domestic
manufacturer of carbonyl iron powders and one of only two manufacturers
worldwide.
Competition is largely based upon product and service quality, technology,
distribution capability and price. ISP believes that it is well positioned in
the marketplace as a result of its broad product lines, sophisticated technology
and worldwide distribution network.
RESEARCH AND DEVELOPMENT
ISP's worldwide research and development expenditures were $21.2 million,
$20.3 million and $21.9 million in 1993, 1994 and 1995, respectively.
ISP's research and development department is located primarily at ISP's
worldwide technical center and laboratories in Wayne, New Jersey and additional
research and development is conducted at the Calvert City, Kentucky, Texas City,
Texas, Chatham, New Jersey, Belleville, New Jersey, and Columbus, Ohio plant
sites and technical centers in the United Kingdom, Germany, China and Singapore.
ISP's mineral products research and development facility, together with its
recently opened customer design and color center, is located at Hagerstown,
Maryland.
ENVIRONMENTAL SERVICES
ISP has received conditional site designation for the construction of a
hazardous waste treatment, storage and disposal facility at its Linden, New
Jersey property. If ISP is successful in securing the site designation and the
necessary permits to construct and operate the hazardous waste facility, ISP
intends to develop and operate the facility in a separate subsidiary, either on
its own or in a joint venture with a suitable partner. ISP estimates that the
cost of constructing the facility will be approximately $100 million and, if
approved, the facility is anticipated to be in operation three years after
commencement of construction. ISP anticipates utilizing internally generated
cash and/or seeking project or other independent financing.
PROPERTIES
The corporate headquarters and principal research and development
laboratories of ISP are located at a 100-acre campus-like office and research
park owned by a subsidiary of ISP at 1361 Alps Road, Wayne, New Jersey 07470.
The premises are subject to a first mortgage. ISP Holdings maintains its
principal office at 818 Washington Street, Wilmington, Delaware 19801, telephone
(302) 428-0847.
The principal domestic and foreign real properties either owned by, or
leased to, ISP are described below. Unless otherwise indicated, the properties
are owned in fee. In addition to the principal facilities listed below, ISP
maintains sales offices and warehouses in the United States and abroad,
substantially all of which are in leased premises under relatively short-term
leases.
35
<PAGE>
ISP Holdings does not directly own or lease any real property.
<TABLE>
<CAPTION>
LOCATION FACILITY PRODUCT LINE
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
DOMESTIC
Alabama
Huntsville........................ Plant* Advanced Materials
Kentucky
Calvert City...................... Plant Specialty Chemicals
Maryland
Hagerstown........................ Research Center, Design Center, Mineral Products
Sales Office
Missouri
Annapolis......................... Plant, Quarry Mineral Products
New Jersey
Belleville........................ Plant, Sales Office, Research Specialty Chemicals
Center, Warehouse*
Bridgewater....................... Sales Office Specialty Chemicals
Chatham........................... Plant, Sales Office, Research Specialty Chemicals
Center, Warehouse*
Wayne............................. Headquarters, Corporate Specialty Chemicals; Filter Products
Administrative Offices, Research and Advanced Materials
Center
Ohio
Columbus.......................... Plant, Sales Office Fine Chemicals
Pennsylvania
Blue Ridge Summit................. Plant, Quarry Mineral Products
Tennessee
Memphis........................... Plant*, Warehouse*, Distribution Filter Products
Center*
Texas
Seadrift.......................... Plant Specialty Chemicals
Texas City........................ Plant Specialty Chemicals
Wisconsin
Pembine........................... Plant, Quarry Mineral Products
INTERNATIONAL
Belgium
Sint-Niklaas...................... Plant, Sales Office, Distribution Specialty Chemicals and Filter
Center Products
Brazil
Sao Paulo......................... Plant*, Sales Office*, Distribution Specialty Chemicals and Filter
Center* Products
Canada
Mississauga, Ontario.............. Plant*, Sales Office*, Distribution Specialty Chemicals
Center*
Oakville, Ontario................. Plant* Filter Products
Germany
Hamburg........................... Plant* Filter Products
Great Britain
Guildford......................... European Headquarters*, Research Specialty Chemicals
Center*
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
LOCATION FACILITY PRODUCT LINE
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
India
Nagpur............................ Plant Specialty Chemicals
Singapore
Southpoint........................ Plant*, Sales Office*, Distribution Specialty Chemicals and Filter
Center*, Asia-Pacific Headquarters*, Products
Warehouse*
Affiliate:
GAF-Huls Chemie GmbH Marl, Plant, Sales Office Specialty Chemicals
Germany...........................
</TABLE>
- ------------------
* Leased Property
The Company believes that its subsidiaries plants and facilities, which are
of varying ages and are of different construction types, have been
satisfactorily maintained, are in good condition, are suitable for their
respective operations and generally provide sufficient capacity to meet
production requirements. Each plant has adequate transportation facilities for
both raw materials and finished products. In 1995, the Company made capital
expenditures in the amount of $38.3 million relating to plant, property and
equipment.
PATENTS AND TRADEMARKS
ISP owns approximately 313 domestic and 123 foreign patents and owns or
licenses approximately 118 domestic and 1,350 foreign trademark registrations
related to the business of ISP. The Company does not believe that any single
patent, patent application or trademark is material to ISP's business or
operations.
The Company believes that the duration of the existing patents and patent
licenses is satisfactory.
ENVIRONMENTAL COMPLIANCE
Since 1970, a wide variety of federal, state and local environmental laws
and regulations relating to environmental matters (the 'Regulations') have been
adopted and amended. By reason of the nature of the operations of the Company
and its predecessor and certain of the substances that are, or have been used,
produced or discharged at their plants or at other locations, the Company is
affected by the Regulations. The Company has made capital expenditures of less
than $3.8 million in each of the last three years in order to comply with the
Regulations (which expenditures are included in additions to property, plant and
equipment) and anticipates that aggregate capital expenditures relating to
environmental compliance in 1996 and 1997 will be approximately $3.4 million and
$3.5 million, respectively.
The Regulations deal with air and water emissions or discharges into the
environment, as well as the generation, storage, treatment, transportation and
disposal of solid and hazardous waste, and the remediation of any releases of
hazardous substances and materials to the environment. The Company believes that
its manufacturing facilities comply in all material respects with applicable
Regulations, and, while it cannot predict whether more burdensome requirements
will be adopted in the future, it believes that any potential liability for
compliance with the Regulations will not materially affect its business,
liquidity or financial position.
The Company believes that its manufacturing facilities are being operated
in compliance in all material respects with applicable environmental, health and
safety laws and regulations but cannot predict whether more burdensome
requirements will be imposed by governmental authorities in the future.
ENVIRONMENTAL LITIGATION
The Company, together with other companies, is a party to a variety of
proceedings and lawsuits involving environmental matters ('Environmental
Claims') under the Comprehensive Environmental Response Compensation and
Liability Act ('CERCLA') and similar state laws, in which recovery is sought for
the cost of cleanup of contaminated sites, a number of which are in the early
stages or have been dormant for protracted periods.
37
<PAGE>
The Company estimates that its liability in respect of all Environmental
Claims, and certain other environmental compliance expenses, as of September 29,
1996, after giving effect to the Transactions will be $17.4 million, before
reduction for insurance recoveries reflected on its balance sheet (discussed
below) of $6.9 million ('estimated recoveries'). In the opinion of management,
the resolution of such matters should not be material to the business, liquidity
or financial position of the Company. However, adverse decisions or events,
particularly as to the liability and the financial responsibility of the
Company's insurers and of the other parties involved at each site and their
insurers, could cause the Company to increase its estimate of its liability in
respect of such matters. It is not currently possible to estimate the amount or
range of any additional liability.
After considering the relevant legal issues and other pertinent factors,
the Company believes that it will receive the estimated recoveries and it may
receive amounts substantially in excess thereof. The Company believes it is
entitled to substantially full defense and indemnity under its insurance
policies for most Environmental Claims, although the Company's insurers have not
affirmed a legal obligation under the policies to provide indemnity for such
claims.
The estimated recoveries are based in part upon interim agreements with
certain insurers. The Company terminated these agreements in 1995 and on March
8, 1995 commenced litigation in the United States District Court for the
District of New Jersey seeking amounts substantially in excess of the estimated
recoveries. While the Company believes that its claims are meritorious, there
can be no assurance that the Company will prevail in its efforts to obtain
amounts equal to, or in excess of, the estimated recoveries.
In June 1989, ISP entered into a Consent Order with the New Jersey
Department of Environmental Protection ('NJDEP') requiring the development of a
remediation plan for its closed Linden, New Jersey plant and the maintenance of
financial assurances (currently $7.5 million) to guarantee ISP's performance. In
April 1993, NJDEP issued orders which require the prevention of discharge of
contaminated groundwater and stormwater from the site and the elimination of
other potential exposure concerns. ISP believes, although there can be no
assurance, that, taking into account its plans for development of the site, it
can comply with the NJDEP order at a cost of no more than $7.5 million (in
connection with which ISP anticipates insurance recoveries of approximately $5
million). See '--Environmental Services.'
Pursuant to an Order dated September 28, 1990 issued by the United States
Environmental Protection Agency (the 'EPA'), over 100 potentially responsible
parties, including the Company, have agreed to participate in the remediation of
a contaminated waste disposal site in Carlstadt, New Jersey. The EPA is
evaluating final remedies for the site. Total cleanup costs are unknown but the
Company estimates, based on information currently available to it, that the
insurance described above will cover a substantial portion of the Company's
share of such costs.
EMPLOYEES
ISP Holdings has no employees other than its officers.
At September 29, 1996, ISP Holdings and its subsidiaries employed
approximately 2,700 people worldwide and approximately 700 employees in the
United States and Canada were subject to 6 union contracts. The Company does not
expect to renegotiate any additional labor contracts during the remainder of
1996. The Company believes that its relations with its employees and their
unions are satisfactory.
The Company has in effect various benefit plans, which include a
non-qualified retirement plan for a group of executives, a capital accumulation
plan for its salaried and certain hourly employees, a flexible benefit plan for
its salaried employees, a retirement plan for certain of its hourly employees,
and group insurance agreements providing life, accidental death, disability,
hospital, surgical, medical and dental coverage. In addition, the Company has
contracted with various health maintenance organizations to provide medical
benefits. The Company and, in many cases, its employees contribute to the cost
of these plans.
38
<PAGE>
MANAGEMENT
The following table sets forth the name, age, position and other
information with respect to the directors and executive officers of ISP
Holdings. Each person listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD(1) AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Samuel J. Heyman
Director, Chairman and
Chief Executive Officer............. 57 Mr. Heyman has been a director and Chairman and Chief
Executive Officer of ISP Holdings since its formation,
of G-I Holdings since August 1988 and of GAF, G
Industries and certain of its subsidiaries since April
1989, prior to which he held the same position with the
predecessor to GAF (the 'Predecessor Company') from
December 1983 to April 1989. Mr. Heyman has been
Chairman and Chief Executive Officer of ISP, and has
been a director and Chairman of BMCA, since their
respective formations. Mr. Heyman has been a director
of USI since October 1995 and Chief Executive Officer
of BMCA since June 1996. He is also the Chief Executive
Officer, Manager and General Partner of a number of
closely held real estate development companies and
partnerships whose investments include commercial real
estate and a portfolio of publicly traded securities.
Peter R. Heinze
President and Chief
Operating Officer,
International Specialty
Products Inc........................ 55 Dr. Heinze has been President, Chief Operating Officer
and a Director of ISP since November 1996. He was
Senior Vice President, Chemicals of PPG Industries,
Inc. from April 1993 to November 1996 and Group Vice
President, Chemicals of PPG Industries, Inc. from
August 1992 to April 1993. From January 1988 to August
1992, Dr. Heinze was President, Chemicals Division, and
an Executive Vice President of BASF Corporation.
Carl R. Eckardt
Executive Vice President............ 65 Mr. Eckardt has been Executive Vice President of ISP
Holdings since its formation. He has been Vice Chairman
of GAF since November 1996 and a director of GAF since
April 1987. He was Executive Vice President of GAF from
April 1989 to November 1996 and held the same position
with the Predecessor Company from January 1987 to April
1989. He was President and Chief Operating Officer of
ISP from January 1994 to November 1996 and was
Executive Vice President of ISP from its formation to
January 1994 and has served as such since November
1996. Mr. Eckardt has been
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD(1) AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Executive Vice President of G-I Holdings since March
1993. Mr. Eckardt was President of GCC and the
Predecessor Company's chemicals division from 1985 to
1987. Mr. Eckardt was a Senior Vice President Worldwide
Chemicals and Senior Vice President International
Chemicals of the Predecessor Company from 1982 to 1985
and 1981 to 1982, respectively. Mr. Eckardt joined the
Predecessor Company in 1974.
James P. Rogers
Senior Vice President and
Chief Financial Officer............. 45 Mr. Rogers has been Senior Vice President and Chief
Financial Officer of ISP Holdings since its formation,
of G-I Holdings, GAF and certain of its subsidiaries
and Senior Vice President-Finance of ISP since November
1993, a director and Senior Vice President of BMCA
since its formation and a director and Senior Vice
President of USI since October 1995. Mr. Rogers has
served as Treasurer of G-I Holdings, GAF and certain of
its subsidiaries since March 1992 and was Vice
President-Finance of such corporations from March 1992
to October 1993. He was Treasurer of ISP from March
1992 to December 1994 and from September 1995 to
December 1996. From August 1987 to March 1992, Mr.
Rogers was Treasurer of Amphenol Corporation, a
manufacturer of electronic connectors.
Richard A. Weinberg
Senior Vice President and
General Counsel..................... 37 Mr. Weinberg has been Senior Vice President and General
Counsel of ISP Holdings since its formation, and of
GAF, G-I Holdings, ISP, BMCA and certain of their
subsidiaries since May 1996. He was Vice President and
General Counsel of BMCA from September 1994 to May
1996, Vice President Law of BMCA from May 1994 to
September 1994 and Vice President Law of GAFBMC from
April 1993 to May 1994. Mr. Weinberg was employed by
Reliance Group Holdings Inc., a diversified insurance
holding company, as Staff Counsel from October 1987 to
January 1990 and as Assistant Vice President and
Corporate Counsel from January 1990 to April 1993.
Louis S. Goldberg
Senior Vice President,
Corporate Human Resources........... 59 Mr. Goldberg has been Senior Vice President, Corporate
Human Resources of ISP Holdings since its formation and
of GAF and G-I Holdings and certain of their
subsidiaries since July 1996. He has served as Senior
Vice President, Headquarters
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND POSITION HELD(1) AGE AND FIVE-YEAR EMPLOYMENT HISTORY
- -------------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Administrative Services of ISP since July 1996. From
January 1996 to July 1996, Mr. Goldberg served as a
senior consultant to GAF. From January 1995 to January
1996, he was Commissioner of the Department of
Administrative Services for the State of Connecticut,
and from January 1991 to December 1993 he served as
Connecticut's Commissioner of the Department of Motor
Vehicles. From September 1989 to December 1990, he was
Senior Vice President of Staub, Warmbold & Associates.
From August 1984 to April 1989 he was Vice
President-Human Resources of Playtex, Inc. and from
February 1977 to January 1984 he was Vice President
Administration/Human Resources of The Seagram Company
Ltd.
</TABLE>
- ------------------
(1) Under ISP Holdings' By-laws, each director and executive officer continues
in office until ISP Holdings' next annual meeting of stockholders and until
his or her successor is elected and qualified.
41
<PAGE>
EXECUTIVE COMPENSATION
No compensation is paid to officers or directors of ISP Holdings for their
services in such capacity.
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of ISP Holdings and the four other most highly compensated executive
officers of ISP Holdings who were employed in such capacity as of December 31,
1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------- --------------------------------------------
NAME AND PRINCIPAL OTHER ANNUAL SECURITIES ALL OTHER
POSITION(1) YEAR SALARY BONUS(2) COMPENSATION UNDERLYING OPTIONS/SARS(4) COMPENSATION
- ---------------------------- ---- -------- -------- ------------ ----------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Samuel J. Heyman............ 1995 $553,666 $200,000 0 150,000 (O) $ 9,848(3)
Chairman of the 1994 394,792 0 0 0 23,665(3)
Board of Directors 1993 464,792 0 0 0 12,750(3)
and Chief Executive
Officer
Carl R. Eckardt............. 1995 325,500 300,000 0 41,600 10,095(3)
President and 1994 312,084 300,000 0 45,240 (O) 15,440(3)
Chief Operating 1993 269,583 100,000 0 0 8,064(3)
Officer, ISP
Mark A. Buckstein(5)........ 1995 321,563 135,000 0 35,700 (O) 17,920(5)
Executive Vice 1994 306,250 185,000 $ 60,289(5) 2,993 (S) 24,430(5)
President, General 1993 125,000(5) 65,000(5) 35,000(5) 30,000 (O)/6,255(S) 4,685(5)
Counsel and Secretary
James P. Rogers............. 1995 248,333 225,000 0 38,300 (O) 13,154(6)
Senior Vice President 1994 224,167 200,000 0 15,000 (O) 18,025(6)
and Chief 1993 194,167 200,000 0 15,000 (O)/9,319(S) 21,903(6)
Financial Officer
James J. Strupp............. 1995 204,667 47,500 5,055 14,000 (O) 3,766(7)
Senior Vice President, 1994 188,542 37,500 4,079 15,180 (O)/3,026(S) 7,746(7)
Human Resources 1993 167,292 25,000 3,848 17,123 (O)/6,202(S) 5,537(7)
</TABLE>
- ------------------
(1) ISP paid the compensation to each of such named executive officers. The SARs
were granted by GAF.
(2) Bonus amounts are payable pursuant to ISP's Executive Incentive Compensation
Programs.
(3) Included in these amounts for Mr. Heyman are: $8,598, $22,415 and $11,000
for the premium paid by the Company for a life insurance policy in 1995,
1994 and 1993, respectively; and $1,250, $1,250 and $1,750 for the premium
paid by the Company for a long-term disability policy in 1995, 1994 and
1993, respectively. Included in these amounts for Mr. Eckardt are: $8,845,
$14,190 and $6,314 for the premium paid by G-I Holdings for a life insurance
policy in 1995, 1994 and 1993, respectively; and $1,250, $1,250 and $1,750
for the premiums paid by the Company for a long-term disability policy in
1995, 1994 and 1993, respectively.
(4) The options (O) are for shares of ISP Common Stock and the stock
appreciation rights (S) relate to shares of GAF common stock. See 'Options
and Stock Appreciation Rights.'
(5) Mr. Buckstein commenced employment as Executive Vice President, General
Counsel and Secretary on August 1, 1993 and retired from the Company on May
15, 1996. Included in 'Other Annual Compensation' for Mr. Buckstein are
$31,398 in payment of moving related expenses and a 'tax gross-up' of
$21,440 in 1994 and $35,000 in payment of moving related expenses in 1993,
all in connection with Mr. Buckstein's move following his joining the
Company. Included in 'All Other Compensation' for Mr. Buckstein are: $11,000
and $11,000, representing the Company's contribution under the GAF Capital
Accumulation Plan in 1995 and 1994, respectively; $5,670, $12,180 and $2,935
for the premium paid by G-I Holdings for a life
(Footnotes continued on next page)
42
<PAGE>
(Footnotes continued from previous page)
insurance policy in 1995, 1994 and 1993, respectively; and $1,250, $1,250
and $1,750 for the premium paid by the Company for a long-term disability
policy in 1995, 1994 and 1993, respectively.
(6) Included in these amounts for Mr. Rogers are $10,963, $10,750 and $16,040,
representing the Company's contribution under the GAF Capital Accumulation
Plan in 1995, 1994 and 1993, respectively; $978, $6,125 and $4,504 for the
premium paid by the Company for a life insurance policy in 1995, 1994 and
1993, respectively; and $1,213, $1,150 and $1,359 for the premium paid by
the Company for a long-term disability policy in 1995, 1994 and 1993,
respectively.
(7) Included in these amounts for Mr. Strupp are $500, $500 and $500,
representing the Company's contribution under the GAF Capital Accumulation
Plan in 1995, 1994 and 1993, respectively; $2,266, $6,383 and $3,866 for the
premium paid by the Company for a life insurance policy in 1995, 1994 and
1993, respectively; and $1,000, $863 and $1,171 for the premium paid by the
Company for a long-term disability policy in 1995, 1994 and 1993,
respectively.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize grants of options to acquire ISP Common
Stock granted during 1995 to the executive officers named in the Summary
Compensation Table above and the potential realizable value of such options and
stock appreciation rights ('SARs') relating to GAF common stock held by such
persons. No SARs were granted to, and no options or SARs were exercised by, such
persons in 1995.
ISP COMMON STOCK OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE/ MARKET APPRECIATION FOR
UNDERLYING GRANTED TO BASE PRICE OPTION TERM
OPTIONS EMPLOYEES PRICE ON DATE EXPIRATION ---------------------
NAME GRANTED(0) IN FISCAL 1995 ($/SHARE) OF GRANT DATE 5% 10%
- ------------------------------------ ---------- -------------- --------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Samuel J. Heyman.................... 150,000(2) 11.07% $ 7.000 $ 7.000 2/27/04 $578,850 $1,425,900
Carl R. Eckardt..................... 41,600(3) 3.07% 8.625 8.625 7/10/04 197,808 487,219
Mark A. Buckstein................... 35,700(3) 2.63% 8.625 8.625 7/10/04 169,754 418,118
James P. Rogers..................... 25,800(4) 1.90% 8.625 8.625 7/10/04 122,679 302,170
12,500(4) 0.92% 5.875 10.875 12/31/01 108,732 167,384
James J. Strupp..................... 14,000(3) 1.03% 8.625 8.625 7/10/04 66,570 163,968
</TABLE>
- ------------------
(1) Options were granted under the ISP 1991 Incentive Plan for Key Employees and
Directors, as amended (the '1991 Incentive Plan'). Each option becomes
vested as to 20%, 40%, 60%, 80% and 100% of the shares subject thereto on
each of the first through the fifth anniversaries of the date of grant,
respectively, and, to the extent vested, is exercisable for 9 years from the
date of grant, except for options granted to Mr. Rogers for 12,500 shares
which will become fully vested 2 1/2 years after the date of grant, and, to
the extent vested, are exercisable for 6 years from the date of grant. The
Compensation and Pension Committee of the Board of Directors of ISP may, on
a case by case basis, accelerate the vesting of unvested options in the
event of a 'Change in Control' (as defined).
(2) Mr. Heyman's ISP options were granted on February 27, 1995 and became or
will become exercisable as to 30,000 shares on each of February 27, 1996,
1997, 1998, 1999 and 2000.
(3) Mr. Eckardt's, Mr. Buckstein's and Mr. Strupp's ISP options were granted on
July 10, 1995. Mr. Eckardt's and Mr. Strupp's options will become
exercisable as to 8,320 shares and 2,800 shares, respectively, on each of
July 10, 1996, 1997, 1998, 1999 and 2000. Mr. Buckstein's options terminated
upon his retirement from the Company.
(Footnotes continued on next page)
43
<PAGE>
(Footnotes continued from previous page)
(4) Mr. Rogers' options for 25,800 shares were granted on July 10, 1995 and will
become exercisable as to 5,160 shares on each of July 10, 1996, 1997, 1998,
1999 and 2000. Mr. Rogers' options for 12,500 ISP shares will become
exercisable on June 30, 1998.
VALUE OF ISP COMMON STOCK OPTIONS/GAF STOCK APPRECIATION RIGHTS AT DECEMBER 31,
1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED ISP OPTIONS (O)/GAF IN-THE-MONEY OPTION/SARS
SARS(S) AT 12/31/95 AT 12/31/95(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------- ------------------------------- ------------------------
<S> <C> <C>
Samuel J. Heyman.................. 0/150,000(O) $ 0/$581,250
Carl R. Eckardt................... 39,048/97,792(O) 37,323/242,892
Mark A. Buckstein................. 12,000/53,700(O) 49,500/154,575
0/9,248(S) 0/359,662
James P. Rogers................... 27,000/71,300(O) 25,875/190,300
0/9,319(S) 0/312,122
James J. Strupp................... 9,885/36,418(O) 40,776/118,119
0/9,228(S) 0/315,184
</TABLE>
- ------------------
(1) Options for 150,000, 86,840, 65,700, 68,300 and 46,303 shares were
in-the-money for Messrs. Heyman, Eckardt, Buckstein, Rogers and Strupp,
respectively, as of December 31, 1995. All outstanding SARs were
in-the-money as of December 31, 1995.
PENSION PLANS
Non-Qualified Retirement Plan. The Company has a non-qualified retirement
plan for the benefit of certain key employees (the 'Retirement Plan'). The
benefit payable under the Retirement Plan, which vests in accordance with a
10-year schedule, consists of an annual payment commencing at age 65 equal to
25% of a covered employee's last full year's base salary. The benefit continues
for the longer of 15 years or the joint lifetimes of the employee or his or her
spouse. If a covered employee dies while employed by GAF or a subsidiary, a
death benefit of 36% of the employee's base salary at the date of death is
payable for a term of 15 years to the employee's beneficiary.
No new participants have been admitted to the Retirement Plan since January
1989 and it is not anticipated that any new participants will be admitted
hereafter. Of the executive officers named in the Summary Compensation Table,
only Messrs. Heyman, Eckardt and Strupp participate in the Retirement Plan.
The following table shows, for the salary levels and years of service
indicated, the annual pension benefit, payable commencing at age 65 to
participants in the Retirement Plan.
44
<PAGE>
NON-QUALIFIED RETIREMENT PLAN
ANNUAL PAYMENTS AT AGE 65
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------------
SALARY 5 10 15 20 25 30 35
-------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$250,000 $31,250 $ 62,500 $ 62,500 $ 62,500 $ 62,500 $ 62,500 $ 62,500
300,000 37,500 75,000 75,000 75,000 75,000 75,000 75,000
350,000 43,750 87,500 87,500 87,500 87,500 87,500 87,500
400,000 50,000 100,000 100,000 100,000 100,000 100,000 100,000
450,000 56,250 112,500 112,500 112,500 112,500 112,500 112,500
500,000 62,500 125,000 125,000 125,000 125,000 125,000 125,000
550,000 68,750 137,500 137,500 137,500 137,500 137,500 137,500
600,000 75,000 150,000 150,000 150,000 150,000 150,000 150,000
650,000 81,250 162,500 162,500 162,500 162,500 162,500 162,500
700,000 87,500 175,000 175,000 175,000 175,000 175,000 175,000
</TABLE>
The years of service covered by the Retirement Plan are, for Mr. Heyman,
Mr. Eckardt and Mr. Strupp, nine years, nine years and seven years,
respectively. Current salaries covered by the Retirement Plan are the amounts
set forth under the 'salary' column of the Summary Compensation Table for the
above-named executive officers. The annual pension benefit is not subject to
reduction for Social Security and other benefits and is computed on a
straight-life annuity basis.
Additional Pension Arrangements. ISP has agreed to provide Mr. Eckardt, at
age 67, a $200,000 annuity comprising two pieces: (i) the benefits payable under
the Retirement Plan described above, and (ii) a supplemental retirement benefit
representing the difference between $200,000 per year and the benefit payable
under the Retirement Plan. The supplemental retirement benefit will vest at 20%
per year over a five year period beginning March 19, 1994. In the event Mr.
Eckardt should die without a surviving spouse, no supplemental retirement
benefit will be payable. In the event Mr. Eckardt should die prior to the
termination of his employment, and leave a surviving spouse, his spouse will be
entitled to receive for her life an annual payment of the portion of the
supplemental retirement benefit in which he was vested on the date of his death.
If Mr. Eckardt's employment is terminated involuntarily other than for cause (as
defined), or in the event Mr. Eckardt becomes totally and permanently disabled,
he will be entitled to receive payment of the portion of the supplemental
retirement benefit in which he is vested on the date of termination or of the
onset of such disability. If Mr. Eckardt's employment is terminated for cause,
the Company in its sole discretion may declare all or any portion (whether
vested or unvested) of the supplemental retirement benefits forfeited.
45
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ISP HOLDINGS
Prior to consummation of the Spin Off Transactions, all of the outstanding
common stock of ISP Holdings ('ISP Holdings Common Stock') was owned of record
by GAF. As part of the Spin Off Transactions, the ISP Holdings Common Stock was
distributed to the stockholders of GAF initially in the same proportion as they
own common stock of GAF. See 'The Spin Off Transactions.'
The following table sets forth information with respect to the ownership of
ISP Holdings Common Stock, as of October 31, 1996, by each other person known to
ISP Holdings to own beneficially more than 5% of the ISP Holdings Common Stock
outstanding on that date, by each director of ISP Holdings and by all executive
officers and directors of ISP Holdings as a group, based on 10 shares of ISP
Holdings Common Stock outstanding on that date:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF TOTAL VOTING
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS POWER
- ------------------------- -------------------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock............. Samuel J. Heyman 10(1) 100%(1) 100%(1)
1361 Alps Road
Wayne, New Jersey 07470
All directors and executive 10(1) 100%(1) 100%(1)
officers of ISP Holdings as
a group (6 persons)
</TABLE>
- ------------------
(1) By virtue of Mr. Heyman's ownership of capital stock of GAF having
approximately 96% of the combined voting power thereof, Mr. Heyman may be
deemed to be the beneficial owner of all shares of ISP Holdings Common
Stock.
ISP
As of October 31, 1996, shares of ISP Common Stock were beneficially owned
by ISP Holdings' directors, ISP Holdings and ISP Holdings' directors and
executive officers as a group as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES
SHARES BENEFICIALLY BENEFICIAL
NAME OWNED % OWNED(3) %(3)
- --------------------------------------- ---------- ---- ---------------- ----------
<S> <C> <C> <C> <C>
Samuel J. Heyman....................... 125,000 0.1% 80,655,000(1) 83.6%(1)
Carl R. Eckardt(2)..................... 1,000 * 77,416 *
James P. Rogers........................ 20,316(4) * 67,477(4) *
Peter R. Heinze........................ 0 * 0 *
Louis S. Goldberg...................... 200 * 200 *
Richard A. Weinberg.................... 0 * 0 *
ISP Holdings........................... 80,500,000 83.5% 80,500,000 83.5%
All directors and executive officers
of ISP Holdings (6 persons).......... 146,516(4) 0.2(3)(4) 80,800,092(2)(4) 83.7%(2)(4)
</TABLE>
- ------------------
* Less than one-tenth of one percent
(1) By virtue of Mr. Heyman's ownership of capital stock of GAF having
approximately 96% of the combined voting power thereof, the number of shares
shown as being beneficially owned by Mr. Heyman includes 80,500,000 shares
owned by ISP Holdings. The business addresses of Mr. Heyman and ISP Holdings
are 1361 Alps Road, Wayne, New Jersey 07470 and 818 Washington Street,
Wilmington, Delaware 19801, respectively.
(Footnotes continued on next page)
46
<PAGE>
(Footnotes continued from previous page)
(2) The number of shares shown as being beneficially owned by all directors and
officers of ISP Holdings as a group attributes ownership of ISP Holdings'
80,500,000 shares to Mr. Heyman. See footnote 1 above. Mr. Eckardt also
owns 29,995 shares of GAF's common stock which shares have, in the
aggregate, approximately 1.7% of the combined voting power of GAF's capital
stock. Such shares are held subject to GAF's right to acquire such shares
from Mr. Eckardt upon his termination of employment with GAF and its
affiliates.
(3) Includes with respect to Messrs. Heyman, Eckardt and Rogers and all
directors and executive officers as a group 30,000, 76,416, 47,160 and
153,576 shares, respectively, subject to options granted under the ISP 1991
Incentive Plan which are currently exercisable or exercisable within 60
days.
(4) Includes with respect to Mr. Rogers 7,316 shares held in his account with
the GAF Capital Accumulation Plan as of December 31, 1995 and 10,000 shares
held jointly with his spouse.
TAX SHARING AGREEMENT
On December , 1996, effective January 1, 1997, ISP and its domestic
subsidiaries entered into a Tax Sharing Agreement with ISP Holdings with respect
to the payment of federal income taxes and certain related matters (the 'ISP
Holdings Tax Sharing Agreement'). During the term of the ISP Holdings Tax
Sharing Agreement, which extends as long as ISP or any of its domestic
subsidiaries, as the case may be, is included in a consolidated federal income
tax return filed by ISP Holdings, or a successor entity, ISP is obligated to pay
to ISP Holdings an amount equal to those federal income taxes ISP would have
incurred if, subject to certain exceptions, ISP (on behalf of itself and its
domestic subsidiaries) filed its consolidated federal income tax return. These
exceptions include, among others, that ISP may utilize certain favorable tax
attributes i.e., losses, deductions and credits (except for a certain amount of
foreign tax credits and, in general, net operating losses) only at the time such
attributes reduce the federal income tax liability of ISP Holdings and its
consolidated subsidiaries (the 'ISP Holdings Group'); and that ISP may carry
back or carry forward its favorable tax attributes only after taking into
account current tax attributes of the ISP Holdings Group. In general, subject to
the foregoing limitations, unused tax attributes carry forward for use in
reducing amounts payable by ISP to ISP Holdings in future years. Subject to
certain exceptions, actual payment for such attributes will be made by ISP
Holdings to ISP only when ISP Holdings receives an actual refund of taxes from
the IRS or, under certain circumstances, the earlier of (i) the dates of the
filing of federal income tax returns of ISP for taxable years of ISP following
the last taxable year in which it was a member of the ISP Holdings Group, or
(ii) when ISP Holdings no longer owns more than 50% of ISP. Foreign tax credits
not utilized by ISP in computing its tax sharing payments will be refunded by
ISP Holdings to ISP, if such credits expire unutilized, upon the termination of
the statute of limitations for the year of expiration.
The ISP Holdings Tax Sharing Agreement provides for analogous principles to
be applied to any consolidated, combined or unitary state or local income taxes.
Under the ISP Holdings Tax Sharing Agreement, ISP Holdings makes all decisions
with respect to all matters relating to taxes of the ISP Holdings Group. The
provisions of the ISP Holdings Tax Sharing Agreement take into account both the
federal income taxes ISP would have incurred if it filed its own separate
federal income tax return and the fact that ISP is a member of the ISP Holdings
Group for federal income tax purposes.
ISP Holdings and ISP were parties to tax sharing agreements with members of
the GAF Group. As a result of the Spin Off Transactions, ISP Holdings and ISP
are no longer included in the consolidated federal income tax returns of GAF,
and therefore, such tax sharing agreements are no longer applicable with respect
to the future tax liabilities of ISP Holdings and ISP. ISP Holdings and ISP
remain obligated, however, with respect to tax liabilities imposed or that may
be imposed for periods prior to the Spin Off Transactions. Among other things,
those tax sharing agreements provide for the sharing of the GAF Group's
consolidated tax liability based on each member's share of the tax as if such
member filed on a separate basis. Accordingly, a payment of tax would be made to
GAF equal to ISP Holdings' and ISP's allocable share of the GAF Group's
consolidated tax liability. Alternatively, ISP Holdings and ISP would be
entitled to refunds if losses or other attributes reduce the GAF Group's
consolidated tax liability. Moreover, foreign tax credits generated by ISP not
utilized by GAF will be refunded by GAF or its subsidiary to ISP, if such
credits expire unutilized upon termination of the statute of
47
<PAGE>
limitations for the year of expiration. Furthermore, those tax sharing
agreements provide for an indemnification to ISP Holdings and ISP for any tax
liability attributable to another member of the GAF Group.
See 'Certain Relationships' for information relating to tax indemnification
in connection with the Spin Off Transactions.
CERTAIN RELATIONSHIPS
Management Agreement. Pursuant to a Management Agreement (the 'Management
Agreement') which expires at the end of 1997, ISP provides certain general
management, administrative and facilities services to ISP Holdings and to
certain other affiliates of GAF, including BMCA, USI, G-I Holdings and GCC.
Charges by ISP for providing such services aggregated $4.5 million in 1995. Such
charges were increased to an annual rate of approximately $4.9 million,
effective January 1, 1996, and can be further adjusted by amendment if there is
a substantial change in the cost to ISP of providing such services. In addition
to the management services charge, BMCA paid approximately $700,000 to ISP in
1995, primarily for telecommunications and information services, and G-I
Holdings and BMCA paid approximately $200,000 to ISP in 1995 for legal services,
which in each case were not then contemplated by the Management Agreement.
Although, due to the unique nature of the services provided under the Management
Agreement, comparisons with third party arrangements are difficult, ISP believes
that the terms of the Management Agreement, taken as a whole, are no less
favorable to ISP than could be obtained from an unaffiliated third party.
Certain of the executive officers of ISP perform services for affiliates of ISP
pursuant to the Management Agreement, and ISP is indirectly reimbursed therefor
by virtue of the management fee.
Granules Contracts. BMCA purchases from ISP all of its colored roofing
granule requirements (except for the requirements of BMCA's California roofing
plant) under a requirements contract which was renewed for 1997 and is subject
to annual renewal unless terminated by ISP or BMCA. In 1995, BMCA purchased
approximately $45.7 million of mineral products from ISP, representing
approximately 7% of ISP's total net sales and approximately 53% of ISP's net
sales of mineral products. In addition, in December 1995, USI commenced
purchasing from ISP substantially all of its requirements for colored roofing
granules (except for the requirements of USI's Stockton, California and
Corvallis, Oregon plants) pursuant to a requirements contract which expires
December 31, 1997. During the period in 1995 after USI's acquisition by an
affiliate of the Company, USI purchased approximately $0.1 million of mineral
products from ISP. The Company's supply arrangements with BMCA and USI are at
prices and on terms which the Company believes are no less favorable to ISP than
could be obtained from an unaffiliated third party.
Mutual Indemnification. Pursuant to the terms of an indemnification
agreement dated as of October 18, 1996 (the 'Indemnification Agreement') among
GAF, G-I Holdings, ISP Holdings, G Industries and GCC, (i) GAF and G-I Holdings
have agreed to indemnify ISP Holdings and its subsidiaries for all liabilities
of the GAF Group as it is currently comprised (the 'Current GAF Group'),
including all liabilities for asbestos-related claims (whether for indemnity or
defense) and such group's liabilities relating to environmental matters,
litigation and employee benefits and excluding all liabilities of ISP and its
subsidiaries, all liabilities relating to the Notes and all other liabilities
reflected in the pro forma consolidated balance sheet of ISP Holdings and its
subsidiaries or the notes thereto prepared in connection with the ISP Holdings
Transactions, (ii) ISP Holdings has agreed to indemnify GAF and the other
members of the Current GAF Group for all liabilities of ISP and its
subsidiaries, all liabilities relating to the Notes, and all other liabilities
reflected in the pro forma consolidated balance sheet of ISP Holdings and its
subsidiaries or the notes thereto prepared in connection with the ISP Holdings
Transactions (excluding those liabilities as to which ISP Holdings is being
indemnified in accordance with clause (i)), (iii) ISP Holdings has agreed to
indemnify GAF and the other members of the Current GAF Group for its accrued tax
liability prior to the Spin Off Transactions and (iv) GAF, G-I Holdings, G
Industries and GCC have agreed to indemnify ISP Holdings, ISP and its
subsidiaries from, and against, any and all taxes (net of any tax benefits
realized by the indemnitees) that may be payable by the Current GAF Group with
respect to the Spin Off Transactions. See 'Selected Financial Data.'
Other Transactions Between ISP Holdings and Other Members of the Current
GAF Group. The Indentures restrict ISP Holdings and ISP from engaging in
certain transactions with members of the Current GAF Group, including making
loans to, or guarantees in favor of, such companies, except pursuant to certain
specified agreements. See 'Description of the New Notes' and 'Risk
Factors--Holding Company Structure and Related Considerations.' For a
description of certain tax sharing agreements, see 'Tax Sharing Agreement.'
48
<PAGE>
THE EXCHANGE OFFERS
PURPOSE AND EFFECT
Each of the Old 9% Notes and the Old 9 3/4% Notes were issued by ISP
Holdings on October 18, 1996. In connection therewith, ISP Holdings entered into
each of the 9% Note Indenture and the 9 3/4% Note Indenture, each of which
requires that ISP Holdings file a registration statement under the Securities
Act with respect to the New Notes and, upon the effectiveness of such
registration statement, offer to the holders of the Old Notes the opportunity to
exchange their Old Notes for a like principal amount of New Notes, which will be
issued without a restrictive legend and, except as set forth below, may be
reoffered and resold by the holder without registration under the Securities
Act. Upon the completion of the Exchange Offers, ISP Holdings' obligations with
respect to the registration of the Old Notes and the New Notes will terminate,
except as provided below. A copy of each Indenture and the Registration
Agreements delivered in connection therewith have been filed as exhibits
Prospectus is a part. As a result of the filing and the effectiveness of the
Registration Statement, certain prospective increases in the interest rate on
the Old Notes provided for in the Registration Agreements will not occur.
Following the completion of the Exchange Offers, holders of Old Notes not
tendered will not have any further registration rights, except as provided
below, and the Old Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for the Old Notes could be
adversely affected upon completion of the Exchange Offers.
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, ISP Holdings believes that New Notes
issued pursuant to the Exchange Offers in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by a holder thereof (other than any
such holder that is an 'affiliate' of ISP holdings within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such holder
represents to ISP Holdings that (i) such New Notes are acquired in the ordinary
course of business of such holder, (ii) such holder is not engaging in and does
not intend to engage in a distribution of such new Notes and (iii) such holder
has no arrangement or understanding with any person to participate in the
distribution of such New Notes. Any holder who tenders in the Exchange Offers
for the purpose of participating in a distribution of the New Notes cannot rely
on such interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales of
such New Notes. See 'Plan of Distribution.'
In the event that any holder of Old Notes would not receive freely
tradeable New Notes in the Exchange Offers or is not eligible to participate in
the Exchange Offers, such holder can elect, by so indicating on the Letter of
Transmittal and providing certain additional necessary information, to have such
holder's Old Notes registered in a 'shelf' registration statement on an
appropriate form pursuant to Rule 415 under the Securities Act. In the event
that ISP Holdings is obligated to file a 'shelf' registration statement, it will
be required to keep such 'shelf' registration statement effective for a period
of three years or such shorter period that will terminate when all of the Old
Notes covered by such registration statement have been sold pursuant thereto.
Other than as set forth in this paragraph, no holder will have the right to
require ISP Holdings to register such holder's Notes under the Securities Act.
See 'Procedures for Tendering.'
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offers holders of Old Notes not
tendered will not have any further registration rights, except as set forth
above, and the Old Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for a holder's Old Notes
could be adversely affected upon completion of the Exchange Offers if such
holder does not participate in the Exchange Offers.
49
<PAGE>
TERMS OF THE EXCHANGE OFFERS
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, ISP Holdings will accept any and all Old Notes
validly tendered and not withdrawn prior to 12:00 midnight, New York City time,
on the Expiration Date. ISP Holdings will issue (i) $1,000 principal amount of
New 9% Notes in exchange for each $1,000 principal amount of outstanding Old 9%
Notes accepted in the Exchange Offer relating thereto and (ii) $1,000 principal
amount of New 9 3/4% Notes in exchange for each $1,000 principal amount of
outstanding Old 9 3/4% Notes accepted in the Exchange Offer relating thereto.
Holders may tender some or all of their Old Notes pursuant to the Exchange
Offers. However, Old Notes may be tendered only in integral multiples of $1,000
in principal amount.
The form and terms of New 9% Notes are the same as the form and terms of
the Old 9% Notes and the form and terms of the New 9 3/4 Notes are the same as
the form and terms of the Old 9 3/4% Notes, except, in each case, that the New
Notes have been registered under the Securities Act and hence will not bear
legends restricting the transfer thereof. The New 9% Notes will evidence the
same debt as the Old 9% Notes and will be issued pursuant to, and entitled to
the benefits of, the 9% Indenture pursuant to which the Old Notes were issued
and will be deemed one issue of notes, together with the Old 9% Notes. The New
9 3/4% Notes will evidence the same debt as the Old 9 3/4% Notes and will be
issued pursuant to, and entitled to the benefits of, the 9 3/4% Indenture
pursuant to which the Old Notes were issued and will be deemed one issue of
notes, together with the Old 9 3/4% Notes.
As of the date of this Prospectus, $325,000,000 aggregate principal amount
of the Old 9% Notes and $199,871,000 aggregate principal amount of the Old
9 3/4% Notes were outstanding. This Prospectus, together with the applicable
Letter of Transmittal, is being sent to all registered holders and to others
believed to have beneficial interests in the Old Notes. Holders of Old Notes do
not have any appraisal or dissenters' rights in connection with the Exchange
Offers under the General Corporation Law of the State of Delaware or the
Indentures. ISP Holdings intends to conduct the Exchange Offers in accordance
with the applicable requirements of the Securities Exchange Act of 1934, as
amended (the 'Exchange Act'), and the rules and regulations of the Commission
promulgated thereunder.
ISP Holdings shall be deemed to have accepted validly tendered Old Notes
when, as, and if ISP Holdings has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from ISP Holdings. If any tendered
Old Notes are not accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth herein or otherwise, certificates
for any such unaccepted Old Notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offers will not be required to
pay brokerage commissions or fees or, except as set forth below under 'Transfer
Taxes,' transfer taxes with respect to the exchange of Old Notes pursuant to the
Exchange Offers. ISP Holdings will pay all charges and expenses, other than
certain applicable taxes, in connection with the Exchange Offers. See '--Fees
and Expenses' below.
EXPIRATION DATE; AMENDMENTS
The term 'Expiration Date' shall mean 12:00 midnight, New York City time,
on , 1997, unless ISP Holdings, in its sole discretion, extends
either Exchange Offer (in which case the term 'Expiration Date' shall mean the
later date and time to which such Exchange Offer is extended). ISP Holdings does
not intend to extend either Exchange Offer although it reserves the right to do
so by giving oral or written notice of such extension to the Exchange Agent and
by giving each registered holder notice by means of a press release or other
public announcement of any extension, in each case, prior to 9:00 A.M., New York
City time, on the next business day after the scheduled Expiration Date. ISP
Holdings also reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes or, if any of the conditions set forth below under 'Conditions'
shall not have been satisfied or waived, to terminate either Exchange Offer or
(ii) to amend the terms of either Exchange Offer in any manner, by giving oral
or written notice of such delay, or termination to the Exchange Agent, and by
complying with Rule 14e-1(d) promulgated under the Exchange Act to the extent
such Rule applies. ISP Holdings acknowledges and undertakes to comply with the
provisions of Rule 14e-1(c) promulgated under the Exchange Act, which requires
ISP Holdings to pay the consideration offered, or return the Old Notes
surrendered for exchange, promptly after the termination or withdrawal of the
applicable Exchange Offer. Any such
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extension, termination or amendment will be followed as promptly as practicable
by a notice to holders of Old Notes of the appropriate issue.
PROCEDURES FOR TENDERING
Only a registered holder of Old 9% Notes may tender such Old Notes in the
Exchange Offer relating thereto and only a registered holder of Old 9 3/4% Notes
may tender such Old Notes in the Exchange Offer relating thereto. To tender in
either Exchange Offer, a registered holder must complete, sign, and date the
applicable Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile to the Exchange
Agent prior to the Expiration Date. In addition, either (i) certificates for
such Old Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
'Book-Entry Confirmation') of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
'Book-Entry Transfer Facility') pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the registered holder must comply with the guaranteed
delivery procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth below under 'Exchange Agent' prior to the Expiration
Date.
The tender by a registered holder which is not withdrawn prior to the
Expiration Date will constitute an agreement between such holder and ISP
Holdings in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO ISP HOLDINGS. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless (A) Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled 'Special Registration
Instructions' or 'Special Delivery Instructions' on the Letter of Transmittal or
(ii) for the account of an Eligible Institution and (B) the box entitled
'Special Registration Instructions' on the Letter of Transmittal has not been
completed. In the event that signatures on a Letter of Transmittal or a notice
of withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion Program
or the Stock Exchanges Medallion Program (each an 'Eligible Institution').
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power and signed by such
registered holder as such registered holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officer of
corporations, or others acting in a fiduciary or
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<PAGE>
representative capacity, such persons should so indicate when signing, and
unless waived by ISP Holdings, evidence satisfactory to ISP Holdings of their
authority to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
ISP Holdings in its sole discretion, which determination will be final and
binding. ISP Holdings reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes ISP Holdings' acceptance of which
would, in the opinion of counsel for ISP Holdings, be unlawful. ISP Holdings
also reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. ISP Holdings' interpretation of the terms and
conditions of the Exchange Offers (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as ISP Holdings shall determine. Although ISP Holdings intends to notify
holders of defects or irregularities with respect to tenders of Old Notes,
neither ISP Holdings, the Exchange Agent, nor any other person shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, ISP Holdings reserves the right in its sole discretion to
purchase or make offers for, or to offer New Notes for, any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set forth below
under 'Conditions,' to terminate either Exchange Offer and, to the extent
permitted by applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offers.
By tendering, each holder will represent to ISP Holdings that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of such holder, (ii) the holder is
not engaging in and does not intend to engage in a distribution of such New
Notes, (iii) the holder does not have an arrangement or understanding with any
person to participate in the distribution of such New Notes and (iv) the holder
is not an 'affiliate,' as defined under Rule 405 of the Securities Act, of ISP
Holdings.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to either Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility, a properly completed and duly executed Letter
of Transmittal and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offers or if Old Notes are submitted for a greater principal amount
than the holder desires to exchange, such unaccepted or non-exchanged Old Notes
(or Old Notes in substitution therefor) will be returned without expense to the
tendering holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
non-exchanged Old Notes will be credited to such tendering holder's account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offers within two business days after receipt of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the address
set forth below under 'Exchange Agent' on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
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<PAGE>
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old 9% Notes or Old 9 3/4% Notes desires to
tender such Old Notes and such Old Notes are not immediately available, or time
will not permit such holder's Old Notes or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) on or prior to 12:00
midnight, New York City time, on the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by ISP Holdings (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ('NYSE') trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
any other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent, and (iii) the certificates for
all physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal, are received by the Exchange Agent within three NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old 9% Notes or Old 9 3/4% Notes may be withdrawn at any time
prior to 12:00 midnight, New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth below under 'Exchange Agent' prior to 12:00
midnight, New York City time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the 'Depositor'), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee register the transfer of
such Old Notes into the name of the person withdrawing the tender, and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form, and
eligibility (including time of receipt) of such notices will be determined by
ISP Holdings, whose determination shall be final and bindings on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offers. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
applicable Exchange Offer. Properly withdrawn Old Notes may be retendered by
following one of the procedures described under 'Procedures for Tendering' above
at any time on prior to 12:00 midnight, New York City time, on the Expiration
Date.
CONDITIONS
The consummation of either Exchange Offer is not conditioned on the
consummation of the other Exchange Offer. Notwithstanding any other provisions
of the Exchange Offers and, however, subject to its obligations pursuant to the
Registration Agreements, ISP Holdings shall not be required to accept for
exchange, or to issue New Notes in exchange for, any Old Notes and may terminate
or amend either Exchange Offer, if at any time before the acceptance of such New
Notes for exchange, any of the following events shall occur:
A. any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of ISP Holdings to proceed with such Exchange
Offer; or
B. such Exchange Offer shall violate any applicable law or any
applicable interpretation of the staff of the Commission.
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The foregoing conditions are for the sole benefit of ISP Holdings and may
be asserted by ISP Holdings regardless of the circumstances giving rise to any
such condition or may be waived by ISP Holdings in whole or in part at any time
and from time to time in its sole discretion. The failure by ISP Holdings at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and such right shall be deemed an ongoing right which may be asserted
at any time and time to time.
In addition, ISP Holdings will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened by the Commission or be in
effect with respect to the Registration Statement of which this Prospectus is a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
Neither Exchange Offer is conditioned on any minimum principal amount of
Old Notes being tendered for exchange.
ASSISTANCE
All executed Letters of Transmittal should be directed to the Exchange
Agent. Questions and requests for assistance may be directed to the Exchange
Agent as provided below under 'Exchange Agent.'
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offers. Questions, requests for assistance and requests for additional copies of
the Prospectus, the Letter of Transmittal and other related documents should be
directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail, By Hand
or by Overnight Courier:
The Bank of New York
101 Barclay Street--7E
New York, New York 10286
Attn: Reorganization Section
By Facsimile: By Telephone:
(212) 571-3080 (212) 815-6333
The Exchange Agent also acts as trustee under the Indentures.
FEES AND EXPENSES
ISP Holdings will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of ISP Holdings.
The estimated cash expenses to be incurred in connection with the Exchange
Offers will be paid by ISP Holdings and are estimated in the aggregate to be
approximately $250,000 which includes fees and expenses of the Exchange Agent,
accounting, legal, printing and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
ISP Holdings to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offers be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
ACCOUNTING TREATMENT
ISP Holdings will not recognize any gain or loss for accounting purposes
upon the consummation of the Exchange Offers. The expense of the Exchange Offers
will be amortized by ISP Holdings over the respective terms of the New Notes
under generally accepted accounting principles.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The Old 9% Notes were issued under an Indenture dated as of October 18,
1996 (the '9% Note Indenture') between ISP Holdings and the Bank of New York, as
trustee (the 'Trustee'). The Old 9 3/4% Notes were issued under an Indenture
dated as of October 18, 1996 (the '9 3/4% Note Indenture') between ISP Holdings
and the Trustee. A copy of each of the 9% Note Indenture and the 9 3/4% Note
Indenture (each individually, an 'Indenture' and together, the 'Indentures') has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. As a result of the consummation of the Spin Off Transactions, G-I
Holdings and its subsidiaries, including BMCA, are no longer subsidiaries of ISP
Holdings. Therefore, restrictions set forth in the Indentures with respect to
the operations of G-I Holdings and its subsidiaries, including BMCA, are no
longer applicable. The New 9% Notes will be issued under the 9% Note Indenture
and the New 9 3/4% Notes will be issued under the 9 3/4% Note Indenture, each of
which will be qualified under the Trust Indenture Act of 1939, as amended (the
'TIA'), upon the effectiveness of the Registration Statement of which this
Prospectus is a part. The form and terms of each issue of New Notes and the
respective series of Old Notes are the same except that the New Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The following summary of certain provisions of
the Indentures does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the TIA, and to all of the provisions
of each Indenture including the definitions of certain terms therein and those
terms made a part of such Indenture by reference to the TIA as in effect on the
date of such Indenture. The definitions of certain capitalized terms used in the
following summary are set forth under 'Certain Definitions.' The term '9% Notes'
means the New 9% Notes and the Old 9% Notes treated as a single class. The term
'9 3/4% Notes' means the New 9 3/4% Notes and the Old 9 3/4% Notes treated as a
single class. The term 'Notes' means the 9% Notes and the 9 3/4% Notes,
collectively. For purposes of this section, the 'Company' means ISP Holdings
Inc., not including any of its Subsidiaries.
The 9% Notes will be general unsecured obligations of the Company and will
rank senior to all subordinated indebtedness of the Company and pari passu in
right of payment to the 9 3/4% Notes and to all other unsubordinated
indebtedness of the Company. The 9 3/4% Notes will be general unsecured
obligations of the Company and will rank senior to all subordinated indebtedness
of the Company and pari passu in right of payment to the 9% Notes and to all
other unsubordinated indebtedness of the Company. The Notes will be effectively
subordinated to all secured indebtedness of the Company to the extent of the
assets securing such indebtedness and to all indebtedness and other obligations
of the Company's subsidiaries. See Note 8 to Consolidated Financial Statements.
PRINCIPAL, MATURITY AND INTEREST
The 9% Notes are limited in aggregate principal amount to $325,000,000 and
will mature on October 15, 2003. The 9% Notes bear interest at a rate of 9% per
annum from the Issue Date. Interest is payable semiannually on each April 15 and
October 15 (each, a '9% Interest Payment Date'), commencing on April 15, 1997,
to the persons who are registered Holders on the immediately preceding April 1
and October 1, whether or not a business day (each, a '9% Interest Record
Date'). Accrued and unpaid interest on the Old 9% Notes will be paid in cash on
the first 9% Interest Payment Date to the persons who are registered Holders of
9% Notes on the 9% Interest Record Date for such 9% Interest Payment Date.
The 9 3/4% Notes are limited in aggregate principal amount to $199,871,000
and will mature on February 15, 2002. The 9 3/4% Notes bear interest at a rate
of 9 3/4% per annum from the Issue Date. Interest will be payable semiannually
on each February 15 and August 15 (each, a '9 3/4% Interest Payment Date'),
commencing on February 15, 1997, to the persons who are registered Holders on
the immediately preceding February 1 and August 1, whether or not a business day
(each, a '9 3/4% Interest Record Date'). Accrued and unpaid interest on the Old
9 3/4% Notes will be paid in cash on the first 9 3/4% Interest Payment Date to
the persons who are registered Holders of 9 3/4% Notes on the 9 3/4% Interest
Record Date for such 9 3/4% Interest Payment Date.
If the Company defaults in a payment of interest on the Notes, it shall pay
the default interest, plus, to the extent permitted by law, any interest payable
on the defaulted interest, to the Persons who are Holders on a
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subsequent special record date. Such special record date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a business day. At least 15 days before the
special record date, the Company shall mail or cause to be mailed to each Holder
and the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
OPTIONAL REDEMPTION
The 9% Notes are redeemable, at the Company's option, in whole at any time
or in part from time to time, on and after October 15, 1999, upon not less than
30 nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed during the
twelve-month period commencing on October 15 of the year set forth below, plus,
in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------ ----------
<S> <C>
1999.................................................................... 104.5%
2000.................................................................... 103.0%
2001.................................................................... 101.5%
2002.................................................................... 100.0%
</TABLE>
In the event that on or prior to October 15, 1999, (x) the Company
consummates a sale of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP, the Company may, at its option, redeem, but
only to the extent of net cash proceeds therefrom actually received by the
Company, up to 50% of the principal amount of the 9% Notes then outstanding at a
redemption price equal to 109% of the principal amount thereof plus accrued
interest thereon to the date of redemption; provided, however, that, no such
redemption may be made if and to the extent that, after giving effect thereto,
less than 50% of the principal amount of 9% Notes originally issued would be
outstanding. Any such redemption shall be made within 75 days of the first
consummation of any such sale.
The Company also has the right to redeem all, but not less than all, of the
9% Notes upon a Change of Control. See 'Change of Control Put and Call.'
The 9 3/4% Notes are redeemable, at the Company's option, in whole at any
time or in part from time to time, on and after October 15, 1999, upon not less
than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on October 15 of the year set forth below,
plus, in each case, accrued and unpaid interest thereon, if any, to the date of
redemption:
YEAR PERCENTAGE
- -------------------------------------------------------------- ----------
1999.......................................................... 104.8750%
2000.......................................................... 102.4375%
2001.......................................................... 100.0000%
In the event that on or prior to October 15, 1999, (x) the Company
consummates a sale of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP, the Company may, at its option, redeem, but
only to the extent of net cash proceeds therefrom actually received by the
Company, up to 50% of the principal amount of the 9 3/4% Notes then outstanding
at a redemption price equal to 109.75% of the principal amount thereof plus
accrued interest thereon to the date of redemption; provided, however, that, no
such redemption may be made if and to the extent that, after giving effect
thereto, less than a majority of the principal amount of 9 3/4% Notes originally
issued would be outstanding. Any such redemption shall be made within 75 days of
the first consummation of any such sale.
The Company also has the right to redeem all, but not less than all, of the
9 3/4% Notes upon a Change of Control. See 'Change of Control Put and Call.'
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SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes of either class are to be
redeemed at any time, selection of such Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such Notes are listed or, if such Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part;
provided, further, that if a partial redemption is made in accordance with the
second or fifth paragraph under 'Optional Redemption,' selection of the Notes or
portions thereof for redemption shall be made by the Trustee only on a pro rata
basis with the other Notes of such class or on as nearly a pro rata basis as is
practicable (subject to procedures of the Depository Trust Company), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date (or, if applicable, at such other time as is provided below under 'Change
of Control Put and Call') to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions thereof called for redemption as long
as the Company has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
CHANGE OF CONTROL PUT AND CALL
In the event of any Change of Control, each Holder shall have the right, at
such Holder's option, to require the Company to purchase all or any portion (in
integral multiples of $1,000) of such Holder's Notes on the date (the 'Change of
Control Payment Date') which is 25 business days after the date the Change of
Control Notice (as defined below) is mailed or is required to be mailed (or such
later date as is required by applicable law) at 101% of the principal amount
thereof (or, if lower, the applicable redemption prices then in effect under the
provisions described in the first and fourth paragraphs under '--Optional
Redemption') plus accrued interest thereon to the Change of Control Payment
Date.
The Company or, at the request of the Company, the Trustee shall send, by
first-class mail, postage prepaid, to all Holders, within ten business days
after the occurrence of each Change of Control, a notice of the occurrence of
such Change of Control (the 'Change of Control Notice'), specifying a date by
which a Holder must notify the Company of such Holder's intention to exercise
the repurchase right and describing the procedure that such Holder must follow
to exercise such right. The Company is required to deliver a copy of such notice
to the Trustee.
Each Change of Control Notice shall state: (1) that the change of control
offer is being made pursuant to this covenant and that all Notes of such class
tendered will be accepted for payment; (2) the purchase price and the Change of
Control Payment Date; (3) that any Note not tendered will continue to accrue
interest; (4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the change of control offer shall cease to
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have a Note purchased pursuant to a change of control offer will be
required to surrender the Note in accordance with the instructions set forth
therein; (6) that the Company has the right, pursuant to provisions described in
the next paragraph, to redeem any Notes not tendered at the Call Price (defined
below); and (7) the circumstances and relevant facts regarding such Change of
Control.
In the event a Change of Control occurs, the Company may redeem all, but
not less than all, of the Notes of each class then outstanding, at a redemption
price equal to 100% of the principal amount thereof plus accrued interest to the
redemption date, plus the Applicable Premium (the 'Call Price'). Notice of any
redemption to be made pursuant to this paragraph as a result of the occurrence
of a Change of Control must be given no later than 10 days after the Change of
Control Payment Date applicable to the Change of Control giving rise to such
redemption, and redemption must be made within 30 days of the date of the
notice.
The Company shall comply with all applicable Federal and state securities
laws in connection with each Change of Control Notice.
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CERTAIN DEFINITIONS
'Acquired Debt,' with respect to any Person, means (i) Debt (including any
then unutilized commitment under any revolving working capital facility) of an
entity, which entity is acquired by such Person or any of its Subsidiaries after
the Issue Date; provided that such Debt (including any such facility) is
outstanding at the time of the acquisition of such entity, is not created in
contemplation of such acquisition and is not, directly or indirectly, recourse
(including by way of set-off) to such Person or its Subsidiaries or any of their
respective assets other than to the entity and its Subsidiaries so acquired and
the assets of the entity and its Subsidiaries so acquired, (ii) Debt of such
Person that is not, directly or indirectly, recourse (including by way of
set-off) to such Person and its Subsidiaries or any of their respective assets
other than to specified assets acquired by such Person or its Subsidiaries after
the Issue Date, which Debt is outstanding at the time of the acquisition of such
assets and is not created in contemplation of such acquisition, or (iii)
Refinancings of Debt described in clauses (i) or (ii), provided that the
recourse with respect to such Refinancing Debt is limited to the same extent as
the Debt so Refinanced.
'Additional Interest' means all additional interest owing under the
Registration Rights Agreements.
'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
'control' when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
'controlling' and 'controlled' having meanings correlative to the foregoing. For
the avoidance of doubt, GAF and its Affiliates (so long as they are under common
control with the Company) shall be deemed to be Affiliates of the Company.
'Applicable Premium' means, with respect to any Note, the greater of (x)
1.0% of the principal amount of such Note and (y) the excess, if any, of (a) the
present value of the required remaining interest payments, principal and future
optional redemption premium (if applicable) of such Note, discounted on a
semi-annual bond equivalent basis from either the maturity date of the Note or
the optional redemption date to the applicable redemption date at a per annum
interest rate equal to the Treasury Yield for such redemption date plus 100
basis points, over (b) the sum of the principal amount of such Note plus accrued
and unpaid interest to the redemption date.
'Asset Sale' means, with respect to any Person, the sale, lease, assignment
or other disposition (including, without limitation, dispositions pursuant to
any consolidation, merger or sale and leaseback transaction) by such Person or
any of its Subsidiaries in any single transaction or series of related
transactions of (x) any Capital Stock of any Subsidiary of such Person or (y)
all or substantially all of the properties and assets of any division or line of
business of such Person or any of its Recourse Subsidiaries, in either case,
other than by the Company or any of its Subsidiaries to the Company or any of
its Subsidiaries. For the purposes of this definition, the term 'Asset Sale'
shall not include (A) any sale, lease, assignment or other disposition of
properties or assets that is governed by the provisions described under
'--Merger, Etc.,' (B) any sale, lease, assignment or other disposition by a
Person that has outstanding Long-Term Debt all of which (x) are rated BBB- or
higher by S&P and are not on credit watch by S&P for a possible downgrade below
BBB- or (y) are rated Baa3 or higher by Moody's and are not on credit watch by
Moody's for a possible downgrade below Baa3, or (C) any sale of Common Stock the
proceeds of which are used pursuant to the provisions described in the second or
fifth paragraph under '-- Optional Redemption.'
'Average Life' means, with respect to any Debt, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date of
the transaction or event giving rise to the need to calculate the Average Life
of such Debt to the date, or dates, of each successive scheduled principal
payment of such Debt multiplied by (b) the amount of each such principal payment
by (ii) the sum of all such principal payments.
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'Bankruptcy Law' means Title 11, U.S. Code or any similar Federal, state or
foreign law for the relief of debtors.
'Board of Directors' of any Person means the Board of Directors or similar
governing body of such Person, or any duly authorized committee of such Board of
Directors or similar governing body.
'Board Resolution' means, with respect to the Board of Directors of any
Person, a copy of a resolution certified by the Secretary or Assistant Secretary
of such Person to have been duly adopted by such Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Trustee.
'BMCA' means Building Materials Corporation of America, a Delaware
corporation, and its successors.
'Capitalized Lease Obligation' means any rental obligation that, in
accordance with GAAP, is required to be classified and accounted for as a
capitalized lease and the amount of Debt represented by such obligation shall be
the capitalized amount of such obligation determined in accordance with GAAP;
and the stated maturity thereof shall be the date of the last payment of rent or
any other amount due in respect of such obligation.
'Capital Stock' of any Person means any and all shares, interests
(including partnership interests), warrants, rights, options or other interests,
participations or other equivalents of or interests in (however designated)
equity of such Person, including Common Stock or Preferred Stock, whether now
outstanding or issued after the Issue Date, but excluding any debt securities
convertible into or exchangeable for such equity.
'Cash Equivalents' means (i) marketable direct obligations Issued by, or
unconditionally Guaranteed by, the United States Government or Issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof, (ii)
marketable direct obligations Issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's, (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's, (iv)
certificates of deposit or bankers' acceptances maturing no more than one year
from the date of acquisition thereof Issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined capital surplus of not less than $250,000,000, (v)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above and (vi) investments
in money market funds having assets in excess of $500,000,000 and which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
'Change of Control' means the occurrence of any of the following events:
(i) prior to the first public offering of Voting Stock of the Company,
the Permitted Holders cease to be the 'beneficial owner' (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
majority voting power of the Voting Stock of the Company, whether as a
result of issuance of securities of the Company, any merger, consolidation,
liquidation or dissolution of the Company, any direct or indirect transfer
of securities by any Permitted Holder or otherwise (for purposes of this
clause (i) and clauses (ii) and (iv) below, the Permitted Holders shall be
deemed to beneficially own any Voting Stock of a corporation (the
'specified corporation') held by any other corporation (the 'parent
corporation') so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, a majority of the Voting Stock of the
parent corporation);
(ii) any 'Person' (as such term is used in sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in clause (i) above, except that a Person
shall be deemed to have 'beneficial ownership' of all shares that any such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 35% of the Voting Stock of the Company, but only if the Permitted
Holders beneficially own (as defined in clause (i) above), directly or
indirectly, in the aggregate a lesser percentage of the Voting Stock of the
Company than such other Person and do not have the right or ability by
voting
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power, contract or otherwise to elect or designate for election a majority
of the Board of Directors of the Company;
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company or its predecessor (together with any new directors whose election
by such Board or whose nomination for election by the shareholders of the
Company or its predecessor was approved by a vote of a majority of the
directors of the Company then still in office who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Company then in office; or
(iv) either (x) the Permitted Holders or (y) the Company ceases, for
any reason, to be the beneficial owner (as defined in clause (i) above),
directly or indirectly, of majority voting power of the Voting Stock of
ISP, whether as a result of issuance of securities, any merger,
consolidation, liquidation or dissolution, any direct or indirect transfer
of securities by any Permitted Holder or otherwise.
'Commission' means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
'Common Stock' of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of such Person's
common stock whether now outstanding or issued after the Issue Date.
'Consolidated EBITDA Coverage Ratio' means, with respect to any Person, for
any period, the ratio of (i) EBITDA of such Person for such period to (ii)
Consolidated Interest Expense of such Person for such period; provided, however,
that (A) if such Person or any of its Subsidiaries has Issued any Debt or
Capital Stock since the beginning of such period that remains outstanding on the
date such calculation is made or if the transaction giving rise to the need to
calculate the Consolidated EBITDA Coverage Ratio is an Issuance of Debt or
Capital Stock, or both, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect, on a pro forma basis, to the issuance
of such Debt or Capital Stock as if such Debt or Capital Stock had been Issued
on the first day of such period and the discharge of any other Debt or Capital
Stock Refinanced or otherwise discharged with the proceeds of such new Debt or
Capital Stock as if such discharge had occurred on the first day of such period;
(B) if since the beginning of such period such Person or any of its Subsidiaries
shall have made any asset sale out of the ordinary course of business, EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such asset sale for
such period, or increased by an amount equal to the EBITDA (if negative),
directly attributable thereto for such period and Consolidated Interest Expense
for such period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Debt or Capital Stock of such Person or any
Subsidiary of such Person and the amount of any other Debt or Capital Stock
Refinanced or otherwise discharged with respect to such Person and its
continuing Subsidiaries (including as a result of the assumption of such Debt or
Capital Stock by the purchaser of such assets, provided that such Person or any
of its Subsidiaries is no longer liable therefor) in connection with such asset
sale for such period (or if the Capital Stock of any Subsidiary of such Person
is sold, the Consolidated Interest Expense for such period directly attributable
to the Debt of such Subsidiary to the extent such Person and its continuing
Subsidiaries are no longer liable for such Debt after such sale) (it being
understood that the Spin Off shall be considered an asset sale out of the
ordinary course of business for purposes of this clause (B)); and (C) if since
the beginning of the period such Person or any of its Subsidiaries (by merger or
otherwise) shall have made an Investment in any Subsidiary of such Person (or
any Person which becomes a Subsidiary of such Person) or an acquisition of
assets, including any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto, as if
such Investment or acquisition occurred on the first day of such period. For
purposes of this definition, pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the Person with
respect to which the calculation is being made. If any Debt or Capital Stock
bears a floating rate of interest or dividends and is being given pro forma
effect, the interest on such Debt and the dividends on such Capital Stock shall
be calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period.
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'Consolidated Interest Expense' means with respect to any Person, for any
period, the sum of (a) the interest expense of such Person and its consolidated
Subsidiaries (other than interest expense related to Non-Recourse Debt) for such
period as determined in accordance with GAAP consistently applied, plus (b) the
product of (x) the amount of all dividends paid or accrued on any series of
preferred stock of such Person (other than non-Redeemable Stock) and its
Recourse Subsidiaries times (y) a fraction, the numerator of which is one and
the denominator of which is one minus the effective combined consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
'Consolidated Net Income (Loss)' means with respect to any Person, for any
period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance with GAAP,
adjusted to the extent included in calculating such net income (or loss), by
excluding (i) all extraordinary gains in such period net of all extraordinary
losses in such period; (ii) net income (or loss) of any other Person
attributable to any period prior to the date of combination of such other Person
with such Person or any of its Subsidiaries on a 'pooling-of-interests' basis;
(iii) net gains or losses in respect of dispositions of assets by such Person or
any of its Subsidiaries (including pursuant to a sale-and-leaseback arrangement)
other than in the ordinary course of business; (iv) the net income (loss) of any
Subsidiary of such Person (other than, in calculating the consolidated net
income (loss) of the Company, the consolidated net income (loss) of ISP) to the
extent that the declaration of dividends or distributions by that Subsidiary of
that income is not at the time permitted, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulations applicable to that Subsidiary
or its shareholders; (v) the net income (or net loss) of any other Person that
is not a Subsidiary of the first Person with respect to which Consolidated Net
Income is being calculated (the 'first Person') and in which any other Person
(other than such first Person and or any of its Subsidiaries) has an equity
interest or of a Non-Recourse Subsidiary of such first Person, except to the
extent of the amount of dividends or other distributions actually paid or made
to such first Person or any of its Subsidiaries by such other Person during such
period (subject in the case of a dividend or distribution received by a
Subsidiary of such first Person, to the limitations contained in clause (iv)
above); (vi) any interest income resulting from loans or investments in
Affiliates, other than cash interest income actually received; (vii) charges
relating to the Transactions or the offering of the 10% Notes and (viii) the
cumulative effect of a change in accounting principles.
'Consolidated Net Worth' of any Person means, at any date, all amounts that
would, in conformity with GAAP, be included under shareholders' equity on a
consolidated balance sheet of such Person as at such date less (to the extent
otherwise included therein) any amounts attributable to Redeemable Stock.
'Credit Agreement' means the credit agreement, dated as of July 26, 1996,
among ISP, certain of its Subsidiaries, the financial institutions named therein
and The Chase Manhattan Bank, as agent thereunder, as the same may be amended or
supplemented.
'Custodian' means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
'Debt' of any Person means, without duplication, (i) the principal in
respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable (other than those
payable to government agencies to defer the payment of workers' compensation
liabilities, taxes, assessments or other obligations, and provided in the
ordinary course of business of such Person); (ii) all Capital Lease Obligations
of such Person; (iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement
(but excluding trade accounts payable and other accrued current liabilities
arising in the ordinary course of business); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, bankers'
acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third business
day following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) all obligations of the type referred to in
clauses (i) through (iv) of other Persons and all dividends of other Persons for
the payment of which, in either case, such
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Person is responsible or liable, directly or indirectly, as obligor, guarantor
or otherwise, including guarantees of such obligations and dividends; and (vi)
all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured.
'Default' means any event which is, or after notice or passage of time or
both would be, an Event of Default.
'EBITDA' means, with respect to any Person, for any period, the
Consolidated Net Income of such Person for such period, adjusted to the extent
deducted in calculating such Consolidated Net Income by adding back (without
duplication): (i) income tax expense of such Person and its Subsidiaries accrued
in accordance with GAAP for such period (other than income taxes attributable to
extraordinary items or other items excluded from the definition of Consolidated
Net Income), (ii) Consolidated Interest Expense of such Person, (iii)
depreciation expense, (iv) amortization expense and (v) minority interest in any
Recourse Subsidiary that is not a Wholly-Owned Subsidiary but is otherwise
consolidated in the financial statements of such Person, but only so long as
such Subsidiary is consolidated with such Person for such period for U.S.
federal income tax purposes.
'Exchange Act' means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations of the Commission thereunder.
'Existing Management Agreement' means the Amended and Restated Management
Agreement dated as of March 3, 1992 by and among GAF and certain of its
Subsidiaries as amended through the Issue Date.
'Generally Accepted Accounting Principles' or 'GAAP' means generally
acceptable accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board.
'GAF' means GAF Corporation, a Delaware corporation, and its successors.
'Granules Contracts' means (i) the Supply Agreement dated as of January 1,
1995 between ISP Technologies Inc. and BMCA, as amended by amendment dated as of
December 31, 1995, and (ii) the letter dated November 9, 1995 from ISP Mineral
Products Inc. to USI.
'Guarantee' by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation,
contingent or otherwise, 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 or other obligation of such other Person
(whether arising by virtue of participation 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 the obligee of such Debt or other obligation in any
other manner of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided, however, that the term
'guarantee' shall not include endorsements for collection or deposit in the
ordinary course of business. The term 'Guarantee' used as a verb has a
corresponding meaning.
'Incur' means incur, create, assume, Guarantee or otherwise become liable;
and the terms 'incurred' and 'incurrence' having meanings correlative to the
foregoing.
'Investment' means any direct or indirect advance, loan (other than
advances or loans to customers in the ordinary course of business, which are
recorded, in accordance with GAAP, at the time made as accounts receivable on
the balance sheet of the Person making such advance or loan) or other extension
of credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities Issued by, any other Person.
'ISP' means International Specialty Products Inc., a Delaware corporation,
and its successors.
'ISP Subsidiaries' means ISP and its Subsidiaries.
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'Issue' means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a Person existing at
the time such Person becomes a Subsidiary of another Person (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Issued by such
Subsidiary at the time it becomes a Subsidiary of such other Person.
'Issue Date' means the date of original issuance of the Old Notes.
'Lien' means any lien, mortgage, charge, pledge, security interest, or
other encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).
'Linden Dividend' means the payment of a dividend or distribution in
respect of the Company's Common Stock of the assets comprising the Linden
Property or of the shares of Capital Stock of a Subsidiary of the Company all or
substantially all of the assets of which consist of the Linden Property.
'Linden Property' means that property consisting of approximately 140 acres
(40 acres developed) located in Union County, New Jersey at the foot of South
Wood Avenue, Linden and owned by ISP Environmental Services Inc., which is the
site of a former chemicals manufacturing facility of ISP.
'Long-Term Debt' of any Person means outstanding long-term debt securities
of such Person (or, in the event that such Person has no outstanding long-term
debt securities, a credit facility of such Person) that (i) is unsecured, (ii)
not subordinated in right of payment to any other Debt of such Person and (iii)
is not guaranteed and does not have credit support provided by any other Person
(other than, in the case of Long-Term Debt of any ISP Subsidiary, any ISP
Subsidiary).
'Moody's' means Moody's Investors Service, Inc. or its successor.
'Net Cash Proceeds' means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents,
received by the Company or any of its Subsidiaries from such Asset Sale net of
(a) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), (b) taxes paid or payable ((1) including, without
limitation, income taxes reasonably estimated to be actually payable as a result
of any disposition of property within two years of the date of disposition,
including under any tax sharing arrangements, and (2) after taking into account
any reduction in tax liability due to available tax credits or deductions
applicable to the transaction), (c) a reasonable reserve for the after-tax cost
of any indemnification obligations (fixed and/or contingent) attributable to
seller's indemnities to the purchaser undertaken by the Company or any of its
Subsidiaries in connection with such Asset Sale and (d) repayment of Debt that
is required to be repaid in connection with such Asset Sale, under agreements
governing such Debt or Asset Sale.
'New Management Agreement' means the Existing Management Agreement as
amended to add the Company as a party thereto.
'Non-Recourse Debt' of any Person means Debt or the portion of Debt (i) as
to which neither GAF, the Company nor any of its Recourse Subsidiaries (A)
provides credit support (including any undertaking, agreement or instrument
which would constitute Debt), (B) is directly or indirectly liable or (C)
constitutes the lender and (ii) no default with respect to which (including any
rights which the holders thereof may have to take enforcement action against the
assets of a Non-Recourse Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of such Person or its Recourse Subsidiaries
to declare a default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity.
'Non-Recourse Subsidiary' of any Person means a Subsidiary (A) which has
been designated as such by the Board of Directors of such Person, (B) which has
not acquired any assets directly or indirectly from GAF, the Company or any of
its Subsidiaries other than at fair market value, including by the receipt of
Capital Stock of such Non-Recourse Subsidiary, provided, however, that if any
such acquisition or series of related acquisitions involves assets having a
value in excess of $2,000,000, such acquisition or series of related
acquisitions shall be approved by a majority of the members of the Board of
Directors of the Company in a Board Resolution which shall set forth that such
acquisitions are being, or have been, made at fair market value, and (C) which
has no Debt other than Non-Recourse Debt. Subsidiaries of Non-Recourse
Subsidiaries shall be deemed Non-Recourse Subsidiaries.
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'Obligations' means (a) the full and punctual payment of the principal of,
and interest on, the Notes when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Company under
the Indenture and the Notes and (b) the full and punctual performance of all
other obligations of the Company under the Indenture and the Notes.
'Permitted Holders' means (i) Samuel J. Heyman, his heirs, administrators,
executors and entities of which a majority of the Voting Stock is owned by
Samuel J. Heyman, his heirs, administrators or executors and (ii) any Person
controlled, directly or indirectly, by Samuel J. Heyman or his heirs,
administrators or executors.
'Permitted Lien' means:
(1) Liens for taxes, assessments and governmental charges to the
extent not required to be paid under the Indenture;
(2) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in
the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by an appropriate process of
law, and for which a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made;
(3) pledges or deposits in the ordinary course of business to secure
lease obligations or non-delinquent obligations under workers'
compensation, unemployment insurance or similar legislation;
(4) Liens to secure the performance of public statutory obligations
that are not delinquent, appeal bonds, performance bonds or other
obligations of a like nature (other than for borrowed money);
(5) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Company and
its Subsidiaries taken as a whole;
(6) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of nondelinquent customs duties in
connection with the importation of goods;
(7) judgment and attachment Liens not giving rise to a Default or
Event of Default;
(8) leases or subleases granted to others not interfering in any
material respect with the business of the Company and its Subsidiaries,
taken as a whole;
(9) Liens encumbering deposits made in the ordinary course of business
to secure nondelinquent obligations arising from statutory, regulatory,
contractual or warranty requirements of the Company or its Subsidiaries for
which a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made;
(10) any interest or title of a lessor in the property subject to any
lease, whether characterized as capitalized or operating other than any
such interest or title resulting from or arising out of default by the
Company or any of its Subsidiaries of its obligations under any such lease
which is material;
(11) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases or conditional sales
of personal property that are otherwise permitted under the Indenture and
under which the Company or any of its Subsidiaries is lessee;
(12) broker's Liens securing the payment of commissions and management
fees in the ordinary course of business;
(13) Liens on cash and Cash Equivalents posted as margin pursuant to
the requirements of any bona fide hedge agreement relating to interest
rates, foreign exchange or commodities listed on public exchanges, but only
to the extent such Liens are required from customers generally (regardless
of creditworthiness) in accordance with customary market practice;
(14) Liens on cash collateralizing reimbursement obligations in
respect of letters of credit issued for the account of the Company or any
of its Subsidiaries in the ordinary course of business (other than letters
of credit issued as credit support for any Debt);
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(15) Liens arising in respect of accounts receivable arising as a
result of non-recourse sales thereof;
(16) Liens arising by reason of consignment sales of inventory in the
ordinary course of business; and
(17) Liens on stock or assets of any Non-Recourse Subsidiary securing
Debt owing by such Non-Recourse Subsidiary.
'Person' means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
'Preferred Stock,' as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation. Preferred Stock of any Person shall include Redeemable Stock of
such Person.
'Purchase Money Obligation' of any Person means any Debt secured by a Lien
on assets related to the business of such Person, and any additions and
accessions thereto or replacements thereof, which are purchased or constructed
by such Person at any time after the Issue Date; provided, however, that (i) the
aggregate outstanding principal amount of such Debt (determined on a per asset
basis in the case of any additions, accessions or replacements) shall not at any
time exceed 100% of the purchase price to such Person of the related assets or
(ii) such Debt shall be with recourse solely to the assets so purchased or
acquired, any additions and accessions thereto or replacements thereof and any
proceeds therefrom.
'Ratings Event' means any of the following:
(i) the rating of ISP's Long-Term Debt being below Baa3 (in the case
of the rating by Moody's) and below BB+ (in the case of the rating by S&P);
or
(ii) at any time that ISP's Long-Term Debt is rated below Baa3 by
Moody's, the rating of ISP's Long-Term Debt being placed on credit watch
for a ratings downgrade below BB+ by S&P; or
(iii) at any time that ISP's Long-Term Debt is rated below BB+ by S&P,
the rating of ISP's Long-Term Debt being placed on credit watch for a
ratings downgrade below Baa3 by Moody's.
'Recourse Subsidiaries,' of any Person, means all Subsidiaries of such
Person other than Non-Recourse Subsidiaries of such Person.
'Redeemable Stock' means, with respect to any Person, Capital Stock of such
Person that by its terms or otherwise (x) is required, directly or indirectly,
to be redeemed on or prior to the ninetieth day after the Stated Maturity of the
applicable Notes, (y) is redeemable or puttable, directly or indirectly, at the
option of the holder thereof at any time on or prior to the ninetieth day after
the Stated Maturity of the applicable Notes, or (z) is exchangeable or
convertible into another security (other than a security that is not itself
Redeemable Stock).
'Refinance' means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue Debt in exchange
or replacement for, such Debt. 'Refinanced' and 'Refinancing' shall have
correlative meanings.
'Refinancing Debt' means Debt Issued to Refinance, any other Debt;
provided, however, that (i) the amount of the Debt so Issued shall not exceed
the principal amount or the accreted value (in the case of Debt Issued at a
discount) of the Debt so Refinanced plus, in each case, the reasonable costs
incurred by the issuer in connection with such Refinancing, (ii) the Average
Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the
Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of
payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not
bear interest in cash prior to a specified date, the Refinancing Debt shall not
bear interest in cash prior to such specified date, (v) if the Debt being
Refinanced is a Purchase Money Obligation, the Refinancing Debt shall not be
secured by any assets not securing the Debt so Refinanced or improvements or
additions thereto, or replacements thereof, and (vi) the obligors with respect
to the Refinancing Debt shall not include any persons who were not obligors
(including predecessors thereof) with respect to the Debt being Refinanced.
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'Restricted Investment' means, with respect to the Company or any of its
Subsidiaries, an Investment by such Person in an Affiliate of the Company;
provided, however, that the following shall not be Restricted Investments:
(a) any Investment by the Company or any ISP Subsidiary in any
Unrestricted Affiliate; and
(b) any Investment by the Company or any of its Subsidiaries in (x)
the Company or any of its Recourse Subsidiaries or (y) any such Affiliate
that becomes, as a result of such Investment, a Recourse Subsidiary of the
Company.
'Restricted Payment' means (i) the declaration or making of any dividend or
of any other payment or distribution (other than dividends, payments or
distributions payable solely in shares of the Company's Capital Stock other than
Redeemable Stock) on or with respect to the Company's Capital Stock (other than
Redeemable Stock) and (ii) any payment on account of the purchase, redemption,
retirement or other acquisition for value of the Company's Capital Stock (other
than Redeemable Stock); provided, however, that the Linden Dividend shall not be
deemed to be a Restricted Payment.
'Restricted Security' has the meaning set forth in Rule 144(a)(3) under the
Securities Act.
'S&P' means Standard & Poor's Rating Services or its successor.
'Securities Act' means the Securities Act of 1933, as amended from time to
time, and the rules and regulations of the Commission thereunder.
'Significant Subsidiary' means (i) any Recourse Subsidiary of the Company
which at the time of determination either (A) had assets which, as of the date
of the Company's most recent quarterly consolidated balance sheet, constituted
at least 5% of the Company's total assets on a consolidated basis as of such
date, in each case determined in accordance with GAAP, or (B) had revenues for
the 12-month period ending on the date of the Company's most recent quarterly
consolidated statement of income which constituted at least 5% of the Company's
total revenues on a consolidated basis for such period, or (ii) any Recourse
Subsidiary of the Company which, if merged with all Defaulting Subsidiaries (as
defined below) of the Company, would at the time of determination either (A)
have had assets which, as of the date of the Company's most recent quarterly
consolidated balance sheet, would have constituted at least 10% of the Company's
total assets on a consolidated basis as of such date or (B) have had revenues
for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which would have constituted at least
10% of the Company's total revenues on a consolidated basis for such period
(each such determination being made in accordance with GAAP). 'Defaulting
Subsidiary' means any Recourse Subsidiary of the Company with respect to which
an event described under clause (6), (7), or (8) under 'Events of Default' has
occurred and is continuing.
'Specified Agreements' means (i) the Tax Sharing Agreements (but, after a
company leaves the applicable consolidated group, only with respect to the
indemnities that survive thereunder), (ii) the Existing Management Agreement and
the New Management Agreement, (iii) the Granules Contracts and (iv) the
Indemnification Agreement and other similar indemnification agreements in effect
prior to the Issue Date.
'Specified Subsidiaries' means Subsidiaries of the Company other than ISP
Subsidiaries.
'Spin Off' means the consummation of the transactions described under
'--The Spin Off Transactions,' substantially on the terms described therein.
'Stated Maturity' when used with respect to any Senior Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and when used with respect to any other Debt, means the date
specified in the instrument governing such Debt as the fixed date on which the
principal of such Debt or any installment of interest is due and payable.
'Subsidiary' means, with respect to any Person at any time of
determination, (i) a corporation a majority of whose Capital Stock with voting
power, under ordinary circumstances, to elect directors is at the time, directly
or indirectly, owned by such Person, by one or more Subsidiaries of such Person
or by such Person and one or more Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, one or more Subsidiaries
thereof or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of
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determination thereof has at least majority ownership interest and the power to
direct the policies, management and affairs thereof. For purposes of this
definition, any director's qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.
'Tax Sharing Agreements' means, collectively, the tax sharing agreements
described under 'Tax Sharing Agreement.'
'TIA' means the Trust Indenture Act of 1939, as amended, as in effect on
the date hereof.
'Treasury Yield' means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
applicable redemption date (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) most nearly equal to
the then remaining Average Life of the applicable Notes; provided, however, that
if the Average Life of such Notes is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Yield shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the average
life of such Notes is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
'Unrestricted Affiliate' means any Person (other than any Subsidiary of the
Company) controlled (as defined in the definition of 'Affiliate') by the Company
in which no Affiliate of the Company (other than (i) so long as ISP is a
Recourse Subsidiary of the Company, ISP or any of its Wholly-Owned Recourse
Subsidiaries, (ii) any director or officer of the Company or any of its
Subsidiaries (so long as such Person is not also a director or officer of GAF or
any of its Affiliates (other than the Company and its Subsidiaries, except for
Non-Recourse Subsidiaries in which GAF has an interest other than through the
Company)) and (iii) another Unrestricted Affiliate under this paragraph (a)) has
an Investment.
'U.S. Government Obligations' means money or direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
'USI' means U.S. Intec, Inc., a Texas corporation, and its successors.
'Voting Stock' means, with respect to any Person, Capital Stock of any
class or kind normally entitled to vote in the election of the board of
directors or other governing body of such Person.
'Wholly-Owned Recourse Subsidiary' of any Person means a Wholly-Owned
Subsidiary of such Person that is a Recourse Subsidiary of such Person.
'Wholly-Owned Subsidiary' means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares) is owned by the applicable corporation
or another Wholly-Owned Subsidiary of the applicable corporation.
CERTAIN CALCULATIONS
All financial calculations shall be made as if the Spin Off occurred as of
the Issue Date.
CERTAIN COVENANTS
Each Indenture contains, among others, the following covenants:
Limitation on Debt and Preferred Stock of the Company and ISP
Subsidiaries. (a) The Company shall not Issue, directly or indirectly, any Debt
or any Preferred Stock unless, at the time of such Issuance and after giving
effect thereto, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the Consolidated EBITDA Coverage Ratio of the Company for
the period of its most recently completed four consecutive fiscal quarters
ending at least 45 days prior to the date such Debt is Issued is at least 2.00
to 1.00.
(b) The Company shall not permit any ISP Subsidiary (so long as such ISP
Subsidiary is a Subsidiary of the Company) to Issue, directly or indirectly, any
Debt or any Preferred Stock unless, at the time of such Issuance and after
giving effect thereto, (i) no Default or Event of Default shall have occurred
and be continuing and (ii)
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the Consolidated EBITDA Coverage Ratio of ISP for the period of its most
recently completed four consecutive fiscal quarters ending at least 45 days
prior to the date such Debt is Issued is at least 2.00 to 1.00.
(c) Notwithstanding the foregoing, the Company and ISP Subsidiaries may
Issue the following:
(1) Debt Issued pursuant to the Credit Agreement or any Refinancing
Debt thereof in an aggregate principal amount outstanding at any time not
to exceed $500,000,000;
(2) Debt or Preferred Stock of the Company or any of its Subsidiaries
Issued to and held by (i) ISP or any of its Wholly-Owned Recourse
Subsidiaries, or (ii) the Company or any of its Wholly-Owned Recourse
Subsidiaries; provided, however, that (x) any subsequent transfer of such
Debt or such Preferred Stock to any Person not permitted by the foregoing
or (y) any Wholly-Owned Recourse Subsidiary of ISP or of the Company that
holds such Debt or Preferred Stock ceasing to be a Wholly-Owned Recourse
Subsidiary of ISP or of the Company, as the case may be, shall be deemed,
in each case, to constitute the Issuance of such Debt or such Preferred
Stock by the Company or such ISP Subsidiary, as the case may be;
(3) Purchase Money Obligations, including Refinancing Debt thereof, in
an aggregate amount outstanding at any time not to exceed $30,000,000;
(4) Acquired Debt;
(5) Debt outstanding on the Issue Date (including, without limitation,
the Old Notes) and the New Notes;
(6) Refinancing Debt Issued to Refinance any Debt permitted by clauses
(2)-(5) above;
(7) Non-Recourse Debt of a Non-Recourse Subsidiary of ISP and (y)
Guarantees of Non-Recourse Debt of any Non-Recourse Subsidiary of ISP which
Guarantees are recourse only to the stock of such Non-Recourse Subsidiary;
(8) Preferred Stock (other than Redeemable Stock) of the Company;
(9) so long as no Default or Event of Default has occurred and is
continuing and no Ratings Event has occurred and is continuing, Debt of any
ISP Subsidiary; and
(10) Debt (other than Debt described in clauses (1) through (7) and
(9) above) in an aggregate principal amount outstanding at any time not to
exceed $50,000,000.
(d) To the extent the Company or any ISP Subsidiary Guarantees any Debt of
the Company or any ISP Subsidiary, such Guarantee and such Debt will be deemed
to be the same Debt and only the amount of the Debt will be deemed to be
outstanding. If the Company or an ISP Subsidiary Guarantees any Debt of a Person
that, subsequent to the Issuance of such Guarantee, becomes an ISP Subsidiary,
such Guarantee and the Debt so Guaranteed shall be deemed to be the same Debt
which shall be deemed to have been Issued when the Guarantee was Issued and
shall be deemed to be permitted to the extent the Guarantee was permitted when
Issued.
Limitation on Debt and Preferred Stock of Specified Subsidiaries. (a) The
Company shall not permit any Specified Subsidiary (so long as such Specified
Subsidiary is a Subsidiary of the Company) to Issue, directly or indirectly, any
Debt or any Preferred Stock unless, at the time of such Issuance and after
giving effect thereto, (i) no Default or Event of Default shall have occurred
and be continuing and (ii) the Consolidated EBITDA Coverage Ratio of the
Specified Subsidiaries (determined on a combined basis) for its most recently
completed four consecutive fiscal quarter period ending at least 45 days prior
to the date such Debt is Issued is at least 2.00 to 1.00.
(b) Notwithstanding the foregoing, Specified Subsidiaries may Issue the
following:
(1) Debt or Preferred Stock of any Specified Subsidiary Issued to and
held by any Wholly-Owned Recourse Subsidiary of such Specified Subsidiary
or the Company or any of its Wholly-Owned Recourse Subsidiaries; provided,
however, that (x) any transfer of such Debt or such Preferred Stock to any
Person not permitted by the foregoing or (y) such Wholly-Owned Recourse
Subsidiary ceasing to be a Wholly-Owned Recourse Subsidiary of such
Specified Subsidiary or of the Company, as the case may be, shall, in each
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case, be deemed to constitute the Issuance of such Debt or such Preferred
Stock by such Specified Subsidiary;
(2) Purchase Money Obligations in an aggregate amount outstanding at
any time not to exceed $50,000,000;
(3) Acquired Debt;
(4) Debt outstanding on the Issue Date;
(5) Refinancing Debt Issued to Refinance any Debt permitted by clauses
(1)-(4) above;
(6) (x) Non-Recourse Debt of a Non-Recourse Subsidiary of any
Specified Subsidiary and (y) Guarantees of Non-Recourse Debt of
Non-Recourse Subsidiaries which Guarantees are recourse only to the stock
of such Non-Recourse Subsidiary; and
(7) Debt (other than Debt described in clauses (1)-(6) above) in an
aggregate principal amount outstanding at any time not to exceed
$50,000,000.
(c) To the extent any Specified Subsidiary Guarantees any Debt of any other
Specified Subsidiary, such Guarantee and such Debt will be deemed to be the same
Debt and only the amount of the Debt will be deemed to be outstanding. If a
Specified Subsidiary Guarantees any Debt of a Person that, subsequent to the
Issuance of such Guarantee, becomes a Specified Subsidiary, such Guarantee and
the Debt so Guaranteed shall be deemed to be the same Debt which shall be deemed
to have been Issued when the Guarantee was Issued and shall be deemed to be
permitted to the extent the Guarantee was permitted when Issued.
Prohibition on Debt and Capital Stock of Intermediate Parents of
ISP. Notwithstanding paragraphs (a) and (b) of the 'Limitation on Debt and
Preferred Stock of Specified Subsidiaries' covenant the Company shall not permit
any of its Subsidiaries (other than, subject to the 'Limitation on Debt and
Preferred Stock of the Company and ISP Subsidiaries' covenant, ISP Subsidiaries)
that, directly or indirectly, owns any Capital Stock or Debt of any ISP
Subsidiary to Issue any Debt or Capital Stock other than Debt or Capital Stock
Issued to and held by (x) so long as ISP is a Recourse Subsidiary of the
Company, ISP or any of its Wholly-Owned Recourse Subsidiaries or (y) the
Company.
Limitation on Restricted Payments and Restricted Investments. (a) The
Company shall not make, and shall not permit any of its Subsidiaries to make,
directly or indirectly, any Restricted Payment or Restricted Investment at any
time on or after the Issue Date if, at the time of such Restricted Payment or
Restricted Investment or immediately after giving effect thereto:
(1) a Default or an Event of Default shall have occurred and be
continuing;
(2) the Company is not able to incur at least $1.00 of additional Debt
under paragraph (a) of the 'Limitation on Debt and Capital Stock of the
Company and ISP Subsidiaries' covenant; or
(3) the aggregate amount of Restricted Payments made since June 30,
1996 (the 'Applicable Date') and the aggregate amount of Restricted
Investments made since the Applicable Date and then outstanding (the amount
expended for such purposes, if other than in cash, shall be the fair market
value of such property as determined by the Board of Directors of the
Company in good faith as of the date of payment or investment) shall exceed
the sum of:
(i) 50% of the cumulative Consolidated Net Income (or minus 100% of
the cumulative Consolidated Net Loss) of the Company accrued during the
period beginning on the Applicable Date and ending on the last day of
the fiscal quarter for which financial information has been made
publicly available by the Company but ending no more than 135 days prior
to the date of such Restricted Payment or Restricted Investment
(treating such period as a single accounting period);
(ii) 100% of the net cash proceeds, including the fair market value
of property other than cash as determined by the Board of Directors of
the Company in good faith, as evidenced by a Board Resolution, received
by the Company from any Person (other than a Subsidiary of the Company)
from the Issuance and sale subsequent to the Applicable Date of Capital
Stock of the Company (other than Redeemable Stock) or as a capital
contribution;
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(iii) 100% of the net cash proceeds received by the Company from
any Person (other than a Subsidiary of the Company) from the exercise of
options or warrants on Capital Stock of the Company (other than
Redeemable Stock);
(iv) 100% of the net cash proceeds received by the Company from the
conversion into Capital Stock (other than Redeemable Stock) of
convertible Debt or convertible Preferred Stock issued and sold (other
than to a Subsidiary of the Company) since the Applicable Date; and
(v) $30,000,000.
The designation by the Company or any of its Subsidiaries of a Subsidiary
as a Non-Recourse Subsidiary shall be deemed to be the making of a Restricted
Investment by the Company in an amount equal to the outstanding Investments made
by the Company and its Subsidiaries in such person being designated a Non-
Recourse Subsidiary at the time of such designation.
(b) The foregoing paragraph (a) shall not prevent the following, as long as
no Default or Event of Default shall have occurred and be continuing (or would
result therefrom other than pursuant to paragraph (a)):
(1) the making of any Restricted Payment or Restricted Investment
within 60 days after (x) the date of declaration thereof or (y) the making
of a binding commitment in respect thereof; provided that at such date of
declaration or commitment such Restricted Payment or Restricted Investment
complied with paragraph (a); or
(2) any Restricted Payment or Restricted Investment made out of the
net cash proceeds received by the Company from the substantially concurrent
sale of its Common Stock (other than to a Subsidiary of the Company);
provided, however, that such net cash proceeds so utilized shall not be
included in paragraph (a)(3) in determining the amount of Restricted
Payments or Restricted Investments the Company could make under paragraph
(a), and Restricted Payments or Restricted Investments made pursuant to
this clause (2) shall not be included in determining the amount of
Restricted Payments or Restricted Investments made or then outstanding
under paragraph (a)(3); or
(3) repurchases of Capital Stock of the Company, in each case from
employees of the Company or any of its Subsidiaries (other than any
Permitted Holder); provided, however, that the aggregate amount of
Restricted Payments made under this clause shall not exceed $3,000,000 in
any fiscal year; provided, further, however, that the amount of Restricted
Payments made pursuant to this clause (3) shall not be included in
determining the amount of Restricted Payments made under paragraph (a)(3).
Limitation on Liens. (a) The Company shall not, and shall not permit any
of its Specified Subsidiaries to, directly or indirectly, incur or suffer to
exist any Liens (other than Permitted Liens) upon their respective properties or
assets whether owned on the Issue Date or acquired after such date, or on any
income or profits therefrom, other than the following:
(1) Liens securing intercompany Debt permitted by paragraph (b)(1)
under the 'Limitation on Debt and Capital Stock of Specified Subsidiaries'
covenant;
(2) Liens existing on the Issue Date;
(3) Purchase money Liens on assets of the Company and its Specified
Subsidiaries or improvements or additions thereto existing or created
within 180 days after the time of acquisition of or improvement or addition
to such assets, or replacements thereof; provided that (i) such
acquisition, improvement or addition is otherwise permitted by the
applicable Indenture, (ii) the principal amount of Debt (including Debt in
respect of Capitalized Lease Obligations) secured by each such Lien in each
asset shall not exceed the cost (including all such Debt secured thereby,
whether or not assumed) of the item subject thereto, and such Liens shall
attach solely to the particular item of property so acquired, improved or
added, and any additions or accessions thereto, or replacements thereof,
and (iii) the aggregate amount of Debt secured by Liens permitted by this
clause (3) shall not at any one time exceed $50,000,000;
(4) Liens securing Acquired Debt; provided, however, that (i) any such
Lien secured the Acquired Debt at the time of the incurrence of such
Acquired Debt by the Company or by one of its Specified Subsidiaries and
such Lien and Acquired Debt were not incurred by the Company or any of its
Specified Subsidiaries or
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by the Person being acquired or from whom the assets were acquired in
connection with, or in anticipation of, the incurrence of such Acquired
Debt by the Company or by one of its Specified Subsidiaries, and (ii) any
such Lien does not extend to or cover any property or assets of the Company
or of any of its Specified Subsidiaries other than the property or assets
that secured the Acquired Debt prior to the time such Debt became Acquired
Debt of the Company or of one of its Specified Subsidiaries;
(5) Liens to secure Refinancing of any Debt secured by Liens described
in clauses (1)-(4) above and (6) below; provided that (i) the Refinancing
does not increase the principal amount of Debt being so Refinanced and (ii)
the Lien of the Refinancing Debt does not extend to any asset not securing
the Debt being Refinanced or improvements or additions thereto, or
replacements thereof; and
(6) Liens on assets of the Company and its Specified Subsidiaries
(other than the Liens described above), provided that such Liens only
secure Debt of the Company and its Specified Subsidiaries in an aggregate
amount not to exceed at any one time outstanding $50,000,000.
Prohibition on Certain Transactions. The Company shall not, and shall not
permit any of its Subsidiaries to, enter, directly or indirectly, into, or
suffer to exist, any transaction or series of transactions (including, without
limitation, any loan, advance or investment or any purchase, sale, lease or
exchange of property or the rendering of any service) with GAF or any of its
Subsidiaries. The foregoing shall not prohibit any transaction permitted by
paragraph (b)(5) or (c) under the 'Limitation on Transactions with Affiliates'
covenant.
Limitation on Transactions with Affiliates. (a) The Company shall not
enter, and shall not permit any of its Subsidiaries to enter, directly or
indirectly, into any transaction or series of related transactions with any
Affiliate of the Company, including, without limitation, any loan, advance or
investment or any purchase, sale, lease or exchange of property or the rendering
of any service, unless the terms of such transaction or series of transactions
are set forth in writing and at least as favorable as those available in a
comparable transaction in arms-length dealings from an unrelated Person;
provided, however, that (i) if any such transaction or series of related
transactions (other than any purchase or sale of inventory in the ordinary
course of business) involves aggregate payments or other consideration in excess
of $2,000,000, such transaction or series of related transactions shall be
approved (and the value of any non-cash consideration shall be determined) by a
majority of those members of the Board of Directors of the Company or such
Subsidiary, as the case may be, having no personal stake in such business,
transaction or transactions; and (ii) in the event that such transaction or
series of related transactions (other than any purchase or sale of inventory in
the ordinary course of business) involves aggregate payments or other
consideration in excess of $20,000,000 (with the value of any non-cash
consideration being determined by a majority of those members of the Board of
Directors of the Company or such Subsidiary, as the case may be, having no
personal stake in such business, transaction or transactions), the Company or
such Subsidiary, as the case may be, shall have also received a written opinion
from a nationally recognized investment banking firm that such transaction or
series of related transactions are fair to the shareholders, in their capacity
as such, of the Company or such Subsidiary from a financial point of view and
such opinion has been delivered to the Trustee; provided, further, in the event
that the Board of Directors of the Company or the Subsidiary, as the case may
be, proposing to engage in a transaction or series of related transactions
described in the preceding proviso does not have any members having no personal
stake in such business, transaction or transactions, the Company or such
Subsidiary may enter into such transaction or series of transactions if the
Company or such Subsidiary, as the case may be, shall have received the written
opinion of a nationally recognized investment banking firm that the terms
thereof, from a financial point of view, are fair to the shareholders of the
Company or such Subsidiary, in their capacity as such (the determination as to
the value of any non-cash consideration referred to in the preceding proviso to
be made by such investment banking firm), and such opinion shall have been
delivered to the Trustee.
(b) The foregoing paragraph (a) shall not prevent the following:
(1) any transaction between a Subsidiary of the Company and its own
employee stock ownership or benefit plan;
(2) any transaction with an officer or director of the Company or any
of its Subsidiaries entered into in the ordinary course of business
(including compensation or employee benefit arrangements with any such
officer or director);
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(3) any business or transaction by an ISP Subsidiary or the Company
with an Unrestricted Affiliate;
(4) transactions permitted by the 'Limitation on Investments in
Non-Recourse Subsidiaries by ISP Subsidiaries' covenant;
(5) payments made or actions taken pursuant to any of the Specified
Agreements (or any new agreement referred to in paragraph (c) below), as
any such Specified Agreement (or new agreement) is, subject to paragraph
(c) below, amended, modified, extended or waived from time to time;
(6) the making of a Restricted Payment or Restricted Investment
otherwise permitted by paragraph (a) of the 'Limitation on Restricted
Payments and Restricted Investments' covenant or those transactions
specifically permitted by paragraph (b) of the 'Limitation on Restricted
Payments and Restricted Investments' covenant;
(7) (i) transactions between or among Non-Recourse Subsidiaries of
ISP, and (ii) transactions between or among Non-Recourse Subsidiaries of
any Specified Subsidiary; or
(8) (i) so long as ISP is a Recourse Subsidiary of the Company,
transactions between or among ISP, its Recourse Subsidiaries and the
Company, and (ii) transactions between or among any Specified Subsidiary
and its Recourse Subsidiaries.
(c) The Company will not, and will not permit any of its Subsidiaries to
amend, modify, extend or waive any provision of any of the Specified Agreements
in any manner which is significantly adverse to the Company or the Holders (it
being understood that an extension or modification of either of the Granules
Contracts (or any similar granules purchase contract) on terms at least as
favorable to the Company as those available at the time of the extension or
modification (or any such new agreement) in a comparable transaction in
arms-length dealings with an unrelated Person shall not be deemed significantly
adverse to the Company or the Holders).
Limitation on Investments in Non-Recourse Subsidiaries by ISP
Subsidiaries. The Company shall not, and shall not permit any ISP Subsidiary
(so long as such ISP Subsidiary is a Subsidiary of the Company) to, make
Investments in Non-Recourse Subsidiaries of ISP if, after giving effect thereto,
the cumulative aggregate amount (the amount so expended, if other than in cash,
to be determined by the Board of Directors of ISP, as evidenced by a Board
Resolution) of such Investments, as of the date of the Investment, made by the
Company and ISP Subsidiaries would exceed 20% of the Consolidated Net Worth of
ISP.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its Recourse
Subsidiaries to, directly or indirectly, create or otherwise cause to exist or
become effective any encumbrance or restriction on the ability of any such
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock or pay any Debt owed to the Company or any of its Subsidiaries, (b) make
loans or advances to, or Issue any Guarantee for the benefit of, the Company or
any of its Subsidiaries, (c) transfer any of its properties or assets to the
Company or any of its Subsidiaries or (d) incur or suffer to exist Liens in
favor of the Holders, except for such encumbrances or restrictions existing
under or by reason of the following:
(1) applicable law;
(2) the Indentures;
(3) customary provisions restricting subletting or assignment of any
lease or license or other commercial agreement;
(4) any instrument governing Acquired Debt of any Person, which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than such Person and its
Subsidiaries, or the property or assets of such Person and its
Subsidiaries, so acquired;
(5) Liens specifically permitted by the 'Limitation on Liens'
covenant; provided that such Liens and the terms governing such Liens do
not, directly or indirectly, restrict the Company or its Subsidiaries from
granting other Liens, except as to the assets subject to such Liens;
(6) the Credit Agreement or other Debt existing on the Issue Date and
any Refinancing of the Credit Agreement or any such other Debt; provided
that the terms and conditions of any such Refinancing
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agreements relating to the terms described under clauses (a)-(d) above are
no less favorable to the Company and its Subsidiaries than those contained
in the agreements governing the Debt being Refinanced; and
(7) covenants contained in agreements governing Debt of ISP
Subsidiaries; provided, however, that such covenants shall not prohibit the
ISP Subsidiaries from, directly or indirectly, paying dividends or making
loans or advances to the Company in an aggregate amount less than the
positive difference, if any, between (i) the sum of (A) $25,000,000 and (B)
50% of the cumulative Consolidated Net Income (or minus 100% of the
Consolidated Net Loss) of ISP for the period beginning on the first day of
the fiscal quarter during which such Debt was issued, and (ii) the
aggregate amount of Restricted Payments and Restricted Investments made by
ISP Subsidiaries since such date.
Limitation on Asset Sales. (a) The Company shall not, and shall not permit
any of its Subsidiaries, directly or indirectly, to consummate an Asset Sale
unless:
(1) the Company or such Subsidiary, as the case may be, receives
consideration (including non-cash consideration, whose fair market value
shall be determined in good faith by the Board of Directors of the Company
or such Subsidiary, as evidenced by a Board Resolution) at the time of such
Asset Sale at least equal to the fair market value of the assets sold or
otherwise disposed of (as determined in good faith by the Board of
Directors, as evidenced by a Board Resolution);
(2) at least 75% of the consideration received by the Company or such
Subsidiary, as the case may be, shall be cash or Cash Equivalents;
provided, however, that this clause (2) shall not prohibit any Asset Sale
for which the Company or such Subsidiary, as the case may be, receives 100%
of the consideration, directly or through the acquisition of Capital Stock
of a Person, in operating assets; and
(3) in the case of an Asset Sale by the Company or any of its
Subsidiaries, the Company or such Subsidiary, as the case may be, shall
apply the Net Cash Proceeds of such Asset Sale within one year of receipt
thereof, (i) to invest in the businesses that the Company and its Recourse
Subsidiaries are engaged in at the time of such Asset Sale or any like or
related business, (ii) to pay or satisfy Debt or Preferred Stock of the
Company or such Subsidiary, as the case may be, and/or (iii) to offer to
purchase the Notes (on a pro rata basis) in a tender offer at a redemption
price equal to 100% of the principal thereof plus accrued interest thereon
to the date of redemption; provided, however, that the Company may defer
making any such offer until the aggregate Net Cash Proceeds from Asset
Sales to be applied pursuant to clause (3)(iii) equal or exceed
$20,000,000; provided, further, however, that (i) the Company and its
Subsidiaries may retain up to $5,000,000 of Net Cash Proceeds from Asset
Sales in any twelve-month period (without complying with clause (3)), and
(ii) any Asset Sale that would result in a Change of Control shall not be
governed by this covenant but shall be governed by the provisions described
under 'Change of Control Put and Call.'
Investment Company Act. The Company shall not take any action that would
require it or any of its Subsidiaries to register as an investment company under
the Investment Company Act of 1940.
Securities and Exchange Commission Reports. At all times from and after the
earlier of (i) the date of the commencement of the Exchange Offers or the
effectiveness of the Shelf Registration Statement contemplated by the
Registration Rights Agreements and (ii) the date that is six months after the
Issue Date, in either case, whether or not the Company is then required to file
reports with the Commission, the Company shall file with the Commission all such
reports and other information as would be required to be filed with the
Commission under the Exchange Act. The Company shall supply to each Holder and
to any other Person who reasonably requests in writing, without cost, copies of
such reports or other information. In addition, the Company shall, at its cost,
deliver to each Holder, and a prospective purchaser designated by such Holder,
from and after the earlier of the dates referred to in clauses (i) and (ii)
above, quarterly and annual reports substantially equivalent to those which
would be required under the Exchange Act if at the time of such request the
Company is not a reporting company under Section 13 or Section 15(d) of the
Exchange Act. The Company also will comply with the other provisions of TIA
Section 314(a).
So long as any of the Notes remain outstanding, the Company shall cause
each annual, quarterly and other financial report mailed or otherwise furnished
by it generally to public stockholders to be filed with the Trustee and mailed
to the Holders at their addresses appearing in the register of Notes maintained
by the Registrar, in each case at the time of such mailing or furnishing to such
stockholders.
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MERGER, ETC.
The Company shall not consolidate with or merge with or into or sell,
assign, transfer or lease all or substantially all of its properties and assets
(either in one transaction or series of related transactions) to any Person,
unless:
(1) the Company shall be the continuing Person, or the resulting,
surviving or transferee Person (if other than the Company) shall be a
corporation organized and existing under the laws of the United States or
any State thereof or the District of Columbia and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, all the obligations of the
Company under the Notes and the Indenture, and the Indenture shall remain
in full force and effect;
(2) immediately before and immediately after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee Person or any of its Subsidiaries as a
result of such transaction as having been issued by such Person or such
Subsidiary at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing; and
(3) immediately after giving effect to such transaction, the
resulting, surviving or transferee Person shall have a Consolidated Net
Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction.
In connection with any consolidation, merger, sale, assignment, transfer or
lease contemplated by this covenant, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, sale, assignment, transfer or lease and the
supplemental indenture in respect thereto comply with this covenant and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
Upon any consolidation or merger or any sale, assignment, transfer or lease
of all or substantially all of the assets of the Company in accordance with the
foregoing provisions, the successor corporation formed by such consolidation or
into which the Company is merged or to which such sale, assignment, transfer or
lease is made, shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under the Indentures, with the same effect as if
such successor corporation had been named as the Company therein, and, except in
the case of a lease, the Company will be discharged from all obligations and
covenants under the Indentures and the Notes.
EVENTS OF DEFAULT
An 'Event of Default' occurs under an Indenture if:
(1) the Company defaults in the payment of interest on, or Additional
Interest (if any) with respect to, any Note issued pursuant to such
Indenture when the same becomes due and payable and the default continues
for a period of 30 days;
(2) (i) the Company defaults in the payment of the principal of any
Note issued pursuant to such Indenture when the same becomes due and
payable at maturity or otherwise or (ii) the Company fails to redeem or
repurchase Notes issued pursuant to such Indenture when required pursuant
to such Indenture or the Notes;
(3) the Company fails to comply with the provisions described under
'Merger, Etc.' contained in such Indenture;
(4) the Company fails to comply for 30 days after notice with any of
its obligations under 'Change of Control Put and Call' and 'Certain
Covenants' contained in such Indenture;
(5) the Company fails to comply for 60 days after notice with its
other agreements contained in the Indenture or the Notes issued pursuant to
such Indenture (other than those referred to in clauses (1)-(4) above);
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(6) Debt of the Company or any Significant Subsidiary is not paid
within any applicable grace period or is accelerated by the holders thereof
because of a default and the total principal amount of the portion of such
Debt that is unpaid or accelerated exceeds $15,000,000 or its foreign
currency equivalent and such default continues for 5 days after notice;
(7) the Company or any of its Significant Subsidiaries (A) admits in
writing its inability to pay its debts generally as they become due, (B)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (C) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (D) consents to the appointment of a Custodian of it or for
substantially all of its property, (E) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (F)
makes a general assignment for the benefit of its creditors, or (G) takes
any corporate action to authorize or effect any of the foregoing; and
(8) any judgment or order for the payment of money in excess of
$15,000,000 in the aggregate is rendered against the Company or any
Significant Subsidiary of the Company and (i) there is a period of 60 days
following the entry of such judgment or order during which such judgment or
order is not discharged, waived or the execution thereof stayed and such
default continues for 10 days after the notice specified below or (ii)
foreclosure proceedings therefor have begun and have not been stayed within
five days of the commencement of such foreclosure proceeding.
A Default under clauses (4), (5), (6) or (8) is not an Event of Default
until the Trustee or the Holders of at least 25% in aggregate principal amount
of the outstanding issue of Notes issued pursuant to the applicable Indenture
notify the Company in writing of the Default, and the Company does not cure the
Default within the time specified in such clause after receipt of such notice.
Such notice shall be given by the Trustee if so requested in writing by the
Holders of at least 25% in aggregate principal amount of such outstanding Notes.
When a Default under clause (4), (5), (6) or (8) is cured or remedied within the
specified period, it ceases to exist.
If an Event of Default (other than an Event of Default with respect to the
Company specified in clause (7) above) occurs and is continuing, the Trustee, by
written notice to the Company, or the Holders of at least 25% in aggregate
principal amount of such outstanding issue of Notes issued pursuant to the
applicable Indenture, by written notice to the Company and the Trustee, may
declare the principal of and accrued interest on all such Notes then outstanding
to be due and payable (the 'Default Amount'). Upon a declaration of
acceleration, such amount shall be due and payable immediately.
If an Event of Default with respect to the Company specified in clause (7)
above occurs, the Default Amount shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder.
The Holders of a majority in aggregate principal amount at maturity of the
applicable issue of Notes then outstanding, by written notice to the Trustee and
the Company, may rescind an acceleration with respect to such Notes and its
consequences if (i) all existing Defaults and Events of Default, other than the
non-payment of the principal of such Notes which has become due solely by such
declaration of acceleration, have been cured or waived, (ii) to the extent the
payment of such interest is lawful, interest on overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid and
(iii) the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction.
Notwithstanding any other provision of the applicable Indenture, if an
Event of Default occurs and is continuing and the Holders are entitled to
payment as a result of acceleration, the Trustee may pursue any available remedy
by proceeding at law or in equity to collect the payment of principal of and/or
interest on the applicable issue of Notes or to enforce the performance of any
provision of such Notes or the applicable Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
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Subject to certain provisions of the applicable Indenture, the Holders of a
majority in aggregate principal amount of the outstanding Notes governed thereby
by notice to the Trustee may waive an existing Default or Event of Default and
its consequences, except a Default or Event of Default in payment of principal
or interest on any Note as specified in clauses (1) and (2) above. When a
Default or Event of Default is waived, it is cured and ceases to exist.
The Holders of a majority in aggregate principal amount of the applicable
issue of Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or the applicable Indenture or that the Trustee
determines may be unduly prejudicial to the rights of another Holder as such, or
that may subject the Trustee to personal liability. The Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.
A Holder may not pursue any remedy with respect to an Indenture or the
Notes except under specified circumstances.
If a Default occurs under an Indenture and is continuing and if it is known
to the Trustee, the Trustee shall mail to each Holder of Notes issued thereunder
notice of the Default within 90 days after it occurs. Except in the case of a
Default in the payment of the principal of or interest on any Note, the Trustee
may withhold notice if and so long as a committee of its Trust Officers in good
faith determines that the withholding of such notice is in the interests of the
Holders of the applicable Notes.
DISCHARGE; DEFEASANCE
When (i) the Company delivers to the Trustee all outstanding Notes issued
under an Indenture (other than replaced Notes) for cancellation or (ii) all
outstanding Notes issued under an Indenture have become due and payable, and the
Company irrevocably deposits with the Trustee money sufficient to pay at
maturity all such outstanding Notes, including interest thereon (other than
replaced Notes), and if in either case the Company pays all other sums payable
hereunder by the Company, then the Indenture governing such Notes shall, except
with respect to certain matters, cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of such Indenture on demand of the
Company accompanied by an officers' certificate and an opinion of counsel as to
the satisfaction of all conditions to such satisfaction and discharge of such
Indenture and at the cost and expense of the Company.
Subject to the provisions set forth in the applicable Indenture, the
Company may at any time terminate (i) all its obligations under the Notes issued
under an Indenture and the applicable Indenture ('legal defeasance'), or (ii)
its obligations under certain of the covenants under such Indenture ('covenant
defeasance').
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest,
if any, on the applicable issue of Notes to maturity or redemption, as the
case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the applicable Notes to maturity or redemption, as the case may be;
(3) no Default or Event of Default has occurred and is continuing on
the date of such deposit and after giving effect thereto;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an opinion of counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
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(6) the Company delivers to the Trustee an opinion of counsel stating
that the Holders will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and defeasance and will be subject
to federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit and defeasance had
not occurred, and, in the case of legal defeasance only, such opinion of
counsel shall be based on a ruling of the Internal Revenue Service or other
change in applicable federal income tax law; and
(7) the Company delivers to the Trustee an officers' certificate and
an opinion of counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes have been complied with.
Notwithstanding the foregoing provisions of this Section, the conditions
set forth in the foregoing paragraphs (2), (3), (4), (5), (6) and (7) need not
be satisfied so long as, at the time the Company makes the deposit described in
paragraph (1), (i) no payment or bankruptcy Default under the applicable
Indenture has occurred and is continuing on the date of such deposit and after
giving effect thereto and (ii) either (x) a notice of redemption has been mailed
providing for redemption of all the applicable Notes 30 days after such mailing
and the provisions of the applicable Indenture with respect to such redemption
shall have been complied with or (y) the Stated Maturity of all of the
applicable Notes will occur within 30 days. If the conditions of the preceding
sentence are satisfied the Company shall be deemed to have exercised its
covenant defeasance option.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
The Company, when authorized by resolution of its Board of Directors, and
the Trustee may amend an Indenture or the Notes issued pursuant thereto with the
written consent of the Holders of a majority in aggregate principal amount of
the applicable issue of Notes then outstanding, and the Holders of a majority in
aggregate principal amount of the applicable issue of Notes then outstanding by
written notice to the Trustee may waive future compliance by the Company with
any provision of such Indenture or such Notes.
Notwithstanding the foregoing, without the consent of each Holder affected,
an amendment or waiver, may not:
(1) change the stated maturity of the principal of, or any installment
of interest on, any Note or reduce the principal amount thereof, the rate
of interest thereon or any premium payable upon the redemption thereof, or
change the coin or currency in which any Note or any premium or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the stated maturity thereof (or, in
the case of redemption, on or after the redemption date);
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of the Holders of which is required for any supplemental
indenture or the consent of such Holders is required for any waiver of
compliance with provisions of the applicable Indenture or Defaults
hereunder and their consequences provided for in such Indenture;
(3) modify any of the provisions relating to supplemental indentures
requiring the consent of Holders or relating to the waiver of past defaults
or relating to the waiver of covenants, except to increase any such
percentage of outstanding Notes required for such actions or to provide
that certain other provisions of the applicable Indenture cannot be
modified or waived without the consent of each Holder affected thereby;
(4) waive a default in the payment of the principal of or interest on
any Note or modify or waive the Company's obligation to repurchase Notes
under the provisions described under 'Change of Control' or 'Certain
Covenants--Limitation on Asset Sales';
(5) except as otherwise permitted by the provisions described under
'Merger, Etc.', consent to the assignment or transfer by the Company of any
of its rights and obligations under the Indenture;
(6) make any change in the amendment and waiver provisions, provisions
relating to waiver of past defaults or provisions relating to rights of
holders to receive payment; or
(7) change the time at which any Note must be redeemed or repaid in
accordance with the terms of the applicable Indenture and the Notes.
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It shall not be necessary for the consent of the Holders to approve the
particular form of any proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof. Any amendment, waiver
or consent shall be deemed effective upon receipt by the Trustee of the
necessary consents and shall not require execution of any supplemental indenture
to be effective.
Except as otherwise provided above, the Holders of a majority in aggregate
principal amount of the applicable issue of Notes then outstanding may waive
compliance in a particular instance by the Company with any provisions of the
applicable Indenture or such Notes.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any fee, interest or other
amount to any Holders in connection with any consent, waiver or amendment to an
Indenture or the Notes governed thereby, unless such fee, interest or other
amount is offered or agreed to be paid to all Holders who are given the same
opportunity to so consent, waive or agree to amend and who, in fact, so consent,
waive or agree to amend.
GOVERNING LAW
The Indentures and the Notes are governed by and will be construed in
accordance with, the laws of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material federal income tax consequences
to tendering holders of Old Notes of (i) the exchange of Old Notes for New Notes
and (ii) the ownership and disposition of New Notes.
This summary is based upon provisions of the Internal Revenue Code of 1986,
as amended (the 'Code'), Treasury Regulations promulgated thereunder (including
temporary regulations), administrative rulings and judicial decisions now in
effect, all of which are subject to change, possible with retroactive effect.
This summary does not discuss all aspects of federal income taxation that may be
relevant to a particular holder in light of such holder's individual investment
circumstances or to certain types of holders subject to special treatment under
the federal income tax laws (for example, dealers in securities, banks, life
insurance companies, tax-exempt organizations and foreign taxpayers and persons
who hold (or will hold) the Old Notes or New Notes as part of a 'straddle,'
'hedge' or 'conversion transaction'), nor does it discuss any aspect of state,
local or foreign taxation. The following discussion assumes that the Old Notes
and New Notes are (and will be) held by the holders thereof as 'capital assets'
within the meaning of Section 1221 of the Code.
THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATIONAL PURPOSES
ONLY. ACCORDINGLY, EACH HOLDER OF OLD NOTES SHOULD CONSULT WITH SUCH HOLDER'S
OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF
PARTICIPATION IN THE EXCHANGE OFFER, AND THE OWNERSHIP AND DISPOSITION OF NEW
NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX
LAWS.
FEDERAL INCOME TAX CONSEQUENCES OF TENDERING OLD NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offers
should not constitute an exchange for federal income tax purposes. Accordingly,
the Exchange Offers should have no federal income tax consequences to holders of
Old Notes. Except for the immediately succeeding paragraph, the balance of this
discussion assumes that the exchange of Old Notes for New Notes will not
constitute an exchange for federal income tax purposes.
If, contrary to the above conclusion, the exchange of Old Notes for New
Notes constitutes an exchange for federal income purposes, both the Old Notes
and the New Notes should constitute 'securities' for federal income tax purposes
(which determination generally is made by reference to the initial terms of the
debt instrument, with debt instruments with initial terms of more than five
years generally being treated as securities) and, thus, a holder of Old Notes
should recognize no gain or loss on the consummation of the Exchange Offers.
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FEDERAL INCOME TAX CONSEQUENCES OF OWNING NEW NOTES
STATED INTEREST
Interest on a New Note should be taxable to a U.S. holder as ordinary
interest income at the time it accrues or is received in accordance with such
holder's method of accounting for U.S. federal income tax purposes.
SALE OR REDEMPTION
The sale, exchange, redemption (including pursuant to an offer by the
Company) or other disposition of New Notes generally will be a taxable event for
federal income tax purposes. A holder generally will recognize gain or loss
equal to the difference between (i) the amount of cash plus the fair market
value of any property received upon such sale, exchange, redemption or other
taxable disposition of a New Note (other than in respect of accrued interest
thereon) and (ii) the holder's adjusted tax basis in such debt instrument (other
than in respect of accrued interest thereon). Subject to the possible
application of the market discount rules discussed below, such gain or loss will
be capital gain or loss and would be long-term capital gain or loss if the New
Notes were held by the holder for the applicable period at the time of such sale
or other disposition.
MARKET DISCOUNT
Except as discussed below, gain recognized on the disposition of New Notes
having accrued market discount will be treated as ordinary income, and not
capital gain, to the extent of the accrued market discount, provided the amount
of market discount thereon exceeds a de minimis amount. In general, upon the
disposition of a 'market discount' bond, any gain recognized by a holder is
treated as ordinary income to the extent of accrued market discount thereon.
Market discount is defined generally as the excess of (i) the 'stated redemption
price at maturity' of a debt obligation less any unamortized original issue
discount over (ii) the tax basis of the debt obligation in the hands of the
holder immediately after its acquisition.
If a holder of New Notes having accrued market discount disposes of such
New Notes in any transaction other than a sale, exchange or redemption (e.g., a
gift), such holder will be deemed to have realized an amount equal to the fair
market value of such new Notes and will be required to recognize as ordinary
income any accrued market discount thereon. See 'Sale or Redemption' above for
the general consequences of a sale, exchange or redemption. Partial principal
payments (if any) on such New Notes also would be includable as ordinary income
to the extent of any accrued market discount on such New Notes. A holder of New
Notes having accrued market discount also may be required to defer the deduction
of all or a portion of the interest on any indebtedness incurred or maintained
to purchase or carry such New Notes until they are disposed of in a taxable
transaction.
A holder of New Notes having accrued market discount may elect to include
the market discount in income as it accrues. This election would apply to all
market discount obligations acquired by the electing holder on or after the
first day of the first taxable year to which the election applies and may be
revoked only with the consent of the Service. If a holder of New Notes elects to
include market discount in income, the above-discussed rules with respect to
ordinary income recognition resulting from sale and certain other disposition
transactions and to deferral of interest deductions would not apply.
BOND PREMIUM
If the initial tax basis of a holder in any New Notes exceeds the 'amount
payable on maturity' (such excess being the 'bond premium'), the holder may
elect to amortize the bond premium over the period from the acquisition date of
such New Notes to their maturity date (or an earlier call date, if using such
earlier date would result in a smaller amortization deduction) and, except as
Treasury Regulations may otherwise provide, reduce the amount of interest
included in income in respect of such New Notes by such amount.
A holder who elects to amortize bond premium must reduce his adjusted basis
in such New Notes by the amount of such allowable amortization. An election to
amortize bond premium would apply to amortizable bond premium on all taxable
bonds held at or acquired after the beginning of the holder's taxable year as to
which the election is made, and may be revoked subsequently only with the
consent of the Service.
79
<PAGE>
BACKUP WITHHOLDING
Under the Code, a holder of Old Notes or New Notes may be subject, under
certain circumstances, to 'backup withholding' at a 31% rate with respect to
payments of interest or the gross proceeds from the sale, exchange or redemption
of such notes. This withholding generally applies only if the holder (i) fails
to furnish his social security or other taxpayer identification number ('TIN')
within a reasonable time after the request therefor, (ii) furnishes an incorrect
TIN, (iii) fails to report properly interest or dividends, or (iv) fails, under
certain circumstances, to provide a certified statement, signed under penalty of
perjury, that the TIN provided is his correct number and that he is not subject
to backup withholding. Any amount withheld from a payment to a holder under the
backup withholding rules is allowable as a credit against such holder's federal
income tax liability, provided that the required information is furnished to the
Service. Holders of Old Notes and New Notes should consult their tax advisors as
to their qualification for exemption from withholding and the procedure for
obtaining such an exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offers must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of such
New Notes. This Prospectus, as it may be amended or supplemented from time to
time, may be used by all persons subject to the prospectus delivery requirements
of the Securities Act, including broker-dealers in connection with resales of
New 9% Notes received in exchange for Old 9% Notes and in connection with
resales of New 9 3/4% Notes received for Old 9 3/4% Notes, in each case, where
such Old Notes were acquired as a result of market-making activities or other
trading activities. ISP Holdings has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
ISP Holdings will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offers may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offers and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an 'underwriter' within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Securities Act, a broker-dealer will not be
deemed to admit that it is an 'underwriter' within the meaning of the Securities
Act.
For a period of 180 days after the Expiration Date, ISP Holdings will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. ISP Holdings has agreed to pay all expenses
incident to the Exchange Offers (including the reasonable fees and expenses of
Cahill Gordon and Reindel, counsel to Bear, Stearns & Co. Inc., the initial
purchaser of the Old 9% Notes) other than commissions or concessions of any
brokers or dealers and will indemnify holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
New Notes will be passed upon for ISP Holdings by Weil, Gotshal & Manges LLP (a
limited liability partnership including professional corporations), New York,
New York. Weil, Gotshal & Manges LLP has from time to time represented, and
continues to represent, Bear, Stearns & Co. Inc. in connection with various
legal matters. Weil, Gotshal &
80
<PAGE>
Manges LLP has from time to time represented, and may continue to represent, GAF
and certain of its affiliates (including G-I Holdings, ISP and BMCA) in
connection with certain legal matters.
EXPERTS
The consolidated financial statements and schedules of ISP Holdings as of
December 31, 1994 and 1995 and the consolidated statements of income,
shareholder's equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995 included in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
ISP, G-I Holdings and BMCA are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith file reports, proxy statements (with respect to ISP) and
other information with the Commission. The reports, proxy statements and other
information filed by ISP, G-I Holdings and BMCA with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60601-2511. Copies of such material also can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. In addition, ISP's common stock is listed on the New York
Stock Exchange and material filed by ISP can be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005. Finally, the
Commission maintains an Internet web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
ISP Holdings has filed with the Commission a Registration Statement (which
term shall encompass any amendments thereto) on Form S-4 under the Securities
Act with respect to the New Notes offered hereby. This Prospectus does not
contain all information set forth in the Registration Statement and the exhibits
thereto, to which reference is hereby made. Statements made in this Prospectus
as to the contents of any contract, agreement, or other document are not
necessarily complete. With respect to each such contract, agreement, or other
document filed as an exhibit to the Registration Statement, reference is hereby
made to such exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
81
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Consolidated Statements of Income for the three years ended December 31, 1995 and the nine months ended
October 1, 1995 and September 29, 1996 (unaudited)....................................................... F-3
Consolidated Balance Sheets as of December 31, 1995 and as of September 29, 1996 (unaudited)............... F-4
Consolidated Statements of Cash Flows for the three years ended December 31, 1995 and the nine months ended
October 1, 1995 and September 29, 1996 (unaudited)....................................................... F-5
Consolidated Statements of Shareholder's Equity (Deficit) for the three years ended December 31, 1995 and
the nine months ended September 29, 1996 (unaudited)..................................................... F-7
Notes to Consolidated Financial Statements................................................................. F-8
Supplementary Data (unaudited):
Quarterly Financial Data (unaudited)....................................................................... F-27
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ISP Holdings Inc.:
We have audited the accompanying consolidated balance sheets of ISP
Holdings Inc. (a Delaware corporation and a wholly owned subsidiary of GAF
Corporation) and subsidiaries as of December 31, 1994 and 1995, and the related
consolidated statements of income, shareholder's equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 financial statements referred to above, appearing on
pages F-3 to F-26 of this Prospectus, present fairly, in all material respects,
the financial position of ISP Holdings Inc. and subsidiaries as of December 31,
1994 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Roseland, New Jersey
August 7, 1996
(except with respect to the matter
discussed in Note 14 as to which the
date is December 9, 1996)
F-2
<PAGE>
ISP HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
-------------------------------- 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales........................................ $548,252 $600,047 $689,002 $ 530,334 $ 544,135
-------- -------- -------- ----------- -------------
Costs and expenses:
Cost of products sold.......................... 329,517 367,746 414,672 322,329 320,295
Selling, general and administrative............ 125,961 119,656 134,011 98,876 108,236
Provision for restructuring.................... 13,827 -- -- -- --
Goodwill amortization.......................... 13,856 13,400 13,223 9,922 9,900
-------- -------- -------- ----------- -------------
Total costs and expenses.................... 483,161 500,802 561,906 431,127 438,431
-------- -------- -------- ----------- -------------
Operating income................................. 65,091 99,245 127,096 99,207 105,704
Interest expense................................. (24,500) (28,676) (33,091) (24,821) (21,879)
Equity in earnings of joint venture.............. 2,051 2,034 5,413 2,950 4,948
Other income (expense), net...................... 7,181 (119) 6,684 3,869 9,429
-------- -------- -------- ----------- -------------
Income from continuing operations before income
taxes and extraordinary item................... 49,823 72,484 106,102 81,205 98,202
Income taxes:
Current year provision......................... (17,320) (26,732) (38,727) (29,981) (35,647)
Adjustment of deferred tax liability for change
in tax rate................................. (2,945) -- -- -- --
Minority interest in income of subsidiaries...... (5,737) (8,640) (12,306) (9,452) (10,802)
-------- -------- -------- ----------- -------------
Income from continuing operations before
extraordinary item............................. 23,821 37,112 55,069 41,772 51,753
-------- -------- -------- ----------- -------------
Discontinued operations:
Loss from discontinued operations, net of
income taxes................................ (9,415) (7,865) (22,241) (15,838) (25,608)
Gain on sale of discontinued operation, net of
income taxes of $30,648..................... -- -- -- -- 43,637
-------- -------- -------- ----------- -------------
Income (loss) from discontinued operations....... (9,415) (7,865) (22,241) (15,838) 18,029
-------- -------- -------- ----------- -------------
Income before extraordinary item................. 14,406 29,247 32,828 25,934 69,782
Extraordinary item, net of income tax benefit of
$733........................................... -- (1,237) -- -- --
-------- -------- -------- ----------- -------------
Net income....................................... $ 14,406 $ 28,010 $ 32,828 $ 25,934 $ 69,782
-------- -------- -------- ----------- -------------
-------- -------- -------- ----------- -------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
F-3
<PAGE>
ISP HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
------------------------- 1996
1994 1995 (UNAUDITED)
---------- ---------- ------------------
(THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................................. $ 20,127 $ 14,080 $ 11,767
Investments in trading securities................................ 42,737 17,183 1,266
Investments in available-for-sale securities..................... 14,583 114,099 94,567
Investments in held-to-maturity securities....................... -- 4,618 4,119
Accounts receivable, trade, less reserve of $2,292, $2,879
and $2,916.................................................... 55,585 60,327 72,764
Accounts receivable, other....................................... 9,977 12,356 20,637
Inventories...................................................... 108,787 107,969 98,354
Net current assets of discontinued operations.................... 106,237 147,451 254,979
Other current assets............................................. 14,572 12,920 13,726
---------- ---------- ------------------
Total current assets............................................... 372,605 491,003 572,179
Property, plant and equipment, net................................. 477,109 475,550 482,416
Excess of cost over net assets of businesses acquired, net of
accumulated amortization of $78,602, $91,825 and $101,725........ 443,681 430,458 420,558
Other assets....................................................... 64,146 63,378 62,135
---------- ---------- ------------------
Total assets....................................................... $1,357,541 $1,460,389 $1,537,288
---------- ---------- ------------------
---------- ---------- ------------------
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Short-term debt.................................................. $ -- $ 36,199 $ 22,518
Current maturities of long-term debt............................. 890 398 361
Loan payable to affiliate........................................ 41,341 50,597 17,797
Accounts payable................................................. 47,984 41,727 50,017
Accrued liabilities.............................................. 46,625 56,538 57,929
Payable to affiliates, net....................................... 3,336 9,429 4,413
Income taxes..................................................... 4,389 6,114 6,099
---------- ---------- ------------------
Total current liabilities.......................................... 144,565 201,002 159,134
---------- ---------- ------------------
Long-term debt less current maturities............................. 285,397 280,254 239,760
---------- ---------- ------------------
Long-term note payable to affiliate................................ 91,709 67,237 80,977
---------- ---------- ------------------
Deferred taxes..................................................... 72,955 55,743 45,452
---------- ---------- ------------------
Net noncurrent liabilities of discontinued operations.............. 591,592 678,805 770,271
---------- ---------- ------------------
Other liabilities.................................................. 74,310 65,458 62,224
---------- ---------- ------------------
Minority interest in subsidiaries.................................. 112,804 113,597 117,817
---------- ---------- ------------------
Commitments and contingencies......................................
Shareholder's equity (deficit):
Common stock, $.01 par value per share; 1,000 shares authorized:
10 shares issued and outstanding.............................. -- -- --
Additional paid-in capital....................................... 50,704 56,342 118,516
Excess of purchase price over the adjusted historical cost of the
predecessor company shares owned by GAF's stockholders........ (72,605) (72,605) (72,605)
Retained earnings................................................ -- -- 1,924
Cumulative translation adjustment and other...................... 6,110 14,556 13,818
---------- ---------- ------------------
Shareholder's equity (deficit)................................ (15,791) (1,707) 61,653
---------- ---------- ------------------
Total liabilities and shareholder's equity (deficit)............... $1,357,541 $1,460,389 $1,537,288
---------- ---------- ------------------
---------- ---------- ------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
F-4
<PAGE>
ISP HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
------------------------------ 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents, beginning period............ $ 81,679 $ 82,786 $ 62,864 $ 62,864 $ 31,263
-------- -------- -------- ----------- -------------
Cash provided by operating activities:
Net income........................................... 14,406 28,010 32,828 25,934 69,782
Adjustments to reconcile net income to net cash
provided by operating activities:
(Income) loss from discontinued operations....... 9,415 7,865 22,241 15,838 (18,029)
Non-cash extraordinary charge.................... -- 1,237 -- -- --
Depreciation..................................... 28,737 32,753 35,960 26,698 28,183
Goodwill amortization............................ 13,856 13,400 13,223 9,922 9,900
Deferred income taxes............................ (13,542) (16,494) (18,809) (5,125) (11,340)
Provision for restructuring...................... 13,827 -- -- -- --
(Increase) decrease in working capital items....... 2,868 (11,277) (5,105) (13,465) (3,015)
(Increase) decrease in other assets................ 6,586 (4,281) 56 (6,303) 1,116
Increase (decrease) in other liabilities........... 1,847 (2,090) (1,343) (1,250) 810
Increase (decrease) in net payable to affiliates... 10,234 (247) 6,093 (9,756) (5,016)
Change in cumulative translation adjustment........ (5,070) 6,694 5,561 6,470 (4,005)
Change in minority interest in subsidiaries........ 4,517 10,252 13,663 11,002 10,015
Other, net......................................... 340 (2,885) 586 (2,316) (1,903)
-------- -------- -------- ----------- -------------
Net cash provided by continuing operations............. 88,021 62,937 104,954 57,649 76,498
Net cash provided by (used in) discontinued
operations........................................... 1,150 4,106 28,159 27,693 (83,027)
-------- -------- -------- ----------- -------------
Net cash provided by (used in) operating activities.... 89,171 67,043 133,113 85,342 (6,529)
-------- -------- -------- ----------- -------------
Cash provided by (used in) investing activities:
Capital expenditures and acquisitions................ (62,858) (31,098) (38,934) (26,559) (35,669)
Proceeds from sale of discontinued operation......... -- -- -- -- 89,464
Purchases of available-for-sale securities........... -- -- (366,200) (228,007) (194,126)
Purchases of held-to-maturity securities............. -- -- (5,592) (5,314) (9,534)
Designation of trading securities (to)/from
available-for-sale securities...................... -- (16,267) 13,303 (2,697) (9,928)
Proceeds from sales of available-for-sale
securities......................................... -- -- 257,197 134,185 227,838
Proceeds from held-to-maturity securities............ -- -- 974 -- 10,033
-------- -------- -------- ----------- -------------
Net cash provided by (used in) investing activities.... (62,858) (47,365) (139,252) (128,392) 78,078
-------- -------- -------- ----------- -------------
Cash provided by (used in) financing activities:
Proceeds (repayments) from sale of accounts
receivable......................................... 24,284 (1,052) 3,768 1,814 --
Proceeds from termination of interest rate swap
agreements......................................... 25,069 -- -- -- --
Increase (decrease) in short-term debt............... 10,637 (12,848) 36,199 49,088 (14,013)
Repayments of long-term debt......................... (125,820) (83,048) (5,635) (16,341) (40,615)
Increase (decrease) in loans from affiliate.......... 46,317 66,263 (15,216) (2,384) (19,060)
Subsidiary's repurchases of common stock............. -- (327) (16,614) (13,965) (10,365)
Dividends to minority shareholders of subsidiary..... (969) (969) -- -- --
Dividends and distributions paid to parent company... (14,406) (27,010) (33,637) (27,692) (67,996)
Capital contribution from parent company............. 9,230 18,880 5,478 -- 61,558
Other, net........................................... 452 511 195 62 712
-------- -------- -------- ----------- -------------
Net cash used in financing activities.................. (25,206) (39,600) (25,462) (9,418) (89,779)
-------- -------- -------- ----------- -------------
Net change in cash and cash equivalents................ 1,107 (19,922) (31,601) (52,468) (18,230)
-------- -------- -------- ----------- -------------
Cash and cash equivalents, end of period............... $ 82,786 $ 62,864 $ 31,263 $ 10,396 $ 13,033
-------- -------- -------- ----------- -------------
-------- -------- -------- ----------- -------------
</TABLE>
F-5
<PAGE>
ISP HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
------------------------------ 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
Supplemental Cash Flow Information:
<S> <C> <C> <C> <C> <C>
Effect on cash from (increase) decrease in working
capital items(1):
Accounts receivable.................................. $ 2,499 $(14,161) $(10,892) $ (20,652) $ (20,575)
Inventories.......................................... 4,306 (5,087) 1,029 8,589 9,657
Other current assets................................. 1,239 1,688 2,105 (291) (725)
Accounts payable..................................... 5,036 8,187 (5,895) (3,677) 8,264
Accrued liabilities.................................. (896) (4,162) 8,389 1,477 539
Income taxes......................................... (9,316) 2,258 159 1,089 (175)
-------- -------- -------- ----------- -------------
Net effect on cash from (increase) decrease in
working capital items............................ $ 2,868 $(11,277) $ (5,105) $ (13,465) $ (3,015)
-------- -------- -------- ----------- -------------
-------- -------- -------- ----------- -------------
Cash paid during the period for:
Interest (net of amount capitalized)................. $ 23,969 $ 31,140 $ 36,776 $ 30,651 $ 28,175
Income taxes (including taxes paid pursuant
to the Tax Sharing Agreement)...................... 38,703 44,499 44,489 35,285 48,681
</TABLE>
- ------------------
(1) Working capital items exclude cash, restricted cash, short-term investments
and short-term debt. Working capital acquired in connection with
acquisitions is reflected within 'Capital expenditures and acquisitions.'
The effects of reclassifications between noncurrent and current assets and
liabilities are excluded from the amounts shown above. In addition, the
(increase) decrease in accounts receivable shown above does not reflect the
cash proceeds from the sale of certain of the Company's accounts receivable
(see Note 5); such proceeds are reflected in cash from financing activities.
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
F-6
<PAGE>
ISP HOLDINGS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CAPITAL
STOCK AND CUMULATIVE
ADDITIONAL TRANSLATION
PAID-IN ADJUSTMENT RETAINED
CAPITAL AND OTHER EARNINGS
---------- ---------- --------
(THOUSANDS)
<S> <C> <C> <C>
December 31, 1992.......................................................... $ 22,625 $ 7,426 $ --
Net income............................................................... -- -- 14,406
Translation adjustment................................................... -- (5,070) --
Dividends and distributions to parent company............................ -- -- (14,406)
Capital contribution from parent company................................. 9,230 -- --
Change in unrealized gain on investments held by insurance subsidiary.... -- (1,863) --
Adjustment of unfunded pension liability................................. -- (2,357) --
---------- ---------- --------
December 31, 1993.......................................................... $ 31,855 $ (1,864) $ --
Net income............................................................... -- -- 28,010
Translation adjustment................................................... -- 6,694 --
Dividends and distributions to parent company............................ -- -- (28,010)
Capital contribution from parent company................................. 18,880 -- --
Unrealized loss on available-for-sale securities, net of $517 income tax
benefit............................................................... -- (886) --
Change in unrealized gain on investments held by insurance subsidiary.... -- (594) --
Adjustment of unfunded pension liability................................. -- 2,760 --
Effect of subsidiary's purchases of treasury stock....................... (31) -- --
---------- ---------- --------
December 31, 1994.......................................................... $ 50,704 $ 6,110 $ --
Net income............................................................... -- -- 32,828
Translation adjustment................................................... -- 5,561 --
Dividends and distributions to parent company............................ -- -- (32,828)
Capital contribution from parent company................................. 5,478 -- --
Change in unrealized gains on available-for-sale securities, net of
$1,503 income tax effect.............................................. -- 2,636 --
Adjustment of unfunded pension liability................................. -- 249 --
Effect of exercises of subsidiary's stock options........................ 160 -- --
---------- ---------- --------
December 31, 1995.......................................................... $ 56,342 $ 14,556 $ --
Net income (unaudited)................................................... -- -- 69,782
Translation adjustment (unaudited)....................................... -- (4,005) --
Dividends and distributions to parent company (unaudited)................ -- -- (67,858)
Capital contribution from parent company (unaudited)..................... 61,558 -- --
Change in unrealized gains on available-for-sale securities, net of
$1,652 income tax effect (unaudited).................................. -- 3,267 --
Effect of exercises of subsidiary's stock options (unaudited)............ 396 -- --
Effect of subsidiary's issuance of stock and options as incentives
(unaudited)........................................................... 220 -- --
---------- ---------- --------
September 29, 1996 (unaudited)............................................. $ 118,516 $ 13,818 $ 1,924
---------- ---------- --------
---------- ---------- --------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
F-7
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ISP Holdings Inc. ('ISP Holdings') is a wholly owned subsidiary of GAF
Corporation ('GAF'). ISP Holdings was formed on August 6, 1996 and 10 shares of
its common stock were issued to GAF in exchange for all of the capital stock of
G-I Holdings Inc. ('G-I Holdings'), which resulted in G-I Holdings becoming a
direct wholly-owned subsidiary of ISP Holdings. As used herein, the term
'Company' refers to ISP Holdings and its subsidiaries.
The accompanying consolidated financial statements have been prepared on a
basis which retroactively reflects the formation of ISP Holdings, as discussed
above, for all periods presented. The net income for each period presented up to
the date ISP Holdings was formed has been reflected as dividends and/or
distributions to GAF. Financial information with regard to the nine months ended
October 1, 1995 and September 29, 1996 is unaudited and, in the opinion of
management, contains all adjustments necessary to present fairly the financial
position and the results of operations and cash flows of the Company for the
periods presented. All adjustments are of a normal recurring nature. The results
of operations for these periods are not necessarily indicative of the results to
be expected for the full year.
Subject to the satisfaction of certain conditions, GAF intends to effect a
series of transactions (the 'Spin Off Transactions') that will result in, among
other things, the capital stock of ISP Holdings (whose principal asset will be
approximately 83% of the issued and outstanding capital stock of ISP) being
distributed to the stockholders of GAF. As a result of such distribution, ISP
Holdings and its subsidiary, International Specialty Products Inc. ('ISP'), will
no longer be direct or indirect subsidiaries of GAF, and the assets and
liabilities of other wholly owned subsidiaries of G-I Holdings, including
Building Materials Corporation of America ('BMCA'), U.S. Intec, Inc. ('USI'),
and GAF Chemicals Corporation ('GCC'), will no longer be assets and liabilities
of ISP Holdings.
Accordingly, the results of operations and assets and liabilities of BMCA,
USI and GCC, as well as GAF Broadcasting Company, Inc. (which was sold in August
1996), have been classified as 'Discontinued Operations' within the financial
statements for all periods presented.
The Company, through its subsidiary, ISP, is engaged principally in the
manufacture and sale of specialty chemicals. See Notes 11 and 12 for a
description of and financial information concerning the Company's industry
segments and foreign and domestic operations.
See Notes 14 and 16 for a discussion of a subsequent event and discontinued
operations.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
All subsidiaries are consolidated and intercompany transactions have been
eliminated.
Financial Statement Estimates
The preparation of financial statements requires management to make certain
estimates. Actual results could differ from those estimates. In the opinion of
management, the financial statements herein contain all adjustments necessary to
present fairly the financial position and the results of operations and cash
flows of the Company for the periods presented. All adjustments are of a normal
recurring nature. The Company has a policy to review the recoverability of
long-lived assets and identify and measure any potential impairments. The
Company does not anticipate any changes in management estimates that would have
a material impact on operations, liquidity or capital resources, subject to the
matters discussed in Note 13 (Commitments and Contingencies).
Short-term Investments
The Company carries its short-term investments at market value. For
securities classified as 'trading' (including short positions), unrealized gains
and losses are reflected in income. For securities classified as
'available-for-sale', unrealized gains (losses), net of income tax effect, are
included in a separate component of shareholder's equity (deficit), 'Cumulative
translation adjustment and other,' and amounted to ($.9), $1.8 and $5.0 million
as of December 31, 1994 and 1995 and September 29, 1996, respectively.
Investments classified as held-to-maturity securities are carried at amortized
cost in the Consolidated Balance Sheet.
F-8
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
'Other income, net' includes $6.2, $16.5, $9.3 and $13.8 million of net
realized and unrealized gains and losses on securities in 1994 and 1995 and the
first nine months of 1995 and 1996, respectively, and $10.9 million of net
realized gains in 1993. The determination of cost in computing realized gains
and losses is based on the specific identification method.
During the fourth quarter of 1995, the Company redesignated certain equity
securities held long (which are offsets against short positions in certain other
securities), with a fair market value of $18.1 million, as 'trading' and
recorded unrealized gains on such securities, through the date of redesignation,
in the amount of $2.1 million as 'Other income.'
As of December 31, 1994 and 1995 and September 29, 1996, the market value
of the Company's equity securities held long was $57.3, $132.2 and $96.4
million, respectively, and the Company had $13.1, $22 and $4.3 million,
respectively, of short positions in common stocks. As of December 31, 1994 and
1995 and September 29, 1996, the market value of the Company's held-to-maturity
securities was $0, $4.6 and $4.1 million, respectively. The market values
referred to above were based on quotations as reported by various stock
exchanges and major broker-dealers. With respect to its investments in
securities, the Company is exposed to the risk of market loss.
The Company considers its short-term investments in equity and debt
securities classified as 'trading' to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. The LIFO (last-in,
first-out) method is utilized to determine cost for a substantial portion of the
Company's domestic inventories. All other inventories are determined principally
based on the FIFO (first-in, first-out) method.
Property, Plant and Equipment
Depreciation is computed principally on the straight-line method based on
the estimated economic lives of the assets. Certain interest charges are
capitalized during the period of construction as part of the cost of property,
plant and equipment.
New Accounting Standards
In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
relating to accounting for impairment of long-lived assets, which is required to
be adopted in 1996. The Company does not anticipate that the implementation of
SFAS No. 121 will have a material effect on the Company's results of operations
or financial position.
Foreign Exchange Contracts
The Company enters into forward foreign exchange instruments with
off-balance-sheet risk in order to hedge a portion of both its borrowings
denominated in foreign currency and its firm or anticipated purchase commitments
related to the operations of foreign affiliates. Gains and losses on instruments
used to hedge firm purchase commitments are deferred, and amortization is
included in the measurement of the foreign currency transactions hedged. Gains
and losses on instruments used to hedge anticipated purchases are recognized
within 'Other income, net.'
Forward contract agreements require the Company and the counterparty to
exchange fixed amounts of U.S. dollars for fixed amounts of foreign currency on
specified dates. The market value of such contracts varies with changes in the
market exchange rates. The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the forward contract agreements.
However, the Company does not anticipate nonperformance by the counterparties.
The Company does not generally require collateral or other security to support
these financial instruments.
F-9
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
As of December 31, 1994 and 1995 and September 29, 1996, the equivalent
dollar fair value of outstanding forward foreign exchange contracts was $110.3,
$183.1 and $175.3 million, respectively, and the amount of deferred gains and
losses on such instruments was immaterial at December 31, 1994 and 1995 and was
a net gain of $2.3 million at September 29, 1996. All forward contracts are in
major currencies with highly liquid markets and mature within one year. The
Company uses quoted market prices obtained from major financial institutions to
determine the market value of its outstanding forward exchange contracts. The
U.S. dollar equivalent fair value of foreign exchange contracts outstanding as
of September 29, 1996 as a hedge of non-local currency loans was $28.6 million,
representing 100% of the Company's foreign currency exposure with respect to
such loans.
The Company continually monitors its risk from the effect of foreign
currency fluctuations on its operations and on the derivative products used to
hedge its risk. The Company utilizes real-time, on-line foreign exchange data
and news as well as evaluation of economic information provided by financial
institutions. Mark-to-market valuations are made on a regular basis. Hedging
strategies are approved by senior management before being implemented.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries, other than those located in
highly inflationary countries, are translated at year-end exchange rates. The
effects of these translation adjustments are reported in a separate component of
shareholder's equity (deficit), 'Cumulative translation adjustment and other,'
and amounted to $8.5, $14.1 and $10.1 million as of December 31, 1994 and 1995
and September 29, 1996, respectively. Income and expenses are translated at
average exchange rates prevailing during the year. Exchange gains and losses
arising from transactions denominated in a currency other than the functional
currency of the entity involved, and translation adjustments of subsidiaries in
countries with highly inflationary economies, are included in 'Other income,
net.'
Excess of Purchase Price Over the Adjusted Historical Cost of Predecessor
Company Shares
Shareholder's equity (deficit) reflects a reduction of $72.6 million which
arose from a management-led buyout in March 1989 of the predecessor company to
GAF (the 'Acquisition'), because certain members of the management group owned
shares of the predecessor company's common stock before the Acquisition and own
shares of GAF after the Acquisition. Accordingly, a step-up in asset values to
fair value as required by the purchase method of accounting (which was applied
to the Acquisition) does not apply to their shares.
Excess of Cost Over Net Assets of Businesses Acquired ('Goodwill')
Goodwill, which arose principally from the Acquisition, is amortized on the
straight-line method over a period of approximately 40 years. The Company
believes that the goodwill is recoverable. The primary financial indicator to
assess recoverability of goodwill is operating income before amortization of
goodwill. The assessment is based on an undiscounted analysis.
Debt Issuance Costs
Debt issuance costs are amortized to expense over the life of the related
debt.
Interest Rate Swaps
Gain (losses) on interest rate swaps are deferred and amortized as a
reduction (increase) of interest expense over the remaining life of the debt
issue with respect to which the swaps were entered.
Research and Development
Research and development costs are charged to continuing operations as
incurred and amounted to $21.2, $20.3, $21.9, $16.2 and $18.4 million for 1993,
1994 and 1995 and the first nine months of 1995 and 1996, respectively.
F-10
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Investment in Joint Venture
ISP has a 50% ownership in GAF-Huls Chemie GmbH ('GAF-Huls'), a joint
venture which operates a chemical manufacturing plant in Germany, which is
accounted for by the equity method. ISP's equity in the net assets of GAF-Huls
was $33.5, $41.2 and $38.5 million as of December 31, 1994 and 1995 and
September 29, 1996, respectively, and is included in 'Other assets.' Dividends
received by ISP from GAF-Huls totaled $5.4, $4.4, $.3, $.3 and $5.7 million for
1993, 1994 and 1995 and the first nine months of 1995 and 1996, respectively.
Environmental Liability
The Company, together with other companies, is a party to a variety of
proceedings and lawsuits involving environmental matters. The Company estimates
that its liability in respect of such environmental matters for its continuing
operations, and certain other environmental compliance expenses, as of September
29, 1996 is $17.4 million, before reduction for insurance recoveries reflected
on its balance sheet of $6.9 million. The Company's liability is reflected on an
undiscounted basis. See 'Business--Environmental Litigation' for further
discussion with respect to environmental liabilities and estimated insurance
recoveries.
NOTE 2. ACQUISITION
In February 1993, ISP acquired the MTM fine chemicals business. Such
acquisition was accounted for under the purchase method of accounting.
Accordingly, the purchase price was allocated to the estimated fair values of
the identifiable net assets acquired, and the excess was recorded as goodwill.
The results of such acquisition are included from the date of acquisition; the
effect was not material to consolidated operations.
NOTE 3. PROVISION FOR RESTRUCTURING
In the fourth quarter of 1993, ISP recorded a pre-tax provision of $13.8
million, primarily related to its cost reduction program announced in October
1993.
F-11
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. INCOME TAXES
Income tax (provision) benefit for continuing operations consists of the
following:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
-------------------------------- 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Federal:
Current.............................. $(29,555) $(36,055) $(48,955) $ (27,369) $ (40,473)
Deferred............................. 15,726 16,051 17,794 4,757 11,353
-------- -------- -------- ----------- -------------
Total Federal.......................... (13,829) (20,004) (31,161) (22,612) (29,120)
-------- -------- -------- ----------- -------------
Foreign--current....................... (2,984) (6,019) (6,432) (6,564) (5,121)
-------- -------- -------- ----------- -------------
State and local:
Current.............................. (1,268) (1,152) (2,149) (1,173) (1,393)
Deferred............................. 761 443 1,015 368 (13)
-------- -------- -------- ----------- -------------
Total state and local................ (507) (709) (1,134) (805) (1,406)
-------- -------- -------- ----------- -------------
Income tax provision................... $(17,320) $(26,732) $(38,727) $ (29,981) $ (35,647)
-------- -------- -------- ----------- -------------
-------- -------- -------- ----------- -------------
</TABLE>
The differences between the income tax provision computed by applying the
statutory Federal income tax rate to pre-tax income from continuing operations,
and the income tax provision reflected in the Consolidated Statements of Income,
are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
-------------------------------- 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Statutory provision.................... $(17,438) $(25,369) $(37,136) $ (28,422) $ (34,371)
Impact of:
Foreign operations................... 3,116 1,657 3,633 608 1,590
Nondeductible goodwill
amortization...................... (4,849) (4,690) (4,628) (3,473) (3,465)
Percentage depletion................. 1,868 1,684 1,824 1,453 1,219
Other, net........................... (17) (14) (2,420) (147) (620)
-------- -------- -------- ----------- -------------
Income tax provision................... $(17,320) $(26,732) $(38,727) $ (29,981) $ (35,647)
-------- -------- -------- ----------- -------------
-------- -------- -------- ----------- -------------
</TABLE>
F-12
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. INCOME TAXES--(CONTINUED)
The components of the net deferred tax liability are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 29,
-------------------- 1996
1994 1995 (UNAUDITED)
-------- -------- -------------
(THOUSANDS)
<S> <C> <C> <C>
Deferred tax liabilities related to:
Property, plant and equipment................................. $103,294 $ 90,854 $ 90,010
Other......................................................... 2,582 6,019 4,284
-------- -------- -------------
Total deferred tax liabilities.................................. 105,876 96,873 94,294
-------- -------- -------------
Deferred tax assets related to:
Deferred income............................................... (6,694) (19,912) (22,351)
Expenses not yet deducted for tax purposes.................... (24,480) (14,099) (20,982)
Foreign tax credits not yet utilized under the Tax Sharing
Agreement.................................................. (3,230) (3,326) (3,326)
Other......................................................... (4,660) (10,389) (8,779)
-------- -------- -------------
Total deferred tax assets....................................... (39,064) (47,726) (55,438)
-------- -------- -------------
Net deferred tax liability...................................... 66,812 49,147 38,856
Deferred tax assets reclassified to other current assets........ 6,143 6,596 6,596
-------- -------- -------------
Noncurrent deferred tax liability............................... $ 72,955 $ 55,743 $ 45,452
-------- -------- -------------
-------- -------- -------------
</TABLE>
The discussion contained in this Prospectus under the heading 'Tax Sharing
Agreement' is incorporated by reference herein.
In connection with Rhone-Poulenc Surfactants and Specialties, L.P. (the
'Surfactants Partnership'), GCC, an indirect subsidiary of GAF, has recorded a
deferred tax liability in the amount of $131.4 million, which is reflected as a
liability on the consolidated balance sheet of G-I Holdings. Payment of this
liability (subject to reduction to reflect utilization of the tax attributes of
GAF and its subsidiaries) is not expected earlier than 1999 under present
circumstances. In certain circumstances, GCC could be required to satisfy this
liability earlier than 1999. GAF, G-I Holdings and certain subsidiaries of GAF
have agreed to jointly and severally indemnify the Company against such tax
liability. Prior to the Spin Off Transactions, the Company was a member of the
same consolidated federal income tax group as GCC. Subject to such
indemnification, the Company would be severally liable for any tax liability
imposed in connection with the Surfactants Partnership should GAF, G-I Holdings
and such subsidiaries be unable to satisfy such liability. GAF has advised the
Company that, in the event the tax liability becomes payable, GAF believes that
it will have access to sufficient funds to satisfy this liability if so
required.
F-13
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. SALE OF ACCOUNTS RECEIVABLE
In June 1993, ISP sold its domestic trade accounts receivable, without
recourse, for a maximum of $25 million in cash to be made available to ISP based
on eligible domestic receivables outstanding from time to time. As of November
6, 1996, the agreement under which ISP sells its domestic trade accounts
receivable was extended for one year on substantially the same terms and
conditions, and the maximum purchase amount was increased to $29 million.
The excess of accounts receivable sold over the net proceeds received is
included in 'Accounts receivable, other'. The effective cost to the Company
varies with LIBOR or commercial paper rates and is included in 'Other income,
net'.
NOTE 6. INVENTORIES
At December 31, 1994 and 1995 and September 29, 1996, $49.4, $56.2 and
$45.1 million, respectively, of domestic inventories were valued using the LIFO
method. Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- SEPTEMBER 29, 1996
1994 1995 (UNAUDITED)
------------ ------------ ------------------
(THOUSANDS)
<S> <C> <C> <C>
Finished goods.............................................. $ 69,748 $ 71,431 $ 61,175
Work in process............................................. 21,082 20,540 23,851
Raw materials and supplies.................................. 19,900 18,634 17,564
------------ ------------ ------------------
Total....................................................... 110,730 110,605 102,590
Less LIFO reserve........................................... (1,943) (2,636) (4,236)
------------ ------------ ------------------
Inventories................................................. $ 108,787 $ 107,969 $ 98,354
------------ ------------ ------------------
------------ ------------ ------------------
</TABLE>
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- SEPTEMBER 29, 1996
1994 1995 (UNAUDITED)
------------ ------------ ------------------
(THOUSANDS)
<S> <C> <C> <C>
Land and land improvements................................ $ 69,109 $ 69,504 $ 70,286
Buildings and fixtures.................................... 78,808 80,880 81,632
Machinery and equipment................................... 422,795 438,579 471,826
Construction in progress.................................. 36,938 46,547 42,922
------------ ------------ ------------------
Total..................................................... 607,650 635,510 666,666
Less accumulated depreciation............................. (130,541) (159,960) (184,250)
------------ ------------ ------------------
Property, plant and equipment, net........................ $ 477,109 $ 475,550 $ 482,416
------------ ------------ ------------------
------------ ------------ ------------------
</TABLE>
F-14
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- SEPTEMBER 29, 1996
1994 1995 (UNAUDITED)
------------ ------------ ------------------
(THOUSANDS)
<S> <C> <C> <C>
9% ISP Senior Notes due 1999................................ $ 200,000 $ 200,000 $200,000
Borrowings under revolving credit facility.................. 45,000 40,800 --
Industrial revenue bond..................................... 1,830 -- --
Obligations on mortgaged property........................... 38,125 38,125 38,125
Obligations under capital leases (Note 13).................. 1,332 1,727 1,996
------------ ------------ ------------------
Total....................................................... 286,287 280,652 240,121
Less current maturities..................................... (890) (398) (361)
------------ ------------ ------------------
Long-term debt less current maturities...................... $ 285,397 $ 280,254 $239,760
------------ ------------ ------------------
------------ ------------ ------------------
</TABLE>
In connection with the issuance by ISP of $200 million of 9% Senior Notes
(the '9% Notes') due 1999, ISP entered into swaps with banks in an aggregate
notional principal amount of $200 million. In 1993, ISP terminated the swaps,
resulting in gains of $25.1 million, and entered into new swaps. The gains were
deferred and are being amortized as a reduction of interest expense over the
remaining life of the 9% Notes. As a result of the new swaps, the effective
interest cost to ISP of the 9% Notes varies at a fixed spread over LIBOR. Based
on the fair value of the swaps at December 31, 1994 and 1995 and September 29,
1996, ISP would have incurred losses of $22.1, $2.8 and $6.5 million,
respectively, representing the estimated amount that would be payable by ISP if
the swaps were terminated at such dates. The estimated fair value of the 9%
Notes as of December 31, 1994 and 1995 and September 29, 1996, was $192.6,
$214.6 and $206.7 million, respectively.
The Company may be considered to be at risk, to the extent of the costs of
replacing such swaps at current market rates, in the event of nonperformance by
counterparties. However, since the counterparties are major financial
institutions, the credit ratings of which are continually monitored by the
Company, the risk of such nonperformance is considered by the Company to be
remote.
In October 1994, ISP refinanced its $400 million revolving credit/letter of
credit facility and entered into a four-year $250 million revolving
credit/letter of credit facility and a $150 million renewable one-year revolving
credit facility. In connection with the refinancing of the bank facility, ISP
recorded an extraordinary charge of $1.2 million (after an income tax benefit of
$.7 million), representing the write-off of deferred financing fees related to
the previous bank credit agreement. On July 26, 1996, ISP refinanced its $250
million long-term revolving credit facility and $150 million one-year revolving
credit facility with a $400 million five-year revolving credit facility (the
'ISP Credit Agreement'). Borrowings under the ISP Credit Agreement bear interest
at a floating rate based on the banks' base rate, federal funds rate, Eurodollar
rate or a competitive bid rate (which may be based on LIBOR or money market
rates), at the option of ISP.
As of September 29, 1996, letters of credit aggregating $9.4 million were
outstanding under the ISP Credit Agreement. The ISP Credit Agreement permits ISP
to make loans to affiliates, and to make available letters of credit for the
benefit of affiliates, in an aggregate amount of up to $75 million. As of
September 29, 1996, $2.3 million of letters of credit for the benefit of
affiliates were outstanding.
Borrowings by ISP, including those under the ISP Credit Agreement, are
subject to the application of certain financial covenants contained in such
agreement and in the indentures relating to the Company's 9% Senior Notes due
2003 and 9 3/4% Senior Notes due 2002. As of September 29, 1996, ISP was in
compliance with such covenants, and the application of such covenants would not
have restricted the amounts available for borrowing under the ISP Credit
Agreement. The ISP Credit Agreement and the indenture relating to the 9% Notes
also limit the amount of cash dividends, purchases of treasury stock and other
restricted payments (as defined) by ISP. As
F-15
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. LONG-TERM DEBT--(CONTINUED)
of September 29, 1996, under the most restrictive of such limitations, ISP could
have paid dividends in the aggregate amount of $79.9 million, of which $66.4
million would have been available to ISP Holdings.
The ISP Credit Agreement and the indenture relating to the 9% Notes contain
additional affirmative and negative covenants, including restrictions on liens,
investments, transactions with affiliates, sale-leaseback transactions, and
mergers and transfers of all or substantially all of the assets of ISP or its
subsidiaries. The ISP Credit Agreement also provides for a default if there is a
change in control (as defined) of ISP.
Neither the ISP Credit Agreement nor the 9% Notes are secured by any assets
of ISP or its subsidiaries. The indenture governing the 9% Notes provides,
subject to certain exceptions, that if ISP issues any debt secured by a lien on
the stock of certain of its subsidiaries or upon any principal property, then
such notes must be equally and ratably secured.
The Company believes that the fair value of its non-public variable rate
indebtedness approximates the book value of such indebtedness because the
interest rates on such indebtedness are at floating short-term rates. The ISP
Credit Agreement also provides for adjustments to the interest rate if there is
a change in the credit rating of ISP. With respect to the Company's publicly
traded debt securities, the Company has obtained estimates of fair values from
an independent source believed to be reliable.
The aggregate maturities of long-term debt for the Company's continuing
operations as of September 29, 1996 for the next five years are as follows:
TWELVE MONTHS
ENDED SEPTEMBER 30, (THOUSANDS)
- --------------------------------------------------------------- -----------
1997........................................................... $ 361
1998........................................................... 520
1999........................................................... 238,408
2000........................................................... 190
2001........................................................... 150
In the above table, for the twelve months ended September 29, 1999,
maturities include the $200 million of 9% Notes and a $38.1 million obligation
on a mortgaged property.
At September 29, 1996, the Company's foreign subsidiaries had total
available short-term lines of credit aggregating $38.1 million, of which $16.3
million were unused. The weighted average interest rate on the Company's
short-term borrowings as of December 31, 1994 and 1995 and September 29, 1996
was 6.1%, 5.8% and 5.2%, respectively.
See Note 16 for information regarding subsequent events relating to
indebtedness of the Company.
F-16
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. BENEFIT PLANS
Eligible, full-time employees of the Company are covered by various benefit
plans, as described below.
Defined Contribution Plan
The Company provides a defined contribution plan for eligible employees.
The Company contributes up to 7% of participants' compensation (of which, for
ISP employees, up to 4% of participants' compensation, at the participants'
option, is contributed in the form of ISP's common stock at a $.50 per share
discount from the market price on the date of contribution) and also contributes
fixed amounts, ranging from $50 to $750 per year depending on age, to the
accounts of participants who are not covered by a Company-provided
postretirement medical benefit plan. The aggregate contributions by the Company
related to continuing operations were $5.2, $6.1, $6.3, $4.7 and $4.8 million
for 1993, 1994 and 1995 and the first nine months of 1995 and 1996,
respectively.
Defined Benefit Plans
The Company provides a noncontributory defined benefit retirement plan for
certain hourly employees (the 'Hourly Retirement Plan'). Benefits under this
plan are based on stated amounts for each year of service. The Company's funding
policy is consistent with the minimum funding requirements of ERISA.
The Company's net periodic pension cost related to continuing operations
for the Hourly Retirement Plan included the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
------ ------ ------
(THOUSANDS)
<S> <C> <C> <C>
Service cost............................................................... $ 395 $ 363 $ 287
Interest cost.............................................................. 1,134 1,253 1,349
Actual income on plan assets............................................... (985) (924) (976)
Net deferral and amortization of unrecognized prior service cost and
actuarial losses......................................................... 467 343 275
------ ------ ------
Net periodic pension cost.................................................. $1,011 $1,035 $ 935
------ ------ ------
------ ------ ------
</TABLE>
Net periodic pension cost related to continuing operations for the Hourly
Retirement Plan was $.7 and $.1 million, respectively, for the first nine months
of 1995 and 1996.
F-17
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. BENEFIT PLANS--(CONTINUED)
The following table sets forth the funded status of the Hourly Retirement
Plan for continuing operations:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
-------- --------
(THOUSANDS)
<S> <C> <C>
Accumulated benefit obligation:
Vested......................................................................... $ 13,460 $ 16,919
Nonvested...................................................................... 2,360 2,273
-------- --------
Total accumulated benefit obligation............................................. $ 15,820 $ 19,192
-------- --------
-------- --------
Projected benefit obligation..................................................... $ 15,820 $ 19,192
Fair value of plan assets, primarily listed stocks and U.S. Government
securities..................................................................... (10,766) (15,314)
-------- --------
Projected benefit obligation in excess of plan assets............................ 5,054 3,878
Unrecognized prior service cost.................................................. (2,075) (1,956)
Unrecognized net loss............................................................ (1,180) (796)
-------- --------
Unfunded accrued pension cost.................................................... $ 1,799 $ 1,126
-------- --------
-------- --------
</TABLE>
At December 31, 1995, the difference between the 'Projected benefit
obligation in excess of plan assets' and the 'Unfunded accrued pension cost,' in
the amount of $2,752,000, was recorded by the Company as a liability, offset by
an intangible asset in the amount of $1,956,000, a reduction of shareholder's
equity in the amount of $655,000 and a reduction of minority interest in
subsidiary in the amount of $141,000. The foregoing amounts will be amortized to
expense over a period of approximately 15 years, as the Company continues to
fund the benefits under the Hourly Retirement Plan.
In determining the projected benefit obligation, the weighted average
assumed discount rate was 9% and 7.5% for 1994 and 1995, respectively. The
expected long-term rate of return on assets, used in determining net periodic
pension cost, was 9% for 1994 and 1995.
The Company also provides a nonqualified defined benefit retirement plan
for certain key employees. Expense accrued for this plan and charged to
continuing operations was $.8, $1.2, $1.4, $1.1 and $.6 million for 1993, 1994
and 1995 and the first nine months of 1995 and 1996, respectively.
Postretirement Medical and Life Insurance
The Company provides certain medical and life insurance benefits for all
retirees who were formerly hourly employees and for certain retirees who were
formerly salaried employees. Certain hourly employees may become eligible for
benefits if they reach retirement age while working for the Company. The Company
accrues the estimated cost of such retiree benefits during covered employees'
active service periods.
During 1992, the postretirement medical and life insurance plans for
salaried employees were terminated, with certain exceptions for salaried
employees then over age 55 with 10 years of service. Retirees as of December 31,
1992 who were formerly salaried employees maintain life insurance coverage and
receive a Company subsidy of up to $800 per year towards medical coverage, with
certain exceptions. Subsequently, the Company negotiated the termination of
postretirement medical and life insurance plans for certain hourly employees,
with exceptions for hourly employees then over age 50 with 15 or more years of
service.
F-18
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. BENEFIT PLANS--(CONTINUED)
The following table shows the components of the accrued postretirement
health care cost obligation for continuing operations as of December 31, 1994
and 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
------- -------
(THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees, dependents and beneficiaries eligible for benefits.................... $ 8,038 $ 9,053
Active employees fully eligible for benefits.................................... 1,967 2,042
Active employees not fully eligible for benefits................................ 107 121
------- -------
Total accumulated postretirement benefit obligation............................... 10,112 11,216
Fair value of plan assets......................................................... -- --
Unrecognized prior service cost and unrecognized net gain (loss).................. 1,027 (241)
------- -------
Accrued postretirement benefit obligation......................................... $11,139 $10,975
------- -------
------- -------
</TABLE>
The net periodic postretirement benefit cost for continuing operations
included the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1993 1994 1995
------ ---- -----
(THOUSANDS)
<S> <C> <C> <C>
Service cost.................................................................. $ 75 $ 39 $ 3
Interest cost................................................................. 1,012 845 884
Amortization of unrecognized prior service cost and net gain from earlier
periods..................................................................... -- (25) (145)
------ ---- -----
Net periodic postretirement benefit cost...................................... $1,087 $859 $ 742
------ ---- -----
------ ---- -----
</TABLE>
Net periodic postretirement benefit cost for continuing operations was $.6
million for each of the first nine months of 1995 and 1996.
For purposes of calculating the accumulated postretirement benefit
obligation, the following assumptions were made. Retirees as of December 31,
1992 who were formerly salaried employees (with certain exceptions) were assumed
to receive a Company subsidy of $800 per year. With respect to retirees who were
formerly hourly employees, most such retirees are subject to a $5,000 per person
lifetime maximum benefit. Subject to such lifetime maximum, a 14% and 8% annual
rate of increase in the Company's per capita cost of providing postretirement
medical benefits was assumed for 1996 for such retirees under and over age 65,
respectively. To the extent that the lifetime maximum benefits have not been
reached, the foregoing rates were assumed to decrease gradually to 7% and 6%,
respectively, by the year 2003 and remain at that level thereafter. The weighted
average discount rate used in determining the accumulated postretirement benefit
obligation was 9% and 7.5% for 1994 and 1995, respectively.
The health care cost trend rate assumption has an effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend rates by
one percentage point in each year would increase the accumulated postretirement
benefit obligation for continuing operations as of December 31, 1995 by $850,000
and the aggregate of the service and interest cost components of the net
periodic postretirement benefit cost for continuing operations for the year 1995
by $113,000.
F-19
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. STOCK OPTION PLAN
ISP's 1991 Incentive Plan for Key Employees and Directors, as amended (the
'Plan'), authorizes the grant of options to purchase a maximum of 5,000,000
shares of ISP's common stock. In December 1995, ISP's Board of Directors
approved an amendment to the Plan, which was approved by ISP's stockholders in
1996, to permit the Compensation Committee of the Board of Directors to
determine the exercise price and vesting schedule of options granted under the
Plan. In December 1995, ISP granted options to certain employees to purchase
215,500 shares of ISP's common stock at an exercise price of $5.875 per share.
The difference of $5 per share between the exercise price and the fair market
value of such shares on the date of grant is being recognized as compensation
expense over the vesting period of 2 1/2 years. All other ISP employee options
under the Plan have an exercise price equal to the fair market value of such
shares on the date of grant and become exercisable at a rate of 20% per year on
each of the first five anniversaries of the date of grant. Special vesting rules
apply to options granted to non-employee directors.
In 1993, ISP extended an offer to holders of outstanding stock options with
exercise prices ranging from $7.25 to $14.00 to exchange their existing options
for a lesser number of new options with an exercise price of $6.75.
The following is a summary of transactions pertaining to the Plan:
<TABLE>
<CAPTION>
1994
1993 ------------------ 1995
----------- (NUMBER OF SHARES) ----------
<S> <C> <C> <C>
Outstanding January 1.................................. 1,883,649 1,228,964 2,199,716
Granted................................................ 825,509 1,321,020 1,355,510
Exercised.............................................. -- -- (28,805)
Exchanged.............................................. (1,177,518) -- --
Terminated............................................. (302,676) (350,268) (248,982)
----------- ------------------ ----------
Outstanding December 31................................ 1,228,964 2,199,716 3,277,439
----------- ------------------ ----------
----------- ------------------ ----------
At December 31:
Exercisable.......................................... 151,118 332,763 710,750
Available for grant.................................. 1,771,036 800,284 1,722,561
Option Price Range Per Share:
Outstanding.......................................... $ 6.75- $ 6.125- $ 5.875-
$ 14.00 $ 14.00 $ 14.00
Exercised............................................ -- -- $ 6.75-
-- -- $ 7.25
</TABLE>
F-20
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. BUSINESS SEGMENT INFORMATION
The following data present business segment information for the Company's
continuing operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- -------- --------
(MILLIONS)
<S> <C> <C> <C>
Net sales:
Specialty Chemicals................................................ $ 434.5 $ 482.4 $ 556.9
Mineral Products(1)................................................ 81.3 81.1 86.1
Other.............................................................. 32.5 36.5 46.0
-------- -------- --------
Net sales.......................................................... $ 548.3 $ 600.0 $ 689.0
-------- -------- --------
-------- -------- --------
Operating income:
Specialty Chemicals................................................ $ 59.8 $ 79.9 $ 105.5
Mineral Products................................................... 16.9 14.6 16.3
Other.............................................................. 2.2 4.7 5.3
Provision for restructuring(2)..................................... (13.8) -- --
-------- -------- --------
Operating income................................................... $ 65.1 $ 99.2 $ 127.1
-------- -------- --------
-------- -------- --------
Identifiable assets:
Specialty Chemicals................................................ $ 972.6 $ 986.3 $ 980.0
Mineral Products................................................... 161.5 161.2 157.9
Other.............................................................. 19.5 20.6 25.6
General Corporate.................................................. 89.7 83.2 149.4
Net current assets of discontinued operations...................... 65.7 106.2 147.5
-------- -------- --------
Identifiable assets................................................ $1,309.0 $1,357.5 $1,460.4
-------- -------- --------
-------- -------- --------
Capital expenditures and acquisitions:
Specialty Chemicals................................................ $ 54.5 $ 22.5 $ 31.1
Mineral Products................................................... 8.3 8.3 6.0
Other.............................................................. .1 .3 1.8
-------- -------- --------
Total capital expenditures and acquisitions........................ $ 62.9 $ 31.1 $ 38.9
-------- -------- --------
-------- -------- --------
Depreciation:
Specialty Chemicals................................................ $ 22.1 $ 25.2 $ 27.9
Mineral Products................................................... 6.2 6.8 7.2
Other.............................................................. .4 .8 .9
-------- -------- --------
Total depreciation................................................. $ 28.7 $ 32.8 $ 36.0
-------- -------- --------
-------- -------- --------
</TABLE>
- ------------------
(1) Includes sales to BMCA of $43.5, $42.5 and $45.7 million for 1993, 1994 and
1995, respectively, and sales to USI of $.1 million in 1995.
(2) On a segment basis, the provision for restructuring (see Note 3) relates to
Specialty Chemicals ($11.8 million), Mineral Products ($.3 million), and
Other ($1.7 million).
ISP manufactures more than 325 specialty chemicals having numerous
applications in consumer and industrial products encompassing such worldwide
markets as pharmaceuticals, hair and skin care, plastics, agricultural, coatings
and adhesives. ISP's mineral products business manufactures ceramic-coated
colored roofing granules which are sold primarily to the North American roofing
industry for use in the manufacture of asphalt roofing shingles. Over 50% of
ISP's sales of mineral products are to BMCA. ISP also manufactures filter
products and advanced materials.
F-21
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. GEOGRAPHIC INFORMATION
Results set forth below for foreign operations relating to the Company's
continuing operations represent sales and operating income of foreign-based
subsidiaries.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- -------- --------
(MILLIONS)
<S> <C> <C> <C>
Net sales:
Domestic operations(1)............................................. $ 286.8 $ 306.4 $ 345.2
Europe(2).......................................................... 167.7 187.7 218.2
Asia-Pacific....................................................... 69.3 76.6 92.1
Other foreign operations........................................... 24.5 29.3 33.5
-------- -------- --------
Net sales.......................................................... $ 548.3 $ 600.0 $ 689.0
-------- -------- --------
-------- -------- --------
Operating income:
Domestic operations................................................ $ 26.9 $ 41.3 $ 57.9
Europe............................................................. 35.7 37.5 49.7
Asia-Pacific....................................................... 13.2 16.2 17.0
Other foreign operations........................................... 3.1 4.2 2.5
Provision for restructuring(3)..................................... (13.8) -- --
-------- -------- --------
Operating income................................................... 65.1 99.2 127.1
Equity in earnings of joint venture.................................. 2.1 2.0 5.4
Interest expense and other, net...................................... (17.4) (28.7) (26.4)
-------- -------- --------
Income from continuing operations before income taxes and
extraordinary item................................................. $ 49.8 $ 72.5 $ 106.1
-------- -------- --------
-------- -------- --------
Identifiable assets:
Domestic operations................................................ $1,001.5 $1,001.4 $ 984.5
Europe(4).......................................................... 118.5 128.9 133.1
Asia-Pacific....................................................... 24.9 28.5 32.2
Other foreign operations........................................... 8.7 9.3 13.7
General Corporate.................................................. 89.7 83.2 149.4
Net current assets of discontinued operations...................... 65.7 106.2 147.5
-------- -------- --------
Identifiable assets................................................ $1,309.0 $1,357.5 $1,460.4
-------- -------- --------
-------- -------- --------
</TABLE>
- ------------------
(1) Net sales--domestic operations excludes sales by the Company's domestic
subsidiaries to foreign-based subsidiaries of $113.6, $135.1 and $140.9
million for 1993, 1994 and 1995, respectively.
(2) Net sales--Europe excludes sales by the Company's European subsidiaries to
domestic and other foreign-based subsidiaries of $7.2, $12.8 and $19.9
million for 1993, 1994 and 1995, respectively.
(3) On a geographic basis, the provision for restructuring (see Note 3) relates
to domestic operations ($7.6 million), Europe ($5.7 million), Asia-Pacific
($.4 million), and other foreign operations ($.1 million).
(4) Identifiable assets--Europe includes ISP's 50% ownership of GAF-Huls.
More than 60% of the Company's international sales in 1995 were in
countries in Western Europe and Japan which are subject to currency exchange
rate fluctuation risks. See Note 1 for a discussion of the Company's policy to
manage these risks. Other countries in which the Company has sales are subject
to additional risks, including high rates of inflation, exchange controls,
government expropriation and general instability.
F-22
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. COMMITMENTS AND CONTINGENCIES
ISP Holdings is essentially a holding company without independent
businesses or operations and, as such, is dependent upon the cash flow of ISP in
order to satisfy its obligations. Such obligations include $325 million
principal amount of Senior Notes due 2003, and $199.9 million principal amount
of Senior Notes due 2002. See Note 16 to Consolidated Financial Statements for a
discussion of a subsequent event related to the debt obligations of ISP
Holdings. ISP Holdings expects to satisfy such obligations from, among other
things, refinancings of debt, dividends and loans from ISP, as to which there
are restrictions under the ISP Credit Agreement and the Indenture relating to
the ISP 9% Notes (See Note 8), payments pursuant to the Tax Sharing Agreement
between ISP Holdings and ISP and debt financings.
The discussion as to legal matters involving the Company contained in
'Business--Environmental Litigation' is incorporated herein by reference.
GAF and G-I Holdings have established reserves for asbestos bodily injury
claims, as of September 29, 1996, in the amount of $357.8 million (before
estimated present value of recoveries from products liability insurance policies
of $211 million and related deferred tax benefits of $51.4 million). GAF and G-I
Holdings have advised ISP Holdings that certain components of the
asbestos-related liability and the related insurance recoveries have been
reflected on a discounted basis in their financial statements, and that the
aggregate undiscounted liability as of September 29, 1996, before estimated
recoveries from products liability insurance policies, was $398.1 million. GAF
and G-I Holdings have also advised ISP Holdings that they believe that their
reserves adequately reflect their asbestos-related liabilities. GAF's and G-I
Holdings' estimate of liability for asbestos claims is based on a pending
settlement of future asbestos bodily injury claims (the 'Settlement') becoming
effective and on assumptions which relate, among other things, to the number of
new cases filed, the cost of resolving (either by settlement or litigation or
through the mechanism established by the Settlement) pending and future claims,
the realization of related tax benefits, the favorable resolution of pending
litigation against certain insurance companies and the amount of recoveries from
various insurance companies.
Neither ISP, ISP Holdings nor the assets or operations of ISP, which was
operated as a division of a corporate predecessor of GAF prior to July 1986,
have been employed in the manufacture or sale of asbestos products. ISP Holdings
believes that it and ISP should have no legal responsibility for damages in
connection with asbestos-related claims.
Leases for certain property, plant and equipment at two of ISP's mineral
products plants are accounted for as capital leases and are included in
'Property, plant and equipment, net' at December 31, 1994 and 1995 and at
September 29, 1996 in the amount of $1.3, $2.1 and $1.9 million, respectively.
The Company also has operating leases for transportation, production and data
processing equipment and for various buildings. Rental expense on operations
leases for continuing operations was $7, $7.4 and $8.2 million for 1993, 1994
and 1995, respectively. Future minimum lease payments for properties which were
held under long-term noncancelable leases as of December 31, 1995 were as
follows:
CAPITAL OPERATING
LEASES LEASES
------- ---------
(THOUSANDS)
1996................................................ $ 535 $ 2,758
1997................................................ 535 1,839
1998................................................ 494 1,055
1999................................................ 200 573
2000................................................ 146 276
Later years......................................... 194 247
------- --------
Total minimum payments.............................. 2,104 $ 6,748
--------
--------
Less interest included above........................ (377)
-------
Present value of net minimum lease payments......... $ 1,727
-------
-------
F-23
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
ISP intends to acquire or develop a European manufacturing facility to meet
the needs of ISP's European business. While the originally anticipated
commencement date of the European project has been deferred because ISP has been
able to implement cost efficient capacity expansions at its existing
manufacturing facilities, based upon its current analysis of additional
opportunities for expansion of existing capacity, end-use demand, and other
relevant factors, ISP intends to proceed with the project by the end of 1997.
Costs capitalized to date related to this project are included in 'Construction
in progress.' ISP anticipates utilizing internally generated funds, existing
credit facilities and/or independent financing to fund the cost of the project.
ISP has received conditional site designation from the New Jersey Hazardous
Waste Facilities Siting Commission for the construction of a hazardous waste
treatment, storage and disposal facility at its Linden, New Jersey property,
which designation has been appealed to the Courts by the City of Linden. ISP
estimates that the cost of constructing the facility will be approximately $100
million and, if approved, the facility is anticipated to be in operation three
years after commencement of construction. ISP anticipates utilizing internally
generated cash and/or seeking project or other independent financing therefor.
Accordingly, ISP would not expect such facility to impact materially its
liquidity or capital resources.
NOTE 14. DISCONTINUED OPERATIONS
On August 1, 1996, the Company completed the sale of WAXQ, a commercial
radio station operated by GAF Broadcasting Company, Inc. ('GAF Broadcasting'), a
wholly-owned subsidiary of the Company, for a purchase price of $90 million. The
gain on disposal of $43.6 million, after income taxes of $30.6 million, was
recorded in the third quarter of 1996. Accordingly, GAF Broadcasting is reported
as a discontinued operation.
As a result of the spin-off transactions discussed in Note 16, G-I Holdings
and its remaining assets, principally the building materials business,
consisting of BMCA and USI, and the assets and liabilities of GCC, as well as
GAF Broadcasting, are reflected as discontinued operations in the Consolidated
Financial Statements. Summary operating results of such discontinued operations
are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
YEAR ENDED DECEMBER 31, OCTOBER 1, SEPTEMBER 29,
-------------------------------- 1995 1996
1993 1994 1995 (UNAUDITED) (UNAUDITED)
-------- -------- -------- ----------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales............................................ $564,234 $598,666 $695,259 $ 513,967 $ 652,659
Income (loss) before income taxes and
extraordinary item............................. (15,649) (7,430) (39,642) (23,826) (25,414)
Income tax (provision) benefit................... 6,234 (435) 17,401 7,988 7,992
Extraordinary item, net of income tax benefit of
$5,016......................................... -- -- -- -- (8,186)
Net income (loss)................................ (9,415) (7,865) (22,241) (15,838) (25,608)
</TABLE>
F-24
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14. DISCONTINUED OPERATIONS--(CONTINUED)
<TABLE>
<CAPTION>
SEPT. 29, 1996
(UNAUDITED)
--------------
(THOUSANDS)
<S> <C>
Assets
Current assets........................................... $ 465,772
Investment in limited partnership........................ 450,000
Other noncurrent assets.................................. 574,885
--------------
Total assets.......................................... $1,490,657
--------------
--------------
Liabilities
Current liabilities...................................... $ 210,793
Long-term debt(1)........................................ 1,322,778
Other noncurrent liabilities............................. 472,378
--------------
Total liabilities..................................... $2,005,949
--------------
--------------
</TABLE>
- ------------------
(1) See Note 16 for a subsequent event related to the long-term debt of G-I
Holdings.
NOTE 15. RELATED PARTY TRANSACTIONS
BMCA, an affiliate of the Company, purchases colored roofing granule
requirements from ISP under a requirements contract which was renewed for 1996
and is subject to annual renewal unless terminated by ISP or BMCA. Such
purchases totaled $43.5, $42.5, $45.7, $35.9 and $35.7 million for 1993, 1994,
1995 and the first nine months of 1995 and 1996, respectively. In addition, in
December 1995, USI commenced purchasing substantially all of its requirements
for colored roofing granules from ISP (except for the requirements of its
Stockton, California and Corvallis, Oregon plants) pursuant to a requirements
contract which expires December 31, 1997. Such purchases totaled $.1 million for
1995 and $3.3 million for the first nine months of 1996. The receivable from
BMCA for sales of mineral products was $2.6, $2.7 and $5.9 million at December
31, 1994 and 1995 and September 29, 1996, respectively, and the receivable from
USI for sales of mineral products was $.1 and $2.1 million at December 31, 1995
and September 29, 1996, respectively.
Pursuant to a Management Agreement, which expires at the end of 1996, ISP
provides certain general management, administrative, and facilities services to
certain of its affiliates. Charges by ISP for providing such services aggregated
$4.8, $4.4, $4.5, $3.4 and $3.7 million for 1993, 1994 and 1995, and the first
nine months of 1995 and 1996 respectively, and are reflected as reductions of
'Selling, general and administrative' expense. In addition to the management
services charge, BMCA paid approximately $.7 million to ISP in each of 1993,
1994 and 1995, and $.5 million for the first nine months of 1995 and 1996,
primarily for telecommunications and information services, and G-I Holdings and
BMCA paid an aggregate of approximately $.3 and $.2 million in 1994 and 1995,
respectively, to ISP for certain legal services, which in each case were not
encompassed within the Management Agreement.
ISP and its subsidiaries also borrow from G-I Holdings and its subsidiaries
at the same rates available to ISP under the ISP Credit Agreement. Such
borrowings outstanding at December 31, 1994 and 1995 and September 29, 1996
comprised $41.3, $50.6 and $17.8 million, respectively, classified as current,
and $91.7, $67.2 and $81.0 million, respectively, classified as long term.
Certain executive officers of ISP were granted stock appreciation rights in
1993 and 1994 relating to GAF's common stock. Compensation expense in connection
with such stock appreciation rights is reflected in G-I Holdings' operating
expense and was immaterial for 1995, 1994 and 1993.
F-25
<PAGE>
ISP HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16. SUBSEQUENT EVENT (UNAUDITED)
On October 18, 1996, ISP Holdings concluded a cash tender offer and consent
solicitation for G-I Holdings' outstanding Senior Discount Notes. Pursuant to
the tender offer, $428.5 million aggregate principal amount of G-I Holdings'
Senior Discount Notes were purchased by ISP Holdings and $133 million aggregate
principal amount of such Discount Notes were subsequently repurchased by G-I
Holdings from ISP Holdings. ISP Holdings also concluded an offer to exchange its
new Senior Notes due February 15, 2002 for G-I Holdings' Senior Notes. Pursuant
to the exchange offer, $199.9 million of the G-I Holdings' Senior Notes were
acquired by ISP Holdings.
Furthermore, subject to certain conditions, GAF intends to effect a series
of transactions involving its subsidiaries that will result in the capital stock
of ISP Holdings (whose principal asset will then be approximately 83% of the
issued and outstanding common stock of ISP) being distributed to the
stockholders of GAF. As a result of such distribution, ISP Holdings and ISP will
no longer be direct or indirect subsidiaries of GAF, and the other assets of
GAF, principally the building materials business, consisting of BMCA and USI,
will remain assets of G-I Holdings. G-I Holdings will remain a wholly-owned
subsidiary of ISP Holdings until such transactions are consummated. Upon
consummation of such transactions, all G-I Holdings' Senior Discount Notes and
G-I Holdings' Senior Notes then held by ISP Holdings will be contributed to G-I
Holdings and be cancelled.
F-26
<PAGE>
ISP HOLDINGS INC.
SUPPLEMENTARY DATA (UNAUDITED)
QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1994 BY QUARTER 1995 BY QUARTER
---------------------------------- ---------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
------ ------ ------- ------ ------ ------ ------ ------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales..................................... $147.5 $155.8 $ 149.2 $147.5 $179.9 $182.6 $167.8 $158.7
Cost of products sold......................... 90.3 93.2 92.5 91.7 113.2 109.2 99.9 92.4
------ ------ ------- ------ ------ ------ ------ ------
Gross profit.................................. $ 57.2 $ 62.6 $ 56.7 $ 55.8 $ 66.7 $ 73.4 $ 67.9 $ 66.3
------ ------ ------- ------ ------ ------ ------ ------
------ ------ ------- ------ ------ ------ ------ ------
Operating income.............................. $ 24.8 $ 29.7 $ 22.8 $ 21.9 $ 31.2 $ 36.2 $ 31.8 $ 27.9
------ ------ ------- ------ ------ ------ ------ ------
------ ------ ------- ------ ------ ------ ------ ------
Income from continuing operations before
income taxes and extraordinary item......... $ 16.5 $ 23.6 $ 22.7 $ 9.7 $ 24.1 $ 29.6 $ 27.5 $ 24.9
Income taxes.................................. (6.2) (8.8) (8.4) (3.4) (9.0) (11.1) (9.9) (8.7)
Minority interest in income of subsidiary..... (2.0) (2.9) (2.5) (1.2) (2.9) (3.4) (3.2) (2.8)
------ ------ ------- ------ ------ ------ ------ ------
Income from continuing operations before
extraordinary item.......................... 8.3 11.9 11.8 5.1 12.2 15.1 14.4 13.4
Income (loss) from discontinued operations,
net of income taxes......................... (6.6) 11.3 (2.6) (10.0) (9.4) (3.8) (2.6) (6.5)
------ ------ ------- ------ ------ ------ ------ ------
Income (loss) before extraordinary item....... 1.7 23.2 9.2 (4.9) 2.8 11.3 11.8 6.9
Extraordinary item, net of related income tax
benefit..................................... -- -- (1.2) -- -- -- -- --
------ ------ ------- ------ ------ ------ ------ ------
Net income (loss)............................. $ 1.7 $ 23.2 $ 8.0 $ (4.9) $ 2.8 $ 11.3 $ 11.8 $ 6.9
------ ------ ------- ------ ------ ------ ------ ------
------ ------ ------- ------ ------ ------ ------ ------
</TABLE>
F-27
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFERS COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY ISP HOLDINGS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NOTES IN ANY JURISDICTION WHERE,
OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PAGE
----
Summary........................................ 1
Risk Factors................................... 15
Capitalization................................. 20
Selected Financial Data........................ 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 23
The Spin Off Transactions...................... 28
The ISP Holdings Transactions.................. 29
Business....................................... 30
Management..................................... 39
Executive Compensation......................... 43
Security Ownership of Certain Beneficial Owners
and Management............................... 46
Tax Sharing Agreement.......................... 47
Certain Relationships.......................... 48
The Exchange Offers............................ 49
Description of the New Notes................... 55
Certain Federal Income Tax
Considerations............................... 78
Plan of Distribution........................... 80
Legal Matters.................................. 80
Experts........................................ 81
Available Information.......................... 81
Index to Financial Statements.................. F-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$325,000,000
SERIES B 9% SENIOR NOTES
DUE 2003
AND
$199,871,000
SERIES B 9 3/4% SENIOR NOTES
DUE 2002
ISP HOLDINGS INC.
------------------------
PROSPECTUS
------------------------
, 199
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ISP Holdings Inc. is a Delaware corporation. Subsection (b)(7) of Section
102 of the Delaware General Corporation Law (the 'DGCL'), enables a corporation
in its original certificate of incorporation or an amendment thereto to
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit. Article Seventh of ISP Holdings' Certificate of Incorporation has
eliminated the personal liability of directors to the fullest extent permitted
by Subsection (b)(7) of Section 102 of the DGCL.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding provided that such
director or officer acted in good faith in a manner reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action or proceeding, provided further that such director or
officer has no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such director or officer is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification and advancement of expenses provided for, by, or granted
pursuant to, Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and empowers the corporation to
purchase and maintain insurance on behalf of any person who is or was a director
or officer of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145.
Article VIII of the Company's By-Laws states that the corporation shall
indemnify, any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action or suit by reason of the fact
that he is or was a director, officer or employee of the corporation, or is or
was serving at the request of
II-1
<PAGE>
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.--(CONTINUED)
the corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise against judgments, fines
and amounts paid in settlement actually incurred by him in connection with such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<S> <C>
*3.1 -- Certificate of Incorporation of ISP Holdings.
*3.2 -- By-laws of ISP Holdings.
*4.1 -- 9% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of New York,
as trustee.
*4.2 -- 9 3/4% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of New
York, as trustee (including the Registration Rights Agreement of ISP Holdings attached thereto).
*4.3 -- Form of Notes (included in Exhibits 4.1 and 4.2).
*4.4 -- Registration Rights Agreement, dated October 18, 1996, between ISP Holdings and Bear, Stearns &
Co. Inc.
**5 -- Opinion of Weil, Gotshal & Manges LLP re: legality.
**8 -- Opinion of Weil, Gotshal & Manges LLP re: tax matters.
10.1 -- Management Agreement, dated as of March 3, 1992 ('Management Agreement'), among GAF, G-I
Holdings, G Industries, ISP, GAF Building Materials Corporation and GAF Broadcasting
(incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of G-I
Holdings (Registration No. 33-72220)).
10.2 -- Amendment No. 1, dated as of January 1, 1994, to the Management Agreement (incorporated by
reference to Exhibit 10.10 to G-I Holdings' Form 10-K for the year ended December 31, 1993).
10.3 -- Amendment No. 2, dated as of May 31, 1994, to the Management Agreement (incorporated by
reference to Exhibit 10.1 to G-I Holdings' Form 10-Q for the quarter ended July 3, 1994).
10.4 -- Amendment No. 3, dated as of December 31, 1994, to the Management Agreement (incorporated by
reference to Exhibit 10.4 to ISP's Form 10-K for the year ended December 31, 1994).
10.5 -- Amendment No. 4, dated as of December 31, 1995, to the Management Agreement (incorporated by
reference to Exhibit 10.6 to the Registration Statement on Form S-4 of G-I Holdings
(Registration No. 333-2436)).
*10.6 -- Amendment No. 5, dated as of October 18, 1996 to the Management Agreement.
*10.7 -- Indemnification Agreement, dated as of October 18, 1996 among GAF, G-I Holdings, ISP Holdings, G
Industries and GCC.
**10.8 -- Tax Sharing Agreement, dated as of December , 1996, between ISP Holdings and ISP.
10.9 -- Non-Qualified Retirement Plan Letter Agreement (incorporated by reference to Exhibit 10.11 to
ISP's Registration Statement on Form S-1, Registration No. 33-40337).
10.10 -- ISP Amended and Restated 1991 Incentive Plan for Key Employees (incorporated by reference to
Exhibit 99 to ISP's Registration Statement on Form S-8, No. 33-92518).
10.11 -- Agreement, dated July 30, 1993, between ISP and Carl R. Eckardt (incorporated by reference to
Exhibit 10.16 to the Discount Notes Registration Statement).
10.12 -- Stock Appreciation Rights Agreement, dated January 20, 1994, between GAF and James P. Rogers
(incorporated by reference to Exhibit 10.20 to G-I Holdings' Form 10-K for the year ended
December 31, 1993).
</TABLE>
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.--(CONTINUED)
<TABLE>
<S> <C>
10.13 -- Indenture, dated as of March 1, 1992, relating to ISP's 9% Senior Notes due March 1, 1999
(incorporated by reference to Exhibit 4 to ISP's Registration Statement on Form S-1,
Registration No. 33-44862).
*10.14 -- Letter Agreement dated October 15, 1996 between GAF and Dr. Peter Heinze.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
*21 -- Subsidiaries of ISP Holdings.
*23.1 -- Consent of Arthur Andersen LLP.
**23.2 -- Consent of Weil, Gotshal & Manges LLP (included in Exhibits 5 and 8).
*24 -- Power of Attorney (included on signature pages to Registration Statement).
*25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Trustee under the 9% Note Indenture (bound separately).
*25.2 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Trustee under the 9 3/4% Note Indenture (bound separately).
*27.1 -- Financial Data Schedule for fiscal year 1995, which is submitted electronically to the
Securities and Exchange Commission for information only.
*27.2 -- Financial Data Schedule for the first nine months of fiscal year 1996, which is submitted
electronically to the Securities and Exchange Commission for information only.
**99.1 -- Form of 9% Note Letter of Transmittal.
**99.2 -- Form of 9 3/4% Note Letter of Transmittal.
**99.3 -- Form of 9% Notice of Guaranteed Delivery.
**99.4 -- Form of 9 3/4% Notice of Guaranteed Delivery.
**99.5 -- Form of Exchange Agreement between The Bank of New York and ISP Holdings.
</TABLE>
- ------------------
* Filed herewith.
** To be filed by Amendment.
(b) Schedules
<TABLE>
<S> <C>
Consolidated Financial Statement Schedules:
Report of Independent Public Accountants............................................. S-1
Schedule II--Valuation and Qualifying Accounts....................................... S-2
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Wayne, State of New
Jersey, on the 12th day of December 1996.
ISP HOLDINGS INC.
By: /s/ James P. Rogers
----------------------------------
Name: James P. Rogers
----------------------
Title: Senior Vice President and
---------------------------------
Chief Financial Officer
-----------------------
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each of Messrs. Heyman and Stern hereby
constitutes James P. Rogers such person's true and lawful attorney, with full
power of substitution to sign for such person and in such person's name and
capacity indicated below, any and all amendments to this Registration Statement,
and to file the same with the Securities and Exchange Commission, hereby
ratifying and confirming such person's signature as it may be signed by said
attorney to any and all amendments.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- -------------------
<S> <C> <C>
/s/ Samuel J. Heyman Chairman, Chief Executive Officer and December 12, 1996
- ------------------------------------------ Director (Principal Executive Officer)
Samuel J. Heyman
/s/ James P. Rogers Senior Vice President and Chief Financial December 12, 1996
- ------------------------------------------ Officer (Principal Financial Officer)
James P. Rogers
/s/ Jonathan H. Stern Vice President and Controller (Principal December 12, 1996
- ------------------------------------------ Accounting Officer)
Jonathan H. Stern
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------
<S> <C> <C>
*3.1 -- Certificate of Incorporation of ISP Holdings.
*3.2 -- By-laws of ISP Holdings.
*4.1 -- 9% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of New
York, as trustee.
*4.2 -- 9 3/4% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of
New York, as trustee (including the Registration Rights Agreement of ISP Holdings
attached thereto).
*4.3 -- Form of Notes (included in Exhibits 4.1 and 4.2).
*4.4 -- Registration Rights Agreement, dated October 18, 1996, between ISP Holdings and Bear,
Stearns & Co. Inc.
**5 -- Opinion of Weil, Gotshal & Manges LLP re: legality.
**8 -- Opinion of Weil, Gotshal & Manges LLP re: tax matters.
10.1 -- Management Agreement, dated as of March 3, 1992 ('Management Agreement'), among GAF, G-I
Holdings, G Industries, ISP, GAF Building Materials Corporation and GAF Broadcasting
(incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of
G-I Holdings (Registration No. 33-72220)).
10.2 -- Amendment No. 1, dated as of January 1, 1994, to the Management Agreement (incorporated
by reference to Exhibit 10.10 to G-I Holdings' Form 10-K for the year ended December 31,
1993).
10.3 -- Amendment No. 2, dated as of May 31, 1994, to the Management Agreement (incorporated by
reference to Exhibit 10.1 to G-I Holdings' Form 10-Q for the quarter ended July 3, 1994).
10.4 -- Amendment No. 3, dated as of December 31, 1994, to the Management Agreement (incorporated
by reference to Exhibit 10.4 to ISP's Form 10-K for the year ended December 31, 1994).
10.5 -- Amendment No. 4, dated as of December 31, 1995, to the Management Agreement (incorporated
by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of G-I Holdings
(Registration No. 333-2436)).
*10.6 -- Amendment No. 5, dated as of October 18, 1996 to the Management Agreement.
*10.7 -- Indemnification Agreement, dated as of October 18, 1996 among GAF, G-I Holdings, ISP
Holdings, G Industries and GCC.
**10.8 -- Tax Sharing Agreement, dated as of December , 1996, between ISP Holdings and ISP.
10.9 -- Non-Qualified Retirement Plan Letter Agreement (incorporated by reference to Exhibit
10.11 to ISP's Registration Statement on Form S-1, Registration No. 33-40337).
10.10 -- ISP Amended and Restated 1991 Incentive Plan for Key Employees (incorporated by reference
to Exhibit 99 to ISP's Registration Statement on Form S-8, No. 33-92518).
10.11 -- Agreement, dated July 30, 1993, between ISP and Carl R. Eckardt (incorporated by
reference to Exhibit 10.16 to the Discount Notes Registration Statement).
10.12 -- Stock Appreciation Rights Agreement, dated January 20, 1994, between GAF and James P.
Rogers (incorporated by reference to Exhibit 10.20 to G-I Holdings' Form 10-K for the
year ended December 31, 1993).
10.13 -- Indenture, dated as of March 1, 1992, relating to ISP's 9% Senior Notes due March 1, 1999
(incorporated by reference to Exhibit 4 to ISP's Registration Statement on Form S-1,
Registration No. 33-44862).
*10.14 -- Letter Agreement dated October 15, 1996 between GAF and Dr. Peter Heinze.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------
<S> <C> <C>
*21 -- Subsidiaries of ISP Holdings.
*23.1 -- Consent of Arthur Andersen LLP.
**23.2 -- Consent of Weil, Gotshal & Manges LLP (included in Exhibits 5 and 8).
*24 -- Power of Attorney (included on signature pages to Registration Statement).
*25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the 9% Note Indenture (bound separately).
*25.2 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the 9 3/4% Note Indenture (bound separately).
*27.1 -- Financial Data Schedule for fiscal year 1995, which is submitted electronically to the
Securities and Exchange Commission for information only.
*27.2 -- Financial Data Schedule for the first nine months of fiscal year 1996, which is submitted
electronically to the Securities and Exchange Commission for information only.
**99.1 -- Form of 9% Note Letter of Transmittal.
**99.2 -- Form of 9 3/4% Note Letter of Transmittal.
**99.3 -- Form of 9% Notice of Guaranteed Delivery.
**99.4 -- Form of 9 3/4% Notice of Guaranteed Delivery.
**99.5 -- Form of Exchange Agreement between The Bank of New York and ISP Holdings.
</TABLE>
- ------------------
* Filed herewith.
** To be filed by Amendment.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ISP Holdings Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of ISP Holdings Inc. and subsidiaries
included in this registration statement and have issued our report thereon dated
August 7, 1996. Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in item 21(b)
is the responsibility of the Company's management and is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Roseland, New Jersey
August 7, 1996
S-1
<PAGE>
SCHEDULE II
ISP HOLDINGS INC.
VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 31, 1993
(THOUSANDS)
<TABLE>
<CAPTION>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1993 EXPENSES DEDUCTIONS 1993
- -------------------------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Valuation and Qualifying Accounts Deducted from Assets to
Which They Apply:
Allowance for doubtful accounts.......................... $2,105 $ 392 $ 184(a) $ 2,313
Reserve for inventory market valuation................... 5,872 5,142 2,023 8,991
</TABLE>
YEAR ENDED DECEMBER 31, 1994
(THOUSANDS)
<TABLE>
<CAPTION>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1994 EXPENSES DEDUCTIONS 1994
- -------------------------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Valuation and Qualifying Accounts Deducted from Assets to
Which They Apply:
Allowance for doubtful accounts.......................... $2,313 $ 325 $ 346(a) $ 2,292
Reserve for inventory market valuation................... 8,991 7,052 6,412 9,631
</TABLE>
YEAR ENDED DECEMBER 31, 1995
(THOUSANDS)
<TABLE>
<CAPTION>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1995 EXPENSES DEDUCTIONS 1995
- -------------------------------------------------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Valuation and Qualifying Accounts Deducted from Assets to
Which They Apply:
Allowance for doubtful accounts.......................... $2,292 $ 681 $ 94(a) $ 2,879
Reserve for inventory market valuation................... 9,631 8,861 4,514 13,978
</TABLE>
- ------------------
Note:
(a) Represents write-offs of uncollectible accounts net of recoveries.
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------
<C> <C> <S> <C>
*3.1 -- Certificate of Incorporation of ISP Holdings.
*3.2 -- By-laws of ISP Holdings.
*4.1 -- 9% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of New
York, as trustee.
*4.2 -- 9 3/4% Note Indenture, dated as of October 18, 1996, between ISP Holdings and The Bank of
New York, as trustee (including the Registration Rights Agreement of ISP Holdings
attached thereto).
*4.3 -- Form of Notes (included in Exhibits 4.1 and 4.2).
*4.4 -- Registration Rights Agreement, dated October 18, 1996, between ISP Holdings and Bear,
Stearns & Co. Inc.
**5 -- Opinion of Weil, Gotshal & Manges LLP re: legality.
**8 -- Opinion of Weil, Gotshal & Manges LLP re: tax matters.
10.1 -- Management Agreement, dated as of March 3, 1992 ('Management Agreement'), among GAF, G-I
Holdings, G Industries, ISP, GAF Building Materials Corporation and GAF Broadcasting
(incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of
G-I Holdings (Registration No. 33-72220)).
10.2 -- Amendment No. 1, dated as of January 1, 1994, to the Management Agreement (incorporated
by reference to Exhibit 10.10 to G-I Holdings' Form 10-K for the year ended December 31,
1993).
10.3 -- Amendment No. 2, dated as of May 31, 1994, to the Management Agreement (incorporated by
reference to Exhibit 10.1 to G-I Holdings' Form 10-Q for the quarter ended July 3, 1994).
10.4 -- Amendment No. 3, dated as of December 31, 1994, to the Management Agreement (incorporated
by reference to Exhibit 10.4 to ISP's Form 10-K for the year ended December 31, 1994).
10.5 -- Amendment No. 4, dated as of December 31, 1995, to the Management Agreement (incorporated
by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of G-I Holdings
(Registration No. 333-2436)).
*10.6 -- Amendment No. 5, dated as of October 18, 1996 to the Management Agreement.
*10.7 -- Indemnification Agreement, dated as of October 18, 1996 among GAF, G-I Holdings, ISP
Holdings, G Industries and GCC.
**10.8 -- Tax Sharing Agreement, dated as of December , 1996, between ISP Holdings and ISP.
10.9 -- Non-Qualified Retirement Plan Letter Agreement (incorporated by reference to Exhibit
10.11 to ISP's Registration Statement on Form S-1, Registration No. 33-40337).
10.10 -- ISP Amended and Restated 1991 Incentive Plan for Key Employees (incorporated by reference
to Exhibit 99 to ISP's Registration Statement on Form S-8, No. 33-92518).
10.11 -- Agreement, dated July 30, 1993, between ISP and Carl R. Eckardt (incorporated by
reference to Exhibit 10.16 to the Discount Notes Registration Statement).
10.12 -- Stock Appreciation Rights Agreement, dated January 20, 1994, between GAF and James P.
Rogers (incorporated by reference to Exhibit 10.20 to G-I Holdings' Form 10-K for the
year ended December 31, 1993).
10.13 -- Indenture, dated as of March 1, 1992, relating to ISP's 9% Senior Notes due March 1, 1999
(incorporated by reference to Exhibit 4 to ISP's Registration Statement on Form S-1,
Registration No. 33-44862).
*10.14 -- Letter Agreement dated October 15, 1996 between GAF and Dr. Peter Heinze.
*12 -- Computation of Ratio of Earnings to Fixed Charges.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------
*21 -- Subsidiaries of ISP Holdings.
<C> <C> <S> <C>
*23.1 -- Consent of Arthur Andersen LLP.
**23.2 -- Consent of Weil, Gotshal & Manges LLP (included in Exhibits 5 and 8).
*24 -- Power of Attorney (included on signature pages to Registration Statement).
*25.1 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the 9% Note Indenture (bound separately).
*25.2 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the 9 3/4% Note Indenture (bound separately).
*27.1 -- Financial Data Schedule for fiscal year 1995, which is submitted electronically to the
Securities and Exchange Commission for information only.
*27.2 -- Financial Data Schedule for the first nine months of fiscal year 1996, which is submitted
electronically to the Securities and Exchange Commission for information only.
**99.1 -- Form of 9% Note Letter of Transmittal.
**99.2 -- Form of 9 3/4% Note Letter of Transmittal.
**99.3 -- Form of 9% Notice of Guaranteed Delivery.
**99.4 -- Form of 9 3/4% Notice of Guaranteed Delivery.
**99.5 -- Form of Exchange Agreement between The Bank of New York and ISP Holdings.
</TABLE>
- ------------------
* Filed herewith.
** To be filed by Amendment.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
ISP HOLDINGS INC.
------------------------------------
THE UNDERSIGNED, being a natural person for the purposes of
organizing a corporation under the General Corporation Law of the State of
Delaware, hereby certifies that:
FIRST: The name of the Corporation is ISP Holdings Inc.
SECOND: The address of the registered office of the Corporation
in the State of Delaware is 1013 Centre Road, City of Wilmington, County of New
Castle, State of Delaware. The name of the registered agent of the Corporation
in the State of Delaware at such address is The Prentice-Hall Corporation
System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, as from time to time amended.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 1000, all of which shares shall be
Common Stock having a par value of $.001.
FIFTH: The name and mailing address of the incorporator is
Shelley A. Sorkin, c/o ISP Management Company, Inc., 1361 Alps Road, Wayne, New
Jersey 07470.
SIXTH: In furtherance and not in limitation of the powers
conferred by law, subject to any limitations contained elsewhere in these
articles of incorporation, By-laws of the Corporation may be adopted, amended or
repealed by a majority of the board of directors of the Corporation, but any
By-laws adopted by the board of directors may be amended or repealed by the
stockholders entitled to vote thereon. Election of directors need not be by
written ballot.
SEVENTH: (a) A director of the Corporation shall not be
personally liable either to the Corporation or to any stockholder for monetary
damages for breach of fiduciary duty as a director, except (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, or (ii)
for acts or omissions which are not in good faith or which involve intentional
misconduct or knowing violation of the law, or (iii) for any matter in respect
of which such director shall be liable under Section 174 of Title 8 of the
General Corporation Law of the State of Delaware or any amendment thereto or
successor provision thereto, or (iv) for any transaction from which the director
shall have derived an improper personal benefit. Neither amendment nor repeal of
this paragraph (a) nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this paragraph (a) shall eliminate or reduce the
effect of this paragraph (a) in respect of any matter occurring, or any cause of
action, suit or claim that, but for this paragraph (a) of this Article, would
accrue or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
<PAGE>
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in nature, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permitted by law, and the Corporation may adopt By-laws or enter
into agreements with any such person for the purpose of providing for such
indemnification.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Incorporation on this 6th day of August, 1996.
/s/Shelley A. Sorkin
----------------------------
Shelley A. Sorkin
Sole Incorporator
<PAGE>
BY-LAWS EXHIBIT 3.2
OF
ISP HOLDINGS INC.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
<PAGE>
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
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5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by the General Corporation Law, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on which
the Board of Directors adopts the resolution taking such prior action. In order
that the corporation may determine the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to
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exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall be not
more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date within thirteen months after the organization of the
corporation, and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
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- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days thence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be
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transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
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with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability.
The inspectors, if any, shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots, or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots, or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors, if
any, shall make a report in writing of any challenge, question, or matter
determined by him or them and execute a certificate of any fact found by him or
them.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holders thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors.
Any other action shall be authorized by a majority of the votes cast except
where the General Corporation Law prescribes a different percentage of votes
and/or a different exercise of voting power, and except as may be otherwise
prescribed by the provisions of the certificate of incorporation and these
Bylaws.
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<PAGE>
In the election of directors, and for any other action, voting need not be by
ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Action taken pursuant to this paragraph shall be subject
to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be one. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting
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of stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Any director may resign at any time upon
written notice to the corporation. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the next
annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Except as the General
Corporation Law may otherwise require, in the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled vacancies resulting from the removal
of directors for cause or without cause, may be filled by the vote of a majority
of the remaining directors then in office, although less than a quorum, or by
the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or
the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction
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of any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
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In the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any authority the delegation of
which is prohibited by Section 141 of the General Corporation Law, and may
authorize the seal of the corporation to be affixed to all papers which may
require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, one or more
Executive Vice-Presidents, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the
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corporation as shall be prescribed in the resolutions of the Board of Directors
designating and choosing such officers and prescribing their authority and
duties, and shall have such additional authority and duties as are incident to
their office except to the extent that such resolutions may be inconsistent
therewith. The Secretary or an Assistant Secretary of the corporation shall
record all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall exercise such
additional authority and perform such additional duties as the Board shall
assign to him. Any officer may be removed, with or without cause, by the Board
of Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
ARTICLE VII
LIMITATION OF LIABILITY
No person shall be liable to the corporation for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him as a
director or officer of the corporation if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, or,
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with respect to any criminal matter, had no reasonable cause to believe his
conduct was unlawful.
ARTICLE VIII
INDEMNIFICATION
1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY
OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII,
the corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer or employee of the corporation, or is
or was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgement, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT
OF THE CORPORATION. Subject to Section 3 of this Article VIII, the corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer or employee of the corporation, or is or was
serving at the request of the corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or
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settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
In addition to the foregoing, subject to Section 3 of this Article VIII,
the corporation shall indemnify, to the fullest extent permitted by law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgement in its favor by reason of the fact that he is
or was a director, officer or employee of the corporation, or is or was serving
at the request of the corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise against
judgments, fines and amounts paid in settlement actually incurred by him in
connection with such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation.
3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this Article
VIII (unless ordered by a court) shall be made by the corporation upon a
determination that indemnification of the director, officer or employee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs by independent
legal counsel in a written opinion, or (iii) by the stockholders. To the extent,
however, that such director, officer or employee of the corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
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<PAGE>
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
4. GOOD FAITH DEFINED. For purposes of any determination under Article VII
or Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the corporation or
another enterprise, or on information supplied to him by the officers of the
corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the corporation or another enterprise or on
information or records given or reports made to the corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
corporation as a director, officer or employee. The provisions of this Section 4
shall not be deemed to be exclusive or to limit in any way the circumstances in
which a person may be deemed to have met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article VIII, as the case may be.
5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary determination
under Section 3 of this Article VIII, and notwithstanding the absence of any
determination thereunder, any director, officer or employee of the corporation
or of another corporation, partnership, joint venture, trust or other enterprise
who is or was serving at the request of the corporation may apply to any court
of competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under Sections 1 and 2 of this Article VIII. The
basis of such indemnification by a court shall be a determination by such court
that indemnification of the director, officer or employee is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Sections 1 or 2 of this Article VIII, as the case may be. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
corporation promptly upon the filing of such application.
6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred in
defending or investigating a threatened or pending action, suit or
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<PAGE>
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors upon
receipt of an undertaking by or on behalf of the director, officer or employee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article
VIII.
7. NON-EXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION. The indemnification
provided by this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under the certificate of
incorporation, any By-law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding official capacity
and as to action in another capacity while holding office, it being the policy
of the corporation that indemnification of the persons specified in Sections 1
and 2 of this Article VIII, shall be made to the fullest extent permitted by
law. The provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
Article VIII, but whom the corporation has the power or obligation to indemnify
under the provision of the General Corporation Law, or otherwise. The
indemnification provided by this Article VIII shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the benefit
of the heirs, executors and administrators of such person.
8. INSURANCE. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer or employee of the corporation,
or is or was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article VIII.
9. MEANING OF "CORPORATION" FOR PURPOSES OF ARTICLE VIII. For purposes of
this Article VIII, references to "the corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its
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<PAGE>
separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees so that any person who is or was
a director, officer or employee of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer or
employee of another corporation partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
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<PAGE>
_______________________________________________________________
_______________________________________________________________
ISP HOLDINGS INC.
9% Senior Notes due 2003
and
Series B 9% Senior Notes due 2003
______________
INDENTURE
Dated as of October 18, 1996
______________
THE BANK OF NEW YORK
______________
Trustee
_______________________________________________________________
_______________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)................................. 7.10
(a)(2)................................. 7.10
(a)(3)................................. N.A.
(a)(4)................................. N.A.
(a)(5)................................. 7.08
(b).................................... 7.08; 7.10; 10.02
(c).................................... N.A.
311(a).................................... 7.11
(b).................................... 7.11
(c).................................... N.A.
312(a).................................... 2.05
(b).................................... 10.03
(c).................................... 10.03
313(a).................................... 7.06
(b)(1)................................. N.A.
(b)(2)................................. 7.06
(c).................................... 7.06; 10.02
(d).................................... 7.06
314(a).................................... 4.05; 4.06; 10.02
(b).................................... N.A.
(c)(1)................................. 10.04
(c)(2)................................. 10.04
(c)(3)................................. N.A.
(d).................................... N.A.
(e).................................... 10.05
(f).................................... N.A.
315(a).................................... 7.12(b)
(b).................................... 7.05; 10.02
(c).................................... 7.12(a)
(d).................................... 7.12(c)
(e).................................... 6.11
316(a)(last sentence)..................... 2.09
(a)(1)(A).............................. 6.05
(a)(1)(B).............................. 6.04
(a)(2)................................. N.A.
(b).................................... 6.07
(c).................................... 9.04
317(a)(1)................................. 6.08
(a)(2)................................. 6.09
(b).................................... 2.04
318(a).................................... 10.01
_______________
N.A. means "not applicable."
* This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions............................. 1
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act......................... 26
SECTION 1.03. Rules of Construction................... 26
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating......................... 27
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount............ 27
SECTION 2.03. Registrar and Paying Agent.............. 29
SECTION 2.04. Paying Agent To Hold Money in Trust..... 29
SECTION 2.05. Holder Lists............................ 29
SECTION 2.06. Transfer and Exchange................... 30
SECTION 2.07. Replacement Notes....................... 32
SECTION 2.08. Outstanding Notes....................... 32
SECTION 2.09. Treasury Notes.......................... 32
SECTION 2.10. Temporary Notes......................... 33
SECTION 2.11. Cancellation............................ 33
SECTION 2.12. Defaulted Interest...................... 33
SECTION 2.13. CUSIP Number............................ 33
SECTION 2.14. Deposit of Moneys....................... 34
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee...................... 34
SECTION 3.02. Selection of Notes To Be Redeemed....... 35
SECTION 3.03. Notice of Redemption.................... 35
SECTION 3.04. Effect of Notice of Redemption.......... 36
SECTION 3.05. Deposit of Redemption Price............. 36
SECTION 3.06. Notess Redeemed in Part................. 36
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<PAGE>
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes........................ 37
SECTION 4.02. Maintenance of Office or Agency......... 37
SECTION 4.03. Corporate Existence..................... 37
SECTION 4.04. Payment of Taxes and Other Claims....... 38
SECTION 4.05. Compliance Certificates................. 38
SECTION 4.06. Securities and Exchange Commission
Reports............................... 39
SECTION 4.07. Waiver of Stay, Extension or Usury
Laws.................................. 40
SECTION 4.08. Maintenance of Properties............... 40
SECTION 4.09. Limitation on Debt and Preferred
Stock of the Company and ISP
Subsidiaries.......................... 41
SECTION 4.10. Limitation on Debt and Preferred
Stock of BMCA Subsidiaries............ 43
SECTION 4.11. Limitation on Debt and Preferred
Stock of Specified Subsidiaries....... 44
SECTION 4.12. Prohibition on Debt and Capital
Stock of Intermediate Parents of
ISP and BMCA.......................... 45
SECTION 4.13. Limitation on Restricted Payments
and Restricted Investments............ 46
SECTION 4.14. Limitation on Liens..................... 48
SECTION 4.15. Prohibition on Certain Transactions..... 49
SECTION 4.16. Limitation on Transactions with
Affiliates............................ 50
SECTION 4.17. Limitation on Investments in Non-
Recourse Subsidiaries by ISP
Subsidiaries and BMCA
Subsidiaries.......................... 52
SECTION 4.18. Limitation on Dividend and Other
Payment Restrictions Affecting
Subsidiaries.......................... 52
SECTION 4.19. Change of Control....................... 54
SECTION 4.20. Limitation on Asset Sales............... 56
SECTION 4.21. Investment Company Act.................. 59
SECTION 4.22. Consents, etc........................... 59
SECTION 4.23. Registration Rights..................... 60
SECTION 4.24. Spin Off................................ 60
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.01. When the Company May Merge, etc......... 60
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<PAGE>
SECTION 5.02. Successor Corporation Substituted....... 61
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default....................... 61
SECTION 6.02. Acceleration............................ 63
SECTION 6.03. Other Remedies.......................... 63
SECTION 6.04. Waiver of Past Defaults................. 64
SECTION 6.05. Control by Majority..................... 64
SECTION 6.06. Limitation on Remedies.................. 64
SECTION 6.07. Rights of Holders To Receive
Payment............................... 65
SECTION 6.08. Collection Suit by Trustee.............. 65
SECTION 6.09. Trustee May File Proofs of Claim........ 65
SECTION 6.10. Priorities.............................. 66
SECTION 6.11. Undertaking for Costs................... 66
SECTION 6.12. Restoration of Rights and Remedies...... 67
ARTICLE VII
TRUSTEE
SECTION 7.01. Rights of Trustee....................... 67
SECTION 7.02. Individual Rights of Trustee............ 68
SECTION 7.03. Money Held in Trust..................... 68
SECTION 7.04. Trustee's Disclaimer.................... 68
SECTION 7.05. Notice of Defaults...................... 68
SECTION 7.06. Reports by Trustee to Holders........... 69
SECTION 7.07. Compensation and Indemnity.............. 69
SECTION 7.08. Replacement of Trustee.................. 70
SECTION 7.09. Successor Trustee by Merger, etc........ 71
SECTION 7.10. Eligibility; Disqualification........... 72
SECTION 7.11. Preferential Collection of Claims
Against the Company................... 72
SECTION 7.12. Duties of Trustee....................... 72
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes;
Defeasance............................ 73
SECTION 8.02. Conditions to Defeasance................ 74
SECTION 8.03. Application of Trust Money.............. 76
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<PAGE>
SECTION 8.04. Repayment to Company.................... 76
SECTION 8.05. Indemnity for Government
Obligations........................... 76
SECTION 8.06. Reinstatement........................... 76
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.............. 77
SECTION 9.02. With Consent of Holders................. 77
SECTION 9.03. Revocation and Effect of Consents....... 79
SECTION 9.04. Record Date............................. 80
SECTION 9.05. Notation on or Exchange of Notes........ 80
SECTION 9.06. Trustee May Sign Amendments, etc........ 80
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939............. 80
SECTION 10.02. Notices................................. 81
SECTION 10.03. Communication by Holders with Other
Holders............................... 81
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent.................. 81
SECTION 10.05. Statements Required in Certificate
or Opinion............................ 82
SECTION 10.06. Rules by Trustee, Paying Agent,
Registrar............................. 82
SECTION 10.07. Governing Law........................... 82
SECTION 10.08. No Interpretation of Other
Agreements............................ 83
SECTION 10.09. No Recourse Against Others.............. 83
SECTION 10.10. Legal Holidays.......................... 83
SECTION 10.11. Successors.............................. 83
SECTION 10.12. Duplicate Originals..................... 83
SECTION 10.13. Separability............................ 83
SECTION 10.14. Table of Contents, Headings, etc........ 83
SECTION 10.15. Benefits of Indenture................... 84
SIGNATURES............................................. 85
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<PAGE>
EXHIBITS
EXHIBIT A -- Form of Initial Note...................... A-1
EXHIBIT B -- Form of Exchange Note..................... B-1
EXHIBIT C -- Form of Legend for Book-Entry
Securities.............................. C-1
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<PAGE>
INDENTURE, dated as of October 18, 1996, between ISP
HOLDINGS INC. (the "Company"), a Delaware corporation, and THE
BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), having its Corporate Trust Office at 101 Barclay
Street, New York, New York 10286.
The parties agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of
ISP Holdings' 9% Senior Notes due 2003 (the "Initial Notes")
and Series B 9% Senior Notes due 2003 (the "Exchange Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt", with respect to any Person, means
(i) Debt (including any then unutilized commitment under any
revolving working capital facility) of an entity, which entity
is acquired by such Person or any of its Subsidiaries after the
Issue Date; provided that such Debt (including any such
facility) is outstanding at the time of the acquisition of such
entity, is not created in contemplation of such acquisition and
is not, directly or indirectly, recourse (including by way of
set-off) to such Person or its Subsidiaries or any of their
respective assets other than to the entity and its Subsidiaries
so acquired and the assets of the entity and its Subsidiaries
so acquired, (ii) Debt of such Person that is not, directly or
indirectly, recourse (including by way of set-off) to such
Person and its Subsidiaries or any of their respective assets
other than to specified assets acquired by such Person or its
Subsidiaries after the Issue Date, which Debt is outstanding at
the time of the acquisition of such assets and is not created
in contemplation of such acquisition, or (iii) Refinancings of
Debt described in clauses (i) or (ii), provided that the
recourse with respect to such Refinancing Debt is limited to
the same extent as the Debt so Refinanced.
"Additional Interest" means all additional interest
owing under the Registration Rights Agreement.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when
<PAGE>
used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled"
having meanings correlative to the foregoing. For the
avoidance of doubt, GAF and its Affiliates (so long as they are
under common control with the Company) shall, both before and
after the Spin Off, be deemed to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or co-
Registrar of the Notes.
"Applicable Date" has the meaning set forth in
Section 4.13(a)(3).
"Applicable Premium" means, with respect to any Note,
the greater of (x) 1.0% of the principal amount of such Note
and (y) the excess, if any, of (a) the present value of the
required remaining interest payments, principal and future
optional redemption premium (if applicable) of such Note,
discounted on a semi-annual bond equivalent basis from either
the maturity date of the Note or the optional redemption date
to the applicable redemption date at a per annum interest rate
equal to the Treasury Yield for such redemption date plus 100
basis points, over (b) the sum of the principal amount of such
Note plus accrued and unpaid interest to the redemption date.
"Asset Sale" means, with respect to any Person, the
sale, lease, assignment or other disposition (including,
without limitation, dispositions pursuant to any consolidation,
merger or sale and leaseback transaction) by such Person or any
of its Subsidiaries in any single transaction or series of
related transactions of (x) any Capital Stock of any Subsidiary
of such Person or (y) all or substantially all of the
properties and assets of any division or line of business of
such Person or any of its Recourse Subsidiaries, in either
case, other than (i) by the Company or any of its Post-Spin Off
Subsidiaries to the Company or any of its Post-Spin Off
Subsidiaries, (ii) by G-I Holdings or any of its Post-Spin Off
Subsidiaries to G-I Holdings or any of its Post-Spin Off
Subsidiaries and (iii) after the Determination Date, by the
Company or any of its Subsidiaries to the Company or any of its
Subsidiaries. For the purposes of this definition, the term
"Asset Sale" shall not include (A) any sale, lease, assignment
or other disposition of properties or assets that is governed
by Section 5.01, (B) any sale, lease, assignment or other
disposition by a Person that has outstanding Long-Term Debt all
of which (x) are rated BBB- or higher by S&P and are not on
credit watch by S&P for a possible downgrade below BBB- or
(y) are rated Baa3 or higher by Moody's and are not on credit
<PAGE>
watch by Moody's for a possible downgrade below Baa3, (C) any
sale of Common Stock the proceeds of which are used pursuant to
the provisions described in the first paragraph of Section 5(a)
of the Notes or (D) prior to the Spin Off, the retirement,
liquidation, redemption or extinguishment of the indirect
interest of the Company and its Subsidiaries in Rhone-Poulenc
Surfactants and Specialties L.P.
"Average Life" means, with respect to any Debt, the
quotient obtained by dividing (i) the sum of the products of
(a) the number of years from the date of the transaction or
event giving rise to the need to calculate the Average Life of
such Debt to the date, or dates, of each successive scheduled
principal payment of such Debt multiplied by (b) the amount of
each such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of
debtors.
"BMCA" means Building Materials Corporation of
America, a Delaware corporation, and its successors.
"BMCA Subsidiaries" means BMCA and its Subsidiaries.
"Board of Directors" of any Person means the Board of
Directors or similar governing body of such Person, or any duly
authorized committee of such Board of Directors or similar
governing body.
"Board Resolution" means, with respect to the Board
of Directors of any Person, a copy of a resolution certified by
the Secretary or Assistant Secretary of such Person to have
been duly adopted by such Board of Directors and to be in full
force and effect on the date of such certification and
delivered to the Trustee.
"Book-Entry Note" means a Note represented by a
Global Note and registered in the name of the Depository or a
nominee of the Depository.
"Business Day" means a day that is not a Legal
Holiday.
"Capitalized Lease Obligation" means any rental
obligation that, in accordance with GAAP, is required to be
classified and accounted for as a capitalized lease and the
amount of Debt represented by such obligation shall be the
capitalized amount of such obligation determined in accordance
<PAGE>
with GAAP; and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due in respect of
such obligation.
"Capital Stock" of any Person means any and all
shares, interests (including partnership interests), warrants,
rights, options or other interests, participations or other
equivalents of or interests in (however designated) equity of
such Person, including Common Stock or Preferred Stock, whether
now outstanding or issued after the Issue Date, but excluding
any debt securities convertible into or exchangeable for such
equity.
"Cash Equivalents" means (i) marketable direct
obligations Issued by, or unconditionally Guaranteed by, the
United States Government or Issued by any agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition
thereof, (ii) marketable direct obligations Issued by any state
of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's, (iii) commercial paper
maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's, (iv)
certificates of deposit or bankers' acceptances maturing no
more than one year from the date of acquisition thereof Issued
by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital surplus of not
less than $250,000,000, (v) repurchase obligations with a term
of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above and
(vi) investments in money market funds having assets in excess
of $500,000,000 and which invest substantially all their assets
in securities of the types described in clauses (i) through (v)
above.
"Change of Control" means the occurrence of any of
the following events:
(i) prior to the first public offering of Voting
Stock of the Company, the Permitted Holders cease to be
the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of
majority voting power of the Voting Stock of the Company,
<PAGE>
whether as a result of issuance of securities of the
Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect
transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (i) and clauses
(ii) and (iv) below, the Permitted Holders shall be deemed
to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation
(the "parent corporation") so long as the Permitted
Holders beneficially own (as so defined), directly or
indirectly, a majority of the Voting Stock of the parent
corporation);
(ii) any "Person" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (i) above, except
that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly
or indirectly, of more than 35% of the Voting Stock of the
Company, but only if Permitted Holders beneficially own
(as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the Voting Stock
of the Company than such other Person and do not have the
right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of
Directors of the Company;
(iii) during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of the Company or its
predecessor (together with any new directors whose
election by such Board or whose nomination for election by
the shareholders of the Company or its predecessor was
approved by a vote of a majority of the directors of the
Company then still in office who were either directors at
the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors of the Company then in office; or
(iv) either (x) the Permitted Holders or (y) the
Company ceases, for any reason, to be the beneficial owner
(as defined in clause (i) above), directly or indirectly,
of majority voting power of the Voting Stock of ISP,
whether as a result of issuance of securities, any merger,
consolidation, liquidation or dissolution, any direct or
<PAGE>
indirect transfer of securities by any Permitted Holder or
otherwise.
"Change of Control Notice" has the meaning specified
in Section 4.19(b).
"Change of Control Payment Date" has the meaning set
forth in Section 4.19(a).
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act, or if at any time after the execution of the
Indenture such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body
performing such duties at such time.
"Common Stock" of any Person means any and all
shares, interests, participations, or other equivalents
(however designated) of such Person's common stock whether now
outstanding or issued after the Issue Date.
"Consolidated EBITDA Coverage Ratio" means, with
respect to any Person, for any period, the ratio of (i) EBITDA
of such Person for such period to (ii) Consolidated Interest
Expense of such Person for such period; provided, however, that
(A) if such Person or any of its Subsidiaries has Issued any
Debt or Capital Stock since the beginning of such period that
remains outstanding on the date such calculation is made or if
the transaction giving rise to the need to calculate the
Consolidated EBITDA Coverage Ratio is an Issuance of Debt or
Capital Stock, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving
effect, on a pro forma basis, to the issuance of such Debt or
Capital Stock as if such Debt or Capital Stock had been Issued
on the first day of such period and the discharge of any other
Debt or Capital Stock Refinanced or otherwise discharged with
the proceeds of such new Debt or Capital Stock as if such
discharge had occurred on the first day of such period; (B) if
since the beginning of such period such Person or any of its
Subsidiaries shall have made any asset sale out of the ordinary
course of business, EBITDA for such period shall be reduced by
an amount equal to the EBITDA (if positive) directly
attributable to the assets which are the subject of such asset
sale for such period, or increased by an amount equal to the
EBITDA (if negative), directly attributable thereto for such
period and Consolidated Interest Expense for such period shall
be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Debt or Capital Stock of
such Person or any Subsidiary of such Person and the amount of
any other Debt or Capital Stock Refinanced or otherwise
<PAGE>
discharged with respect to such Person and its continuing
Subsidiaries (including as a result of the assumption of such
Debt or Capital Stock by the purchaser of such assets, provided
that such Person or any of its Subsidiaries is no longer liable
therefor) in connection with such Asset Sale for such period
(or if the Capital Stock of any Subsidiary of such Person is
sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the
extent such Person and its continuing Subsidiaries are no
longer liable for such Debt after such sale) (it being
understood that the Spin Off shall be considered an Asset Sale
outside of the ordinary course of business for purposes of this
clause (B)); and (C) if since the beginning of the period such
Person or any of its Subsidiaries (by merger or otherwise)
shall have made an Investment in any Subsidiary of such Person
(or any Person which becomes a Subsidiary of such Person) or an
acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all of an
operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro
forma effect thereto, as if such Investment or acquisition
occurred on the first day of such period. For purposes of this
definition, pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the
Person with respect to which the calculation is being made. If
any Debt or Capital Stock bears a floating rate of interest or
dividends and is being given pro forma effect, the interest on
such Debt and the dividends on such Capital Stock shall be
calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire
period.
"Consolidated Interest Expense" means with respect to
any Person, for any period, the sum of (a) the interest expense
of such Person and its consolidated Subsidiaries (other than
interest expense related to Non-Recourse Debt) for such period
as determined in accordance with GAAP consistently applied,
plus (b) the product of (x) the amount of all dividends paid or
accrued on any series of preferred stock of such Person (other
than non-Redeemable Stock) and its Recourse Subsidiaries times
(y) a fraction, the numerator of which is one and the
denominator of which is one minus the effective combined
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Net Income (Loss)" means with respect
to any Person, for any period, the consolidated net income (or
loss) of such Person and its consolidated Subsidiaries for such
period as determined in accordance with GAAP, adjusted to the
<PAGE>
extent included in calculating such net income (or loss), by
excluding (i) all extraordinary gains in such period net of all
extraordinary losses in such period; (ii) net income (or loss)
of any other Person attributable to any period prior to the
date of combination of such other Person with such Person or
any of its Subsidiaries on a "pooling of interests" basis;
(iii) net gains or losses in respect of dispositions of assets
by such Person or any of its Subsidiaries (including pursuant
to a sale-and-leaseback arrangement) other than in the ordinary
course of business; (iv) the net income (loss) of any
Subsidiary of such Person (other than, in calculating the
consolidated net income (loss) of the Company, the consolidated
net income (loss) of ISP, USI or BMCA) to the extent that the
declaration of dividends or distributions by that Subsidiary of
that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulations applicable to that Subsidiary or
its shareholders; (v) the net income (or net loss) of any other
Person that is not a Subsidiary of the first Person with
respect to which Consolidated Net Income is being calculated
(the "first Person") and in which any other Person (other than
such first Person and or any of its Subsidiaries) has an equity
interest or of a Non-Recourse Subsidiary of such first Person,
except to the extent of the amount of dividends or other
distributions actually paid or made to such first Person or any
of its Subsidiaries by such other Person during such period
(subject in the case of a dividend or distribution received by
a Subsidiary of such first Person, to the limitations contained
in clause (iv) above); (vi) any interest income resulting from
loans or investments in Affiliates, other than cash interest
income actually received; (vii) charges relating to the
Transactions or the offering of the 10% Senior Notes due 2006
and Series B 10% Senior Notes due 2006 of G-I Holdings; and
(viii) the cumulative effect of a change in accounting
principles.
"Consolidated Net Worth" of any Person means, at any
date, all amounts that would, in conformity with GAAP, be
included under shareholders' equity on a consolidated balance
sheet of such Person as at such date less (to the extent
otherwise included therein) any amounts attributable to
Redeemable Stock.
"Credit Agreement" means the credit agreement dated
as of July 26, 1996, among ISP, certain of its Subsidiaries,
the financial institutions named therein and Chase Manhattan
Bank, as agent thereunder, as the same may be amended or
supplemented.
<PAGE>
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any
Bankruptcy Law.
"Debt" of any Person means, without duplication,
(i) the principal in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment
of which such Person is responsible or liable (other than those
payable to government agencies to defer the payment of workers'
compensation liabilities, taxes, assessments or other
obligations, and provided in the ordinary course of business of
such Person); (ii) all Capital Lease Obligations of such
Person; (iii) all obligations of such Person issued or assumed
as the deferred purchase price of property, all conditional
sale obligations of such Person and all obligations of such
Person under any title retention agreement (but excluding trade
accounts payable and other accrued current liabilities arising
in the ordinary course of business); (iv) all obligations of
such Person for the reimbursement of any obligor on any letter
of credit, bankers' acceptance or similar credit transaction
(other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement
following payment on the letter of credit); (v) all obligations
of the type referred to in clauses (i) through (iv) of other
Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise,
including guarantees of such obligations and dividends; and
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
For purposes of Section 4.20, Debt of the Company (prior to the
Spin Off) and any BMCA Subsidiary shall include the provision
for existing or future asbestos-related bodily injury claims,
as set forth in the then most recent consolidated financial
statement of the Company.
"Default" means any event which is, or after notice
or passage of time or both would be, an Event of Default.
<PAGE>
"Depository" means, with respect to the Notes issued
in the form of one or more Book-Entry Notes, The Depository
Trust Company or another person designated as Depository by the
Company, which must be a clearing agency registered under the
Exchange Act.
"Determination Date" means the date (if any) on which
the Company delivers a notice to the Trustee that the Board of
Directors of the Company has determined not to effect the Spin
Off, which notice shall be irrevocable and include a copy of
the Board Resolution of such Board of Directors making such
determination.
"EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such
period, adjusted to the extent deducted in calculating such
Consolidated Net Income by adding back (without duplication):
(i) income tax expense of such Person and its Subsidiaries
accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary items or other items
excluded from the definition of Consolidated Net Income),
(ii) Consolidated Interest Expense of such Person,
(iii) depreciation expense, (iv) amortization expense and (v)
minority interest in any Recourse Subsidiary that is not a
Wholly Owned Subsidiary but is otherwise consolidated in the
financial statements of such Person, but only so long as such
Subsidiary is consolidated with such Person for such period for
U.S. federal income tax purposes.
"Events of Default" has the meaning set forth in
Section 6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and the rules and
regulations of the Commission thereunder.
"Exchange Notes" has the meaning assigned to that
term in the preambles to this Indenture.
"Exchange Offer" means the registration by the
Company under the Securities Act pursuant to a registration
statement of the offer by the Company to each Holder of the
Initial Notes to exchange all the Initial Notes held by such
Holder for the Exchange Notes in an aggregate principal amount
equal to the aggregate principal amount of the Initial Notes
held by such Holder, all in accordance with the terms and
conditions of the Registration Rights Agreement.
<PAGE>
"Exchange Offer Notes" means the 9 3/4% Senior Notes
due 2002 and the Series B 9 3/4% Senior Notes due 2002 of the
Company.
"Existing Management Agreement" means the Amended and
Restated Management Agreement dated as of March 3, 1992 by and
among GAF and certain of its Subsidiaries as amended through
the Issue Date.
"G-I Holdings" means G-I Holdings Inc., a Delaware
corporation, and its successors.
"Generally Accepted Accounting Principles" or "GAAP"
means generally acceptable accounting principles set forth in
the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting
Standards Board.
"GAF" means GAF Corporation, a Delaware corporation,
and its successors.
"Global Note" means a Note evidencing all or a part
of the Notes to be issued as Book-Entry Notes, issued to the
Depository in accordance with Section 2.02 and bearing the
legend prescribed in Exhibit C.
"Granules Contracts" means (i) the Supply Agreement
dated as of January 1, 1995 between ISP Technologies Inc. and
BCMA, as amended by amendment dated as of December 31, 1995 and
(ii) the letter dated November 9, 1995 from ISP Mineral
Products Inc. to USI.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation, contingent or
otherwise, 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 or other obligation of such other Person
(whether arising by virtue of participation 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 the obligee of such Debt or other obligation in any
other manner of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course
<PAGE>
of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means incur, create, assume, Guarantee or
otherwise become liable; and the terms "incurred" and
"incurrence" having meanings correlative to the foregoing.
"Indemnification Agreement" means the indemnification
agreement dated as of the Issue Date among GAF and certain of
its Subsidiaries.
"Indenture" means this Indenture, as amended or
supplemented from time to time.
"Initial Notes" has the meaning assigned to that term
in the preamble to this Indenture.
"Interest Increase Trigger Date" means the date which
is the earlier of (x) 270 days after the Issue Date and (y) 60
days after receipt of the IRS Ruling, but in no event earlier
than January 3, 1997.
"Interest Payment Date" means the Stated Maturity of
an installment of interest on the Notes.
"Investment" means any direct or indirect advance,
loan (other than advances or loans to customers in the ordinary
course of business, which are recorded, in accordance with
GAAP, at the time made as accounts receivable on the balance
sheet of the Person making such advance or loan) or other
extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities Issued by, any other Person.
"IRS Ruling" means a ruling from the Internal Revenue
Service to the effect that the consummation of the Spin Off
will not result in recognition of income by GAF or other
members of GAF's federal consolidated tax group.
"ISP" means International Specialty Products Inc., a
Delaware corporation, and its successors.
"ISP Holdings Transactions" means the transactions
described in the Offering Memorandum under the heading "The ISP
<PAGE>
Holdings Transactions," including the offering of the Initial
Notes, substantially on the terms described therein.
"ISP Subsidiaries" means ISP and its Subsidiaries.
"Issue" means issue, assume, Guarantee, incur or
otherwise become liable for; provided, however, that any Debt
or Capital Stock of a Person existing at the time such Person
becomes a Subsidiary of another Person (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be
Issued by such Subsidiary at the time it becomes a Subsidiary
of such other Person.
"Issue Date" means October 18, 1996, the date of
original issuance of the Initial Notes.
"Legal Holiday" has the meaning set forth in
Section 10.10.
"Lien" means any lien, mortgage, charge, pledge,
security interest, or other encumbrance of any kind (including
any conditional sale or other title retention agreement and any
lease in the nature thereof).
"Linden Dividend" means the payment of a dividend or
distribution in respect of the Company's Common Stock of the
assets comprising the Linden Property or of the shares of
Capital Stock of a Subsidiary of the Company all or
substantially all of the assets of which consist of the Linden
Property.
"Linden Property" means that property consisting of
approximately 140 acres (40 acres developed) located in Union
County, New Jersey at the foot of South Wood Avenue, Linden and
owned by ISP Environmental Services Inc., which is the site of
a former chemicals manufacturing facility of ISP.
"Long-Term Debt" of any Person means outstanding
long-term debt securities of such Person (or, in the event that
such Person has no outstanding long-term debt securities, a
credit facility of such Person) that (i) is unsecured, (ii) not
subordinated in right of payment to any other Debt of such
Person and (iii) is not guaranteed and does not have credit
support provided by any other Person (other than, in the case
of Long-Term Debt of any ISP Subsidiary, any ISP Subsidiary).
"Moody's" means Moody's Investors Service, Inc. or
its successor.
<PAGE>
"Net Cash Proceeds" means, with respect to any Asset
Sale, the proceeds in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations
when received in the form of cash or Cash Equivalents, received
by the Company or any of its Subsidiaries from such Asset Sale
net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees and sales commissions),
(b) taxes paid or payable ((1) including, without limitation,
income taxes reasonably estimated to be actually payable as a
result of any disposition of property within two years of the
date of disposition, including under any tax sharing
arrangements, and (2) after taking into account any reduction
in tax liability due to available tax credits or deductions
applicable to the transaction), (c) a reasonable reserve for
the after-tax cost of any indemnification obligations (fixed
and/or contingent) attributable to seller's indemnities to the
purchaser undertaken by the Company or any of its Subsidiaries
in connection with such Asset Sale and (d) repayment of Debt
that is required to be repaid in connection with such Asset
Sale, under agreements governing such Debt or Asset Sale.
"Net Proceeds Offer" shall have the meaning provided
in Section 4.20.
"New Management Agreement" means the Existing
Management Agreement as amended to add the Company as a party
thereto.
"Non-Recourse Debt" of any Person means Debt or the
portion of Debt (i) as to which neither GAF, the Company nor
any of its Recourse Subsidiaries (A) provides credit support
(including any undertaking, agreement or instrument which would
constitute Debt), (B) is directly or indirectly liable or (C)
constitutes the lender and (ii) no default with respect to
which (including any rights which the holders thereof may have
to take enforcement action against the assets of a Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both)
any holder of any other Debt of such Person or its Recourse
Subsidiaries to declare a default on such other Debt or cause
the payment thereof to be accelerated or payable prior to its
Stated Maturity.
"Non-Recourse Subsidiary" of any Person means a
Subsidiary (A) which has been designated as such by the Board
of Directors of such Person, (B) which has not acquired any
assets directly or indirectly from GAF, the Company or any of
its Subsidiaries other than at fair market value, including by
the receipt of Capital Stock of such Non-Recourse Subsidiary,
provided, however, that if any such acquisition or series of
<PAGE>
related acquisitions involves assets having a value in excess
of $2,000,000, such acquisition or series of related
acquisitions shall be approved by a majority of the members of
the Board of Directors of the Company in a Board Resolution
which shall set forth that such acquisitions are being, or have
been, made at fair market value, and (C) which has no Debt
other than Non-Recourse Debt. Subsidiaries of Non-Recourse
Subsidiaries shall be deemed Non-Recourse Subsidiaries.
"Notes" means the Initial Notes, the Exchange Notes
and the Private Exchange Notes treated as a single class of
securities.
"Obligations" means (a) the full and punctual payment
of the principal of, and interest on, the Notes when due,
whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company
under this Indenture and the Notes and (b) the full and
punctual performance of all other obligations of the Company
under this Indenture and the Notes.
"Offering Memorandum" means the Offering Memorandum
of the Company dated October 15, 1996, relating to the Initial
Notes.
"Officer" of any corporation means the Chairman of
the Board, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Secretary or the
Controller of such corporation.
"Officers' Certificate" of any corporation means a
certificate signed by two Officers or by an Officer and an
Assistant Treasurer or Assistant Secretary of such corporation
and delivered to the Trustee and which complies with
Section 10.05.
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee and
which complies with Section 10.05. Such legal counsel may be
an employee of or counsel to the Company or its Affiliates.
"Paying Agent" has the meaning set forth in Sec-
tion 2.03, except that, for the purposes of Article VIII and
Sections 4.19 and 4.20, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any
thereof.
"Permitted Holders" means (i) Samuel J. Heyman, his
heirs, administrators, executors and entities of which a
majority of the Voting Stock is owned by Samuel J. Heyman, his
<PAGE>
heirs, administrators or executors and (ii) any Person
controlled, directly or indirectly, by Samuel J. Heyman or his
heirs, administrators or executors.
"Permitted Lien" means:
(1) Liens for taxes, assessments and governmental charges
to the extent not required to be paid under this
Indenture;
(2) statutory Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen
or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or
being contested in good faith by an appropriate process of
law, and for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have
been made;
(3) pledges or deposits in the ordinary course of
business to secure lease obligations or non-delinquent
obligations under workers' compensation, unemployment
insurance or similar legislation;
(4) Liens to secure the performance of public statutory
obligations that are not delinquent, appeal bonds,
performance bonds or other obligations of a like nature
(other than for borrowed money);
(5) easements, rights-of-way, restrictions, minor defects
or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with
the business of the Company and its Subsidiaries taken as
a whole;
(6) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of non-
delinquent customs duties in connection with the
importation of goods;
(7) judgment and attachment Liens not giving rise to a
Default or Event of Default;
(8) leases or subleases granted to others not interfering
in any material respect with the business of the Company
and its Subsidiaries, taken as a whole;
(9) Liens encumbering deposits made in the ordinary
course of business to secure nondelinquent obligations
arising from statutory, regulatory, contractual or
<PAGE>
warranty requirements of the Company or its Subsidiaries
for which a reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made;
(10) any interest or title of a lessor in the property
subject to any lease, whether characterized as capitalized
or operating other than any such interest or title
resulting from or arising out of default by the Company or
any of its Subsidiaries of its obligations under any such
lease which is material;
(11) Liens arising from filing UCC financing statements
for precautionary purposes in connection with true leases
or conditional sales of personal property that are
otherwise permitted under this Indenture and under which
the Company or any of its Subsidiaries is lessee;
(12) broker's Liens securing the payment of commissions
and management fees in the ordinary course of business;
(13) Liens on cash and Cash Equivalents posted as margin
pursuant to the requirements of any bona fide hedge
agreement relating to interest rates, foreign exchange or
commodities listed on public exchanges, but only to the
extent such Liens are required from customers generally
(regardless of creditworthiness) in accordance with
customary market practice;
(14) Liens on cash collateralizing reimbursement
obligations in respect of letters of credit issued for the
account of the Company or any of its Subsidiaries in the
ordinary course of business (other than letters of credit
issued as credit support for any Debt);
(15) Liens arising in respect of accounts receivable
arising as a result of non-recourse sales thereof;
(16) Liens arising by reason of consignment sales of
inventory in the ordinary course of business; and
(17) Liens on stock or assets of any Non-Recourse
Subsidiary securing Debt owing by such Non-Recourse
Subsidiary.
"Person" means any individual, corporation,
partnership, joint venture, incorporated or unincorporated
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof or other entity of any kind.
<PAGE>
"Post-Spin Off Subsidiary" of any Person means any
Subsidiary of such Person after giving effect to the Spin Off.
"Preferred Stock", as applied to the Capital Stock of
any corporation, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of
such corporation. Preferred Stock of any Person shall include
Redeemable Stock of such Person.
"Principal" of a debt security, including the Notes,
means the principal of such security plus, when appropriate,
the premium, if any, on such security.
"Principal Amount at Maturity" of a security means
the amount specified as such on the face of such security.
"Private Exchange Notes" has the meaning assigned to
such term in the Registration Rights Agreement.
"Proceeds Purchase Date" shall have the meaning
provided in Section 4.20.
"Purchase Money Obligation" of any Person means any
Debt secured by a Lien on assets related to the business of
such Person, and any additions and accessions thereto or
replacements thereof, which are purchased or constructed by
such Person at any time after the Issue Date; provided,
however, that (i) the aggregate outstanding principal amount of
such Debt (determined on a per asset basis in the case of any
additions, accessions or replacements) shall not at any time
exceed 100% of the purchase price to such Person of the related
assets or (ii) such Debt shall be with recourse solely to the
assets so purchased or acquired, any additions and accessions
thereto or replacements thereof and any proceeds therefrom.
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Ratings Event" means any of the following:
(i) the rating of ISP's Long-Term Debt being below
Baa3 (in the case of the rating by Moody's) and below BB+
(in the case of the rating by S&P); or
(ii) at any time that ISP's Long-Term Debt is rated
below Baa3 by Moody's, the rating of ISP's Long-Term Debt
<PAGE>
being placed on credit watch for a ratings downgrade below
BB+ by S&P; or
(iii) at any time that ISP's Long-Term Debt is rated
below BB+ by S&P, the rating of ISP's Long-Term Debt being
placed on credit watch for a ratings downgrate below Baa3
by Moody's.
"Recourse Subsidiaries", of any Person, means all
Subsidiaries of such Person other than Non-Recourse
Subsidiaries of such Person.
"Redeemable Stock" means, with respect to any Person,
Capital Stock of such Person that by its terms or otherwise
(x) is required, directly or indirectly, to be redeemed on or
prior to the ninetieth day after the Stated Maturity of the
Notes, (y) is redeemable or puttable, directly or indirectly,
at the option of the holder thereof at any time on or prior to
the ninetieth day after the Stated Maturity of the Notes, or
(z) is exchangeable or convertible into another security (other
than a security that is not itself Redeemable Stock).
"Refinance" means, in respect of any Debt, to
refinance, extend, renew, refund, repay, prepay, redeem,
defease or retire, or to issue Debt in exchange or replacement
for, such Debt. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Debt" means Debt Issued to Refinance any
other Debt; provided, however, that (i) the amount of the Debt
so Issued shall not exceed the principal amount or the accreted
value (in the case of Debt Issued at a discount) of the Debt so
Refinanced plus, in each case, the reasonable costs incurred by
the issuer in connection with such Refinancing, (ii) the
Average Life and Stated Maturity of the Debt so Issued shall
equal or exceed that of the Debt so Refinanced, (iii) the Debt
so Issued shall not rank senior in right of payment to the Debt
being Refinanced, (iv) if the Debt being Refinanced does not
bear interest in cash prior to a specified date, the
Refinancing Debt shall not bear interest in cash prior to such
specified date, (v) if the Debt being Refinanced is a Purchase
Money Obligation, Refinancing Debt shall not be secured by any
assets not securing the Debt so Refinanced or improvements or
additions thereto, or replacements thereof, and (vi) the
obligors with respect to the Refinancing Debt shall not include
any persons who were not obligors (including predecessors
thereof) with respect to the Debt being Refinanced.
"Registrar" has the meaning set forth in
Section 2.03.
<PAGE>
"Registration Rights Agreement" means the
registration rights agreement dated the Issue Date between the
Company and Bear, Stearns & Co. Inc., as initial purchaser.
"Restricted Investment" means, with respect to the
Company or any of its Subsidiaries, an Investment by such
Person in an Affiliate of the Company; provided, however, that
the following shall not be Restricted Investments:
(a) any Investment by the Company or any ISP Subsidiary
(or on and after the Determination Date, any
Subsidiary of the Company) in any Unrestricted
Affiliate;
(b) prior to the Determination Date:
(i) any Investment by the Company or any of its
Post-Spin Off Subsidiaries in (x) the Company or
any of its Post-Spin Off Recourse Subsidiaries
or (y) any such Affiliate that becomes, as a
result of such Investment, a Recourse Subsidiary
of any Post-Spin Off Recourse Subsidiary of the
Company; and
(ii) any Investment by G-I Holdings or any of its
Post-Spin Off Subsidiaries in (x) G-I Holdings
or any of its Post-Spin Off Recourse
Subsidiaries or (y) any such Affiliate that
becomes, as a result of such Investment, a
Recourse Subsidiary of any Post-Spin Off
Recourse Subsidiary of G-I Holdings;
(c) prior to the Spin Off, loans and advances bearing
market rates of interest between the Company and any
of its Subsidiaries or between or among Subsidiaries
of the Company so long as such loans and advances, if
they are not permitted under clause (b)(i) or (ii),
are repaid in full in cash at the consummation of the
Spin Off; and
(d) on and after the Determination Date:
(i) any Investment in the Company or any of its
Recourse Subsidiaries; and
(ii) any Investment in any such Affiliate that
becomes, as a result of such Investment, a
Recourse Subsidiary of the Company.
<PAGE>
"Restricted Payment" means (i) the declaration or
making of any dividend or of any other payment or distribution
(other than dividends, payments or distributions payable solely
in shares of the Company's Capital Stock other than Redeemable
Stock) on or with respect to the Company's Capital Stock (other
than Redeemable Stock) and (ii) any payment on account of the
purchase, redemption, retirement or other acquisition for value
of the Company's Capital Stock (other than Redeemable Stock);
provided, however, that the Linden Dividend shall not be deemed
to be a Restricted Payment.
"Restricted Security" has the meaning set forth in
Rule 144(a)(3) under the Securities Act.
"S&P" means Standard & Poor's Rating Services or its
successor.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and the rules and regulations of the
Commission thereunder.
"Series B Exchange Offer Notes" means the Series B
9 3/4% Senior Notes due 2002 of the Company.
"Shelf Registration Statement" means the shelf
registration statement, which the Company will use its best
efforts to cause to become effective with respect to the resale
of the Initial Notes in the event that the Exchange Offer is
not completed, pursuant to the terms of the Registration Rights
Agreement.
"Significant Subsidiary" means (i) any Recourse
Subsidiary of the Company which at the time of determination
either (A) had assets which, as of the date of the Company's
most recent quarterly consolidated balance sheet, constituted
at least 5% of the Company's total assets on a consolidated
basis as of such date, in each case determined in accordance
with GAAP, or (B) had revenues for the 12-month period ending
on the date of the Company's most recent quarterly consolidated
statement of income which constituted at least 5% of the
Company's total revenues on a consolidated basis for such
period, or (ii) any Recourse Subsidiary of the Company which,
if merged with all Defaulting Subsidiaries (as defined below)
of the Company, would at the time of determination either
(A) have had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, would have
constituted at least 10% of the Company's total assets on a
consolidated basis as of such date or (B) have had revenues for
the 12-month period ending on the date of the Company's most
recent quarterly consolidated statement of income which would
<PAGE>
have constituted at least 10% of the Company's total revenues
on a consolidated basis for such period (each such
determination being made in accordance with GAAP). "Defaulting
Subsidiary" means any Recourse Subsidiary of the Company with
respect to which an event described under clause (6), (7), or
(8) of Section 6.01 has occurred and is continuing.
"Specified Agreements" means (i) the Tax Sharing
Agreements (but, after a company leaves the applicable
consolidated group, only with respect to the indemnities that
survive thereunder), (ii) the Existing Management Agreement and
the New Management Agreement, (iii) the Granules Contracts and
(iv) the Indemnification Agreement and other similar
indemnification agreements in effect prior to the Issue Date.
"Specified Subsidiaries" means Subsidiaries of the
Company other than (i) ISP Subsidiaries and (ii) BMCA
Subsidiaries.
"Spin Off" means the consummation of the transactions
described in items (1) through (9) in the first paragraph under
the section of the Offering Memorandum entitled "The Spin Off
Transactions," substantially on the terms described in such
paragraph.
"Spin Off Date" means the date on which the Spin Off
is consummated.
"Stated Maturity" when used with respect to any Note
or any installment of interest thereon, means the date
specified in such Note as the fixed date on which the principal
of such Note or such installment of interest is due and
payable, and when used with respect to any other Debt, means
the date specified in the instrument governing such Debt as the
fixed date on which the principal of such Debt or any
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person at any
time of determination, (i) a corporation a majority of whose
Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof
or (ii) any other Person (other than a corporation) in which
such Person, one or more Subsidiaries thereof or such Person
and one or more Subsidiaries thereof, directly or indirectly,
at the date of determination thereof has at least majority
ownership interest and the power to direct the policies,
management and affairs thereof. For purposes of this
definition, any director's qualifying shares or investments by
<PAGE>
foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tax Sharing Agreements" means, collectively, (i) the
tax sharing agreement dated as of September 7, 1993, as amended
on the Issue Date, among GAF, G-I Holdings, G Industries and
the Company, (ii) the amended and restated tax sharing
agreement dated as of March 3, 1992 among GAF, G Industries,
ISP and certain of ISP's Subsidiaries, (iii) the tax sharing
agreement among ISP Holdings and certain of its Subsidiaries,
described in the Exchange Offer Circular under "Tax Sharing
Agreements -- ISP Holdings Tax Sharing Agreement," and (iv)
prior to the Spin Off, the tax sharing agreement dated as of
January 31, 1994 among GAF, G-I Holdings, BMCA and BMCA's
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as
amended, as in effect on the date hereof.
"Transactions" means the Spin Off and the ISP
Holdings Transactions.
"Treasury Yield" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to the
applicable redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar
data)) most nearly equal to the then remaining Average Life of
the Notes; provided, however, that if the Average Life of the
Notes is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given,
the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of
the Notes is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trustee" means the party named as such in this
Indenture until a successor replaces such party in accordance
with the provisions of this Indenture, and thereafter means
such successor.
"Trust Officer" means the Chairman of the Board, the
President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate
trust matters.
<PAGE>
"Unrestricted Affiliate" means: (a) prior to the
Determination Date, any Person (other than any Subsidiary of
the Company) controlled (as defined in the definition of
"Affiliate") by the Company in which no Affiliate of the
Company (other than (i) so long as ISP is a Recourse Subsidiary
of the Company, ISP or any of its Wholly-Owned Recourse
Subsidiaries, (ii) any director or officer of the Company or
any of its Post-Spin off Subsidiaries (so long as such person
is not also a director or officer of GAF or any of its
Affiliates (other than the Company and its Post-Spin Off
Subsidiaries, except for Non-Recourse Subsidiaries in which GAF
has an interest other than through the Company)) and
(iii) another Unrestricted Affiliate under this paragraph (a))
has an Investment; and (b) on and after the Determination Date,
any Person (other than any Subsidiary of the Company)
controlled (as defined in the definition of "Affiliate") by the
Company in which no Affiliate of the Company (other than (i) so
long as ISP is a Recourse Subsidiary of the Company, ISP or any
of its Wholly-Owned Recourse Subsidiaries, (ii) so long as BMCA
is a Recourse Subsidiary of the Company, BMCA or any of its
Wholly-Owned Recourse Subsidiaries, (iii) a Wholly-Owned
Recourse Subsidiary of the Company, (iv) any director or
officer of the Company or any of its Subsidiaries (so long as
such Person is not also a director or officer of GAF or any of
its Affiliates (other than the Company and its Subsidiaries,
except for Non-Recourse Subsidiaries in which GAF has an
interest other than through the Company)) and (v) another
Unrestricted Affiliate under this paragraph (b)) has an
Investment.
"U.S. Government Obligations" means money or direct
non-callable obligations of the United States of America for
the payment of which the full faith and credit of the United
States is pledged.
"USI" means U.S. Intec, Inc., a Texas corporation,
and its successors.
"Voting Stock" means, with respect to any Person,
Capital Stock of any class or kind normally entitled to vote in
the election of the board of directors or other governing body
of such Person.
"Wholly-Owned Recourse Subsidiary" of any Person
means a Wholly-Owned Subsidiary of such Person that is a
Recourse Subsidiary of such Person.
"Wholly-Owned Subsidiary" means a Subsidiary all the
Capital Stock of which (other than directors' qualifying
<PAGE>
shares) is owned by the applicable corporation or another
Wholly-Owned Subsidiary of the applicable corporation.
Section 1.02. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision
of the TIA, the provision is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in
this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a
Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means
the Trustee; and
"obligor" on the indenture securities means the
Company and any other obligor on the Notes.
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by Commission rule and not otherwise defined herein
have the meanings assigned to them therein.
Section 1.03. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and
words in the plural include the singular;
(4) provisions apply to successive events and
transactions;
(5) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) all calculations made for the purpose of
determining compliance with the terms of the covenants set
forth in Article IV and other provisions of this Indenture
shall utilize GAAP in effect at the time of preparation of, and
in conformity with those used to prepare, the historical
consolidated financial statements of the Company at and for the
<PAGE>
fiscal year ended December 31, 1995. All financial
calculations shall be made as if the Spin Off occurred as of
the Issue Date; provided, however, that if the Determination
Date occurs, all subsequent financial calculations shall be
made without giving effect to the Spin Off; provided, further,
however, that, in such event, cumulative Consolidated Net
Income for purposes of Section 4.13(a) shall be recalculated
from the Applicable Date without giving effect to the Spin Off.
ARTICLE II
THE NOTES
Section 2.01. Form and Dating. The Initial Notes
and the Trustee's certificate of authentication thereon shall
be substantially in the form of Exhibit A hereto. The Exchange
Notes (and the Private Exchange Notes) and the Trustee's
certificate of authentication thereon shall be substantially in
the form of Exhibit B. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or
agreements to which the Company is subject, if any, or usage.
The Company shall approve the form of the Notes and any
notation, legend or endorsement on them, and such approval
shall be evidenced by the execution of such Notes by two
Officers of the Company. Each Note shall be dated the date of
its authentication.
The terms and provisions contained in the form of the
Notes, annexed hereto as Exhibits A and B, shall constitute,
and are hereby expressly made, a part of this Indenture.
Section 2.02. Execution and Authentication;
Aggregate Principal Amount. Two Officers shall sign the Notes
for the Company by facsimile or manual signature. The
Company's seal may be reproduced or imprinted on the Notes, by
facsimile or otherwise.
If a Person whose signature is on a Note as an
Officer no longer holds that office or position at the time the
Trustee authenticates the Note, the Note shall be valid
nevertheless.
A Note shall not be valid until the Trustee manually
signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for
delivery (i) Initial Notes for original issue in an aggregate
principal amount not to exceed $325,000,000 and (ii) Exchange
<PAGE>
Notes or Private Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes
in accordance with the Registration Rights Agreement, in each
case upon a written order of the Company signed by an Officer
of the Company to a Trust Officer. The order shall specify the
amount of Notes to be authenticated, the date on which the
Notes are to be authenticated and whether the Notes are to be
Initial Notes or Exchange Notes. The aggregate principal
amount of Notes outstanding at any time may not exceed
$325,000,000 (or such lesser amount as is issued by the Company
on the Issue Date), except as provided in Section 2.07.
The Notes shall be issuable only in registered form
and only in denominations of $1,000 and any integral multiple
thereof.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate the Notes, which
authenticating agent shall be compensated by the Company.
Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the
Trustee may do so, except with regard to the original issuance
of the Notes and pursuant to Section 2.06. Except as provided
in the preceding sentence, each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any
Agent.
If the Notes are to be issued in the form of one or
more Global Notes, then the Company shall execute and the
Trustee shall authenticate and deliver one or more Global Notes
that (i) shall represent and shall be in minimum denominations
of $1,000 or in the approximate equivalent amount, (ii) shall
be registered in the name of the Depository for such Global
Note or Notes or the nominee of such Depository, (iii) shall be
delivered by the Trustee to such Depository or pursuant to such
Depository's instructions and (iv) shall bear the legend set
forth in Exhibit C.
Section 2.03. Registrar and Paying Agent. The
Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Notes and of their transfer and
exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent.
<PAGE>
The Company shall enter into an appropriate written
agency agreement with any Agent not a party to this Indenture.
Each such agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of
any such Agent and any change in the address of such Agent.
The Company may change an Agent without prior notice to the
Holders. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints the Trustee as
Registrar and Paying Agent in connection with the Notes.
Section 2.04. Paying Agent To Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold
in trust for the benefit of Holders all money held by the
Paying Agent for the payment of principal of or interest on the
Notes, and such Paying Agent shall notify the Trustee of any
default by the Company in making any such payment. If the
Company or any of its Subsidiaries acts as Paying Agent, it
shall segregate the money and hold it as a separate trust fund.
The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds
disbursed, and the Trustee may at any time during the
continuance of any payment default, upon written request to a
Paying Agent, require such Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed.
Upon doing so, the Paying Agent shall have no further liability
for the money so paid over to the Trustee.
Section 2.05. Holder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA { 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the
Trustee at least ten Business Days before each Interest Payment
Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the
Holders, and the Company shall otherwise comply with TIA
{ 312(a).
The Trustee shall be entitled to rely upon a
certificate of the Registrar, the Company or such other Paying
Agent, as the case may be, as to the names and addresses of the
Holders and the principal amounts and serial numbers of the
Notes.
<PAGE>
Section 2.06. Transfer and Exchange. The Notes
shall be issued in registered form and shall be transferable
only upon the surrender of such Notes for registration of
transfer. When Notes are presented to the Registrar or a co-
Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met; provided, however, that every
Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument or transfer in a form satisfactory to the Company
and the Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Company shall execute the Notes,
and the Trustee shall authenticate the Notes at the Registrar's
request. No service charge to the Holder shall be made for any
registration of transfer or exchange, but the Company or the
Trustee may require from the transferring or exchanging Holder
payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 4.19,
4.20 or 9.05). The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of any Note
(i) during a period beginning at the opening of business 15
days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Note being
redeemed in part.
If a Note is a Restricted Security in certificated
form, then as provided in this Indenture and subject to the
limitations herein set forth, the Holder, provided it is a
Qualified Institutional Buyer, may exchange such Note for a
Book-Entry Note by instructing the Trustee to arrange for such
Note to be represented by a beneficial interest in a Global
Note in accordance with the customary procedures of the
Depository.
In accordance with the provisions of this Indenture
and subject to certain limitations herein set forth, an owner
of a beneficial interest in a Global Note which has not been
exchanged for an Exchange Note may request a Note in
certificated form, in exchange in whole or in part, as the case
may be, for such beneficial owner's interest in the Global
Note.
<PAGE>
Upon any exchange provided for in the preceding
paragraph, the Company shall execute and the Trustee shall
authenticate and deliver to the person specified by the
Depository a new Note or Notes registered in such names and in
such authorized denominations as the Depository, pursuant to
the instructions of the beneficial owner of the Notes
requesting the exchange, shall instruct the Trustee.
Thereupon, the beneficial ownership of such Global Note shown
on the records maintained by the Depository or its nominee
shall be reduced by the amounts so exchanged and an appropriate
endorsement shall be made by or on behalf of the Trustee on the
Global Note. Any such exchange shall be effected through the
Depository in accordance with the procedures of the Depository
therefor.
Notwithstanding the foregoing, no Global Note shall
be registered for transfer or exchange, or authenticated and
delivered, whether pursuant to this Section, Section 2.07, 2.10
or 3.06 or otherwise, in the name of a person other than the
Depository for such Global Note or its nominee until (i) the
Depository notifies the Company that it is unwilling or unable
to continue as Depository for such Global Note or if at any
time the Depository ceases to be a clearing agency registered
under the Exchange Act, and a successor depository is not
appointed by the Company within 30 days, (ii) the Company
executes and delivers to the Trustee a written notice that all
such Global Notes shall be exchangeable or (iii) there shall
have occurred and be continuing an Event of Default. Upon the
occurrence in respect of any Global Note representing the Notes
of any one or more of the conditions specified in clause (i),
(ii) or (iii) of the preceding sentence, such Global Note may
be registered for transfer or exchange for Notes registered in
the names of, and authenticated and delivered to, such persons
as the Trustee or the Depository, as the case may be, shall
direct.
Except as provided above, any Note authenticated and
delivered upon registration of transfer of, or in exchange for,
or in lieu of, any Global Note, whether pursuant to this
Section, Section 2.07, 2.10 or 3.06 or otherwise, shall also be
a Global Note and bear the legend specified in Exhibit C.
Section 2.07. Replacement Notes. If a mutilated
Note is surrendered to the Trustee or if the Holder of a Note
claims that such Note has been lost, destroyed or wrongfully
taken, the Company shall issue a replacement Note, and the
Trustee shall authenticate such replacement Note if the
Trustee's requirements are met. If required by the Trustee or
the Company, an indemnity bond must be provided by the Holder
that is sufficient in the judgment of the Trustee and the
<PAGE>
Company to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced.
The Company or the Trustee may charge such Holder for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of
the Company.
Section 2.08. Outstanding Notes. Notes outstanding
at any time are all Notes that have been authenticated by the
Trustee, except for those cancelled by it, those delivered to
it for cancellation and those described in this Section 2.08 as
not outstanding. A Note does not cease to be outstanding
because the Company or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona
fide purchaser.
If the Paying Agent holds (or, if the Company or a
Subsidiary is the Paying Agent, segregates and holds in trust),
in accordance with this Indenture, on the maturity or
redemption date, money sufficient to pay Notes payable on that
date, then on and after that date such Notes shall be deemed to
be no longer outstanding and interest on them shall cease to
accrue.
Section 2.09. Treasury Notes. In determining
whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned
by the Company or any of its Affiliates shall be disregarded,
except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or
consent, only Notes which the Trustee actually knows are so
owned shall be so disregarded.
Section 2.10. Temporary Notes. Until definitive
Notes are ready for delivery, the Company may prepare, and the
Trustee shall authenticate upon written order of the Company
signed by an Officer thereof, temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate, definitive Notes
in exchange for temporary Notes.
Until such exchange, such temporary Notes shall be
entitled to the same rights, benefits and privileges as the
definitive Notes.
<PAGE>
Section 2.11. Cancellation. The Company at any time
may deliver Notes to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel
all Notes surrendered for registration of transfer, exchange,
payment or cancellation. The Company may not issue new Notes
to replace Notes it has paid or delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest. If the Company
defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus, to the extent permitted by law,
any interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date. Such
special record date shall be the fifteenth day next preceding
the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least
15 days before the special record date, the Company shall mail
or cause to be mailed to each Holder and the Trustee a notice
that states the special record date, the payment date and the
amount of defaulted interest to be paid.
Section 2.13. CUSIP Number. The Company in issuing
the Notes may use a "CUSIP" number. If so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience
to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any
notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any
such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the
Trustee of any change in the CUSIP number.
Section 2.14. Deposit of Moneys. On or before
11:00 A.M., New York City time, on each payment date, the
Company shall deposit with the Trustee or Paying Agent in
immediately available funds money sufficient to make cash
payments, if any, due on such payment date. The principal of
and interest on Book-Entry Notes shall be payable to the
Depository or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Book-Entry Notes
represented thereby. The principal of and interest on any
Notes other than Book-Entry Notes shall be payable to the
registered owner of the Notes represented thereby. The
principal of and interest on Notes in certificated form shall
be payable at the office of the Paying Agent; provided,
however, that the Company, at its option, may pay interest by
check by mailing such check to the Holder's registered address.
<PAGE>
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee. If the Company
elects to redeem Notes pursuant to Section 5(a) of the Notes,
it shall notify the Trustee in writing of the redemption date
and the principal amount of Notes to be redeemed.
The Company shall give the notice to the Trustee
provided for in this Section at least 45 days before the
redemption date, unless the Trustee consents in writing to a
shorter notice period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel to the effect
that such redemption will comply with the conditions contained
in this Indenture and will set forth the redemption price. If
fewer than all the Notes are to be redeemed, the record date
relating to such redemption shall be selected by the Company
and given to the Trustee together with the 45-day notice, which
record date shall not be prior to the date of such notice nor
more than 15 days after the date of notice to the Trustee.
Section 3.02. Selection of Notes To Be Redeemed. In
the event that less than all of the Notes are to be redeemed at
any time, selection of such Notes for redemption will be made
by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which such
Notes are listed or, if such Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of
$1,000 or less shall be redeemed in part; provided, further,
that if a partial redemption is made in accordance with the
first paragraph of Section 5(a) of the Notes, selection of the
Notes or portions thereof for redemption shall be made by the
Trustee only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to procedures of The
Depository Trust Company), unless such method is otherwise
prohibited. The Trustee shall make the selection from
outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal
amount at maturity of Notes that have denominations larger than
$1,000, subject to the restriction that Notes and portions of
Notes which the Trustee selects shall be in amounts of $1,000
or a whole multiple of $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to
portions of Notes called for redemption. The Trustee shall
notify the Company promptly of the Notes or portions of Notes
to be redeemed.
<PAGE>
Section 3.03. Notice of Redemption. Notice of
redemption shall be mailed by first-class mail at least 30 but
not more than 60 days before the redemption date (or, if
applicable, at such other time as is provided by Section 5(a)
of the Notes) to each Holder of Notes to be redeemed at its
registered address.
The notice shall identify the Notes to be redeemed
and shall state:
(A) the redemption date;
(B) the redemption price;
(C) the name and address of the Paying Agent;
(D) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(E) if fewer than all the outstanding Notes are to
be redeemed, the identification and principal amounts of
the particular Notes to be redeemed;
(F) that, unless the Company has failed to deposit
with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to this Indenture,
the interest on Notes called for redemption ceases to
accrue on and after such redemption date; and
(G) the CUSIP number, if any, and that no
representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's
expense. In such event, the Company shall provide the Trustee
with the information required by clauses (A), (B), (C) and (E)
at least 45 days before the redemption date.
Section 3.04. Effect of Notice of Redemption. Once
notice of redemption is mailed, Notes called for redemption
become due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the
Paying Agent, subject to the Company's compliance with
Section 3.05 herein, such Notes shall be paid at the redemption
price stated in the notice, plus accrued and unpaid interest,
if any, to the redemption date.
<PAGE>
Section 3.05. Deposit of Redemption Price. On or
prior to the redemption date, the Company shall deposit with
the Paying Agent in immediately available funds (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price
of and accrued and unpaid interest, if any, on all Notes to be
redeemed on that date other than Notes or portions of Notes
called for redemption which have been delivered by the Company
to the Trustee for cancellation.
Section 3.06. Notes Redeemed in Part. Upon
surrender of a Note that is redeemed in part, the Company shall
execute and the Trustee shall authenticate for the Holder (at
the Company's expense) a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
ARTICLE IV
COVENANTS
Section 4.01. Payment of Notes. The Company shall
pay, or cause to be paid, the principal of and interest on the
Notes on the dates and in the manner provided herein and in the
Notes. Principal or interest shall be considered paid on the
date due if the Trustee or Paying Agent holds on that date
money designated for and sufficient to pay all principal and
interest payable in cash in each case as then due. The Company
shall pay interest on overdue principal at the rate specified
therefor in the Notes.
Section 4.02. Maintenance of Office or Agency. The
Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Notes may be surrendered
for registration of transfer or exchange or for presentation
for payment and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company fails to
maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the address of the Trustee as set forth in
Section 10.02.
The Company may also from time to time designate one
or more other offices or agencies where the Notes may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any matter
<PAGE>
relieve the Company of its obligation to maintain an office or
agency pursuant to this Section 4.02. The Company shall give
prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the office of
the Trustee or its agent located in the Borough of Manhattan,
The City of New York, as such office of the Company in
accordance with Section 2.03.
Section 4.03. Corporate Existence. The Company
shall do or cause to be done all things necessary to preserve
and keep in full force and effect (i) its corporate existence
and the corporate existence of each of its Subsidiaries (other
than Non-Recourse Subsidiaries) in accordance with their
respective organizational documents and (ii) the material
rights (charter and statutory), licenses and franchises of the
Company and each of its Subsidiaries; provided, however, that
(i) neither the Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise, or corporate
existence, if the Board of Directors of the Company or such
Subsidiary shall determine that the loss thereof is not, and
will not be, adverse in any material respect to the Company or
the Holders and (ii) nothing in this Section 4.03 shall prevent
the Company from taking any action that complies with the
provisions of Section 5.01.
Section 4.04. Payment of Taxes and Other Claims.
The Company shall, and shall cause each of its Subsidiaries
(other than Non-Recourse Subsidiaries) to, pay or discharge or
cause to be paid or discharged, before any penalty accrues from
the failure to so pay or discharge, (i) all material taxes,
assessments and governmental charges levied or imposed upon it
or any of such Subsidiaries or upon the income, profits or
property of it or any of such Subsidiaries, and (ii) all
material, lawful claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon its property
or the property of any Specified Subsidiary; provided, however,
that there shall not be required to be paid or discharged any
such tax, assessment, charge or claim if the amount,
applicability or validity thereof is being contested in good
faith by appropriate proceedings and adequate provision
therefor has been made.
Section 4.05. Compliance Certificates. (a) The
Company shall deliver to the Trustee within 60 days after the
end of each of the Company's fiscal quarters (120 days after
the end of the Company's last fiscal quarter of its fiscal
year) an Officers' Certificate, stating whether or not the
<PAGE>
signers, after due inquiry, know of any Default or Event of
Default which occurred during such fiscal quarter. An
Officers' Certificate delivered within 120 days after the end
of the Company's fiscal year shall also contain a certification
from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to
such officer's knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of
this Section 4.05(a), such compliance shall be determined
without regard to any period of grace or requirement of notice
provided under this Indenture. If the officer does know of
such a Default or Event of Default, the certificate shall
describe any such Default or Event of Default, and its status.
The first certificate to be delivered pursuant to this
Section 4.05(a) shall be for the first fiscal quarter beginning
after the execution of this Indenture.
(b) The Company shall deliver to the Trustee, as
soon as possible and in any event within 10 days after the
Company becomes aware of the occurrence of each Default or
Event of Default which is continuing, an Officers' Certificate
setting forth the details of such Default or Event of Default,
and the action which the Company has taken and proposes to take
with respect thereto. Following receipt of such Officers'
Certificate, the Trustee shall send the notice called for by
Section 7.05, except as provided therein.
Section 4.06. Securities and Exchange Commission
Reports. (a) At all times from and after the earlier of
(i) the date of the commencement of the Exchange Offer or the
effectiveness of the Shelf Registration Statement and (ii) the
date that is six months after the Issue Date, in either case,
whether or not the Company is then required to file reports
with the Commission, the Company shall file with the Commission
all such reports and other information as would be required to
be filed with the Commission under the Exchange Act. The
Company shall supply to each Holder and to any other Person who
reasonably requests in writing, without cost, copies of such
reports or other information. In addition, the Company shall,
at its cost, deliver to each Holder, and a prospective
purchaser designated by such Holder, from and after the earlier
of the dates referred to in clauses (i) and (ii) of this
Section 4.06(a), quarterly and annual reports substantially
equivalent to those which would be required under the Exchange
Act if at the time of such request the Company is not a
reporting company under Section 13 or Section 15(d) of the
Exchange Act. The Company also will comply with the other
provisions of TIA { 314(a).
<PAGE>
(b) So long as any of the Notes remain outstanding,
the Company shall cause each annual, quarterly and other
financial report mailed or otherwise furnished by it generally
to public stockholders to be filed with the Trustee and mailed
to the Holders at their addresses appearing in the register of
Notes maintained by the Registrar, in each case at the time of
such mailing or furnishing to such stockholders.
(c) Delivery of such reports to the Trustee is for
informational purposes only and the Trustee's receipt of such
reports shall not constitute constructive notice of any
information contained therein or determinable from information
contained therein, including the Company's compliance with any
of its covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officers' Certificates).
(d) The Company shall provide to any holder or any
beneficial owner of Initial Notes any information reasonably
requested by such holder or such beneficial owner concerning
the Company and its Subsidiaries (including financial
statements) necessary in order to permit such holder or such
beneficial owner to sell or transfer Initial Notes in
compliance with Rule 144A under the Securities Act or any
similar rule or regulation adopted by the Commission.
Section 4.07. Waiver of Stay, Extension or Usury
Laws. The Company covenants (to the full extent permitted by
applicable law) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or
advantage of, and will actively resist any attempts to claim
the benefit of any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants
or the performance of this Indenture; and (to the full extent
permitted by applicable law) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had
been enacted.
Section 4.08. Maintenance of Properties. Subject to
this Article IV, the Company shall cause all material
properties owned by or leased to it or any of its Subsidiaries
(other than Non-Recourse Subsidiaries) and used or useful in
the conduct of its business or the business of such
Subsidiaries to be maintained and kept in normal condition,
repair and working order and supplied with all necessary
<PAGE>
equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company or such Subsidiary may be
necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section 4.08
shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is not, in the judgment of the Board of Directors
of the Company or such Subsidiary, adverse in any material
respect, to the Company or the Holders.
Section 4.09. Limitation on Debt and Preferred Stock
of the Company and ISP Subsidiaries. (a) The Company shall
not Issue, directly or indirectly, any Debt or any Preferred
Stock unless, at the time of such Issuance and after giving
effect thereto, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Consolidated EBITDA
Coverage Ratio of the Company for the period of its most
recently completed four consecutive fiscal quarters ending at
least 45 days prior to the date such Debt is Issued is at least
2.00 to 1.00.
(b) The Company shall not permit any ISP Subsidiary
(so long as such ISP Subsidiary is a Subsidiary of the Company)
to Issue, directly or indirectly, any Debt or any Preferred
Stock unless, at the time of such Issuance and after giving
effect thereto, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Consolidated EBITDA
Coverage Ratio of ISP for the period of its most recently
completed four consecutive fiscal quarters ending at least 45
days prior to the date such Debt is Issued is at least 2.00 to
1.00.
(c) Notwithstanding the foregoing, the Company and
ISP Subsidiaries may Issue the following:
(1) Debt Issued pursuant to the Credit Agreement or
any Refinancing Debt thereof in an aggregate principal
amount outstanding at any time not to exceed $500,000,000;
(2) Debt or Preferred Stock of the Company or any of
its Post-Spin Off Subsidiaries Issued to and held by
(i) ISP or any of its Wholly-Owned Recourse Subsidiaries,
(ii) the Company or any of its Wholly-Owned Recourse Post-
Spin Off Subsidiaries or (iii) on and after the
Determination Date, the Company or any of its Wholly-Owned
Recourse Subsidiaries; provided, however, that (x) any
subsequent transfer of such Debt or such Preferred Stock
<PAGE>
to any Person not permitted by the foregoing or (y) any
Wholly-Owned Recourse Subsidiary of ISP or of the Company
that holds such Debt or Preferred Stock ceasing to be a
Wholly-Owned Recourse Subsidiary of ISP or of the Company,
as the case may be, shall be deemed, in each case, to
constitute the Issuance of such Debt or such Preferred
Stock by the Company or such ISP Subsidiary, as the case
may be;
(3) Purchase Money Obligations, including
Refinancing Debt thereof, in an aggregate amount
outstanding at any time not to exceed $30,000,000;
(4) Acquired Debt;
(5) Debt outstanding on the Issue Date (including,
without limitation, the Exchange Offer Notes and the
Series B Exchange Offer Notes) and the Exchange Notes;
(6) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (2)-(5) above;
(7) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of ISP and (y) Guarantees of Non-Recourse Debt
of any Non-Recourse Subsidiary of ISP which Guarantees are
recourse only to the stock of such Non-Recourse
Subsidiary;
(8) on and after the Determination Date, (x) Non-
Recourse Debt of a Non-Recourse Subsidiary of the Company
and (y) Guarantees of Non-Recourse Debt of any Non-
Recourse Subsidiary of the Company which Guarantees are
recourse only to the stock of such Non-Recourse
Subsidiary;
(9) Preferred Stock (other than Redeemable Stock) of
the Company;
(10) so long as no Default or Event of Default has
occurred and is continuing and no Ratings Event has
occurred and is continuing, Debt of any ISP Subsidiary;
and
(11) Debt (other than Debt described in clauses (1)
through (8) and (10) above) in an aggregate principal
amount outstanding at any time not to exceed $50,000,000.
(d) To the extent the Company or any ISP Subsidiary
Guarantees any Debt of the Company or any ISP Subsidiary, such
Guarantee and such Debt will be deemed to be the same Debt and
<PAGE>
only the amount of the Debt will be deemed to be outstanding.
If the Company or an ISP Subsidiary Guarantees any Debt of a
Person that, subsequent to the Issuance of such Guarantee,
becomes an ISP Subsidiary, such Guarantee and the Debt so
Guaranteed shall be deemed to be the same Debt, which shall be
deemed to have been Issued when the Guarantee was Issued and
shall be deemed to be permitted to the extent the Guarantee was
permitted when Issued.
Section 4.10. Limitation on Debt and Preferred Stock
of BMCA Subsidiaries. (a) The Company shall not permit any
BMCA Subsidiary (so long as such BMCA Subsidiary is a
Subsidiary of the Company) to Issue, directly or indirectly,
any Debt or any Preferred Stock unless, at the time of such
Issuance and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing and
(ii) the Consolidated EBITDA Coverage Ratio of BMCA for the
period of its most recently completed four consecutive fiscal
quarters ending at least 45 days prior to the date such Debt is
Issued is at least 2.00 to 1.00.
(b) Notwithstanding the foregoing, BMCA Subsidiaries
may Issue the following:
(1) Debt or Preferred Stock of any BMCA Subsidiary
Issued to and held by (i) BMCA or any of its Wholly-Owned
Recourse Subsidiaries, (ii) any Wholly-Owned Recourse
Subsidiary of the Company other than any ISP Subsidiary or
(iii) on and after the Determination Date, the Company or
any of its Wholly-Owned Recourse Subsidiaries; provided,
however, that (x) any subsequent transfer of such Debt or
Preferred Stock to any Person not permitted by the
foregoing or (y) any Wholly-Owned Recourse Subsidiary of
BMCA (or, if applicable, of the Company) that holds such
Debt or Preferred Stock ceasing to be a Wholly-Owned
Recourse Subsidiary of BMCA (or, if applicable, of the
Company) shall be deemed, in each case, to constitute the
Issuance of such Debt or such Preferred Stock by such BMCA
Subsidiary;
(2) Purchase Money Obligations, including
Refinancing Debt thereof, in an aggregate amount
outstanding at any time not to exceed $35,000,000;
(3) Acquired Debt;
(4) Debt outstanding on the Issue Date;
(5) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (1)-(4) above;
<PAGE>
(6) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of BMCA and (y) Guarantees of Non-Recourse Debt
of any Non-Recourse Subsidiary of BMCA which Guarantees
are recourse only to the stock of such Non-Recourse
Subsidiary; and
(7) Debt (other than Debt described in clauses (1)
through (6) above) in an aggregate principal amount
outstanding at any time not to exceed $35,000,000.
(c) To the extent any BMCA Subsidiary Guarantees any
Debt of any other BMCA Subsidiary, such Guarantee and such Debt
will be deemed to be the same Debt and only the amount of the
Debt will be deemed to be outstanding. If a BMCA Subsidiary
Guarantees any Debt of a Person that, subsequent to the
Issuance of such Guarantee, becomes a BMCA Subsidiary, such
Guarantee and the Debt so Guaranteed shall be deemed to be the
same Debt which shall be deemed to have been Issued when the
Guarantee was Issued and shall be deemed to be permitted to the
extent the Guarantee was permitted when Issued.
Section 4.11. Limitation on Debt and Preferred Stock
of Specified Subsidiaries. (a) The Company shall not permit
any Specified Subsidiary (so long as such Specified Subsidiary
is a Subsidiary of the Company) to Issue, directly or
indirectly, any Debt or any Preferred Stock unless, at the time
of such Issuance and after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be
continuing and (ii) the Consolidated EBITDA Coverage Ratio of
the Specified Subsidiaries (determined on a combined basis) for
its most recently completed four consecutive fiscal quarter
period ending at least 45 days prior to the date such Debt is
Issued is at least 2.00 to 1.00.
(b) Notwithstanding the foregoing, Specified
Subsidiaries may Issue the following:
(1) Debt or Preferred Stock of any Specified
Subsidiary Issued to and held by any Wholly-Owned Recourse
Subsidiary of such Specified Subsidiary or the Company or
any of its Wholly-Owned Recourse Subsidiaries; provided,
however, that (x) any transfer of such Debt or such
Preferred Stock to any Person not permitted by the
foregoing or (y) such Wholly-Owned Recourse Subsidiary
ceasing to be a Wholly-Owned Recourse Subsidiary of such
Specified Subsidiary or of the Company, as the case may
be, shall, in each case, be deemed to constitute the
Issuance of such Debt or such Preferred Stock by such
Specified Subsidiary;
<PAGE>
(2) Purchase Money Obligations in an aggregate
amount outstanding at any time not to exceed $50,000,000;
(3) Acquired Debt;
(4) Debt outstanding on the Issue Date;
(5) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (1)-(4) above;
(6) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of any Specified Subsidiary and (y) Guarantees
of Non-Recourse Debt of Non-Recourse Subsidiaries which
Guarantees are recourse only to the stock of such Non-
Recourse Subsidiary; and
(7) Debt (other than Debt described in clauses
(1)-(6) above) in an aggregate principal amount
outstanding at any time not to exceed $50,000,000.
(c) To the extent any Specified Subsidiary
Guarantees any Debt of any other Specified Subsidiary, such
Guarantee and such Debt will be deemed to be the same Debt and
only the amount of the Debt will be deemed to be outstanding.
If a Specified Subsidiary Guarantees any Debt of a Person that,
subsequent to the Issuance of such Guarantee, becomes a
Specified Subsidiary, such Guarantee and the Debt so Guaranteed
shall be deemed to be the same Debt which shall be deemed to
have been Issued when the Guarantee was Issued and shall be
deemed to be permitted to the extent the Guarantee was
permitted when Issued.
Section 4.12. Prohibition on Debt and Capital Stock
of Intermediate Parents of ISP and BMCA. Notwithstanding
Section 4.11 (a) and (b):
(a) The Company shall not permit any of its
Subsidiaries (other than, subject to Section 4.09, ISP
Subsidiaries) that, directly or indirectly, owns any
Capital Stock or Debt of any ISP Subsidiary to Issue any
Debt or Capital Stock other than Debt or Capital Stock
Issued to and held by (x) so long as ISP is a Recourse
Subsidiary of the Company, ISP or any of its Wholly-Owned
Recourse Subsidiaries or (y) the Company (or, on and after
the Determination Date, any of its Wholly-Owned Recourse
Subsidiaries); and
(b) The Company shall not permit any of its
Subsidiaries (other than, subject to Section 4.10, BMCA
Subsidiaries) that, directly or indirectly, owns any
<PAGE>
Capital Stock or Debt of any BMCA Subsidiary to Issue any
Debt or Capital Stock other than Debt or Capital Stock
Issued to and held by (x) so long as BMCA is a Recourse
Subsidiary of the Company, BMCA or any of its Wholly-Owned
Recourse Subsidiaries or (y) G-I Holdings or any of its
Post-Spin Off Wholly-Owned Recourse Subsidiaries (or, on
and after the Determination Date, the Company or any of
its Wholly-Owned Recourse Subsidiaries).
Section 4.13. Limitation on Restricted Payments and
Restricted Investments. (a) The Company shall not make, and
shall not permit any of its Subsidiaries to make, directly or
indirectly, any Restricted Payment or Restricted Investment at
any time on or after the Issue Date if, at the time of such
Restricted Payment or Restricted Investment or immediately
after giving effect thereto:
(1) a Default or an Event of Default shall have
occurred and be continuing;
(2) the Company is not able to incur at least $1.00
of additional Debt under Section 4.09(a); or
(3) the aggregate amount of Restricted Payments made
since June 30, 1996 (the "Applicable Date") and the
aggregate amount of Restricted Investments made since the
Applicable Date and then outstanding (the amount expended
for such purposes, if other than in cash, shall be the
fair market value of such property as determined by the
Board of Directors of the Company in good faith as of the
date of payment or investment) shall exceed the sum of:
(i) 50% of the cumulative Consolidated Net
Income (or minus 100% of the cumulative Consolidated
Net Loss) of the Company accrued during the period
beginning on the Applicable Date and ending on the
last day of the fiscal quarter for which financial
information has been made publicly available by the
Company but ending no more than 135 days prior to the
date of such Restricted Payment or Restricted
Investment (treating such period as a single
accounting period);
(ii) 100% of the net cash proceeds, including
the fair market value of property other than cash as
determined by the Board of Directors of the Company
in good faith, as evidenced by a Board Resolution,
received by the Company from any Person (other than a
Subsidiary of the Company) from the Issuance and sale
subsequent to the Applicable Date of Capital Stock of
<PAGE>
the Company (other than Redeemable Stock) or as a
capital contribution;
(iii) 100% of the net cash proceeds received by
the Company from any Person (other than a Subsidiary
of the Company) from the exercise of options or
warrants on Capital Stock of the Company (other than
Redeemable Stock);
(iv) 100% of the net cash proceeds received by
the Company from the conversion into Capital Stock
(other than Redeemable Stock) of convertible Debt or
convertible Preferred Stock issued and sold (other
than to a Subsidiary of the Company) since the
Applicable Date; and
(v) $30,000,000.
The designation by the Company or any of its Subsidiaries of a
Subsidiary as a Non-Recourse Subsidiary shall be deemed to be
the making of a Restricted Investment by the Company in an
amount equal to the outstanding Investments made by the Company
and its Subsidiaries in such Person being designated a Non-
Recourse Subsidiary at the time of such designation.
(b) The foregoing paragraph (a) shall not prevent
the following, as long as no Default or Event of Default shall
have occurred and be continuing (or would result therefrom
other than pursuant to paragraph (a)):
(1) the making of any Restricted Payment or
Restricted Investment within 60 days after (x) the date of
declaration thereof or (y) the making of a binding
commitment in respect thereof; provided that at such date
of declaration or commitment such Restricted Payment or
Restricted Investment complied with paragraph (a); or
(2) any Restricted Payment or Restricted Investment
made out of the net cash proceeds received by the Company
from the substantially concurrent sale of its Common Stock
(other than to a Subsidiary of the Company); provided,
however, that such net cash proceeds so utilized shall not
be included in paragraph (a)(3) in determining the amount
of Restricted Payments or Restricted Investments the
Company could make under paragraph (a), and Restricted
Payments or Restricted Investments made pursuant to this
clause (2) shall not be included in determining the amount
of Restricted Payments or Restricted Investments made or
then outstanding under paragraph (a)(3); or
<PAGE>
(3) repurchases of Capital Stock of the Company (or,
prior to the Spin Off, dividends used to repurchase
Capital Stock of GAF), in each case, from employees of the
Company or any of its Subsidiaries (other than any
Permitted Holder); provided, however, that the aggregate
amount of Restricted Payments made under this clause shall
not exceed $3,000,000 in any fiscal year; provided,
further, however, that the amount of Restricted Payments
made pursuant to this clause (3) shall not be included in
determining the amount of Restricted Payments made under
paragraph (a)(3).
Section 4.14. Limitation on Liens. (a) The Company
shall not, and shall not permit any of its Specified
Subsidiaries to, directly or indirectly, incur or suffer to
exist any Liens (other than Permitted Liens) upon their
respective properties or assets whether owned on the Issue Date
or acquired after such date, or on any income or profits
therefrom, other than the following:
(1) Liens securing intercompany Debt permitted by
Section 4.11(b)(1);
(2) Liens existing on the Issue Date;
(3) Purchase money Liens on assets of the Company
and its Specified Subsidiaries or improvements or
additions thereto existing or created within 180 days
after the time of acquisition of or improvement or
addition to such assets, or replacements thereof; provided
that (i) such acquisition, improvement or addition is
otherwise permitted by the Indenture, (ii) the principal
amount of Debt (including Debt in respect of Capitalized
Lease Obligations) secured by each such Lien in each asset
shall not exceed the cost (including all such Debt secured
thereby, whether or not assumed) of the item subject
thereto, and such Liens shall attach solely to the
particular item of property so acquired, improved or
added, and any additions or accessions thereto, or
replacements thereof, and (iii) the aggregate amount of
Debt secured by Liens permitted by this clause (3) shall
not at any one time exceed $50,000,000;
(4) Liens securing Acquired Debt; provided, however,
that (i) any such Lien secured the Acquired Debt at the
time of the incurrence of such Acquired Debt by the
Company or by one of its Specified Subsidiaries and such
Lien and Acquired Debt were not incurred by the Company or
any of its Specified Subsidiaries or by the Person being
acquired or from whom the assets were acquired in
<PAGE>
connection with, or in anticipation of, the incurrence of
such Acquired Debt by the Company or by one of its
Specified Subsidiaries, and (ii) any such Lien does not
extend to or cover any property or assets of the Company
or of any of its Specified Subsidiaries other than the
property or assets that secured the Acquired Debt prior to
the time such Debt became Acquired Debt of the Company or
of one of its Specified Subsidiaries;
(5) Liens to secure Refinancing of any Debt secured
by Liens described in clauses (1)-(4) above and (6) below;
provided that (i) the Refinancing does not increase the
principal amount of Debt being so Refinanced and (ii) the
Lien of the Refinancing Debt does not extend to any asset
not securing the Debt being Refinanced or improvements or
additions thereto, or replacements thereof; and
(6) Liens on assets of the Company and its Specified
Subsidiaries (other than the Liens described above),
provided that such Liens only secure Debt of the Company
and its Specified Subsidiaries in an aggregate amount not
to exceed at any one time outstanding $50,000,000.
Section 4.15. Prohibition on Certain Transactions.
After the Spin Off, the Company shall not, and shall not permit
any of its Post-Spin Off Subsidiaries to, enter, directly or
indirectly, into, or suffer to exist, any transaction or series
of transactions (including, without limitation, any loan,
advance or investment or any purchase, sale, lease or exchange
of property or the rendering of any service) with GAF or any of
its Post-Spin Off Subsidiaries. The foregoing shall not
prohibit any transaction permitted by Section 4.16(b)(5) or
(c).
Section 4.16. Limitation on Transactions with
Affiliates. (a) The Company shall not enter, and shall not
permit any of its Subsidiaries to enter, directly or
indirectly, into any transaction or series of related
transactions with any Affiliate of the Company, including,
without limitation, any loan, advance or investment or any
purchase, sale, lease or exchange of property or the rendering
of any service, unless the terms of such transaction or series
of transactions are set forth in writing and at least as
favorable as those available in a comparable transaction in
arms-length dealings from an unrelated Person; provided,
however, that (i) if any such transaction or series of related
transactions (other than any purchase or sale of inventory in
the ordinary course of business) involves aggregate payments or
other consideration in excess of $2,000,000, such transaction
or series of related transactions shall be approved (and the
<PAGE>
value of any non-cash consideration shall be determined) by a
majority of those members of the Board of Directors of the
Company or such Subsidiary, as the case may be, having no
personal stake in such business, transaction or transactions;
and (ii) in the event that such transaction or series of
related transactions (other than any purchase or sale of
inventory in the ordinary course of business) involves
aggregate payments or other consideration in excess of
$20,000,000 (with the value of any non-cash consideration being
determined by a majority of those members of the Board of
Directors of the Company or such Subsidiary, as the case may
be, having no personal stake in such business, transaction or
transactions), the Company or such Subsidiary, as the case may
be, shall have also received a written opinion from a
nationally recognized investment banking firm that such
transaction or series of related transactions is fair to the
shareholders, in their capacity as such, of the Company or such
Subsidiary from a financial point of view and such opinion has
been delivered to the Trustee; provided, further, in the event
that the Board of Directors of the Company or the Subsidiary,
as the case may be, proposing to engage in a transaction or
series of related transactions described in the preceding
proviso does not have any members having no personal stake in
such business, transaction or transactions, the Company or such
Subsidiary may enter into such transaction or series of
transactions if the Company or such Subsidiary, as the case may
be, shall have received the written opinion of a nationally
recognized investment banking firm that the terms thereof, from
a financial point of view, are fair to the shareholders of the
Company or such Subsidiary, in their capacity as such (the
determination as to the value of any non-cash consideration
referred to in the preceding proviso to be made by such
investment banking firm), and such opinion shall have been
delivered to the Trustee.
(b) The foregoing paragraph (a) shall not prevent
the following:
(1) any transaction between a Subsidiary of the
Company and its own employee stock ownership or benefit
plan;
(2) any transaction with an officer or director of
the Company or any of its Subsidiaries entered into in the
ordinary course of business (including compensation or
employee benefit arrangements with any such officer or
director);
(3) any business or transaction by an ISP
Subsidiary, the Company or, after the Determination Date,
<PAGE>
any Subsidiary of the Company with an Unrestricted
Affiliate;
(4) transactions permitted by Section 4.17;
(5) payments made or actions taken pursuant to any
of the Specified Agreements (or any new agreement referred
to in paragraph (c) below), as any such Specified
Agreement (or new agreement) is, subject to paragraph (c)
below, amended, modified, extended or waived from time to
time;
(6) the making of a Restricted Payment or Restricted
Investment otherwise permitted by Section 4.13(a) or those
transactions specifically permitted by Section 4.13(b);
(7) (i) transactions between or among Non-Recourse
Subsidiaries of ISP, (ii) transactions between or among
Non-Recourse Subsidiaries of BMCA, (iii) transactions
between or among Non-Recourse Subsidiaries of any
Specified Subsidiary and (iv) on or after the
Determination Date, transactions between or among Non-
Recourse Subsidiaries of the Company; or
(8) (i) so long as ISP is a Recourse Subsidiary of
the Company, transactions between or among ISP, its
Recourse Subsidiaries and the Company, (ii) transactions
between or among BMCA and its Recourse Subsidiaries,
(iii) transactions between or among any Specified
Subsidiary and its Recourse Subsidiaries and (iv) on or
after the Determination Date, transactions between or
among the Company and its Recourse Subsidiaries.
(c) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, extend or waive any
provision of any of the Specified Agreements in any manner
which is significantly adverse to the Company or the Holders
(it being understood that an extension or modification of
either of the Granules Contracts (or any similar granules
purchase contract) on terms at least as favorable to the
Company as those available at the time of the extension or
modification (or any such new agreement) in a comparable
transaction in arms-length dealings with an unrelated Person
shall not be deemed significantly adverse to the Company or the
Holders).
Section 4.17. Limitation on Investments in Non-
Recourse Subsidiaries by ISP Subsidiaries and BMCA
Subsidiaries. (a) The Company shall not, and shall not permit
any ISP Subsidiary (so long as such ISP Subsidiary is a
<PAGE>
Subsidiary of the Company) to, make Investments in Non-Recourse
Subsidiaries of ISP if, after giving effect thereto, the
cumulative aggregate amount (the amount so expended, if other
than in cash, to be determined by the Board of Directors of
ISP, as evidenced by a Board Resolution) of such Investments,
as of the date of the Investment, made by the Company and ISP
Subsidiaries would exceed 20% of the Consolidated Net Worth of
ISP.
(b) The Company shall not permit any BMCA Subsidiary
(so long as such BMCA Subsidiary is a Subsidiary of the
Company) to make Investments in Non-Recourse Subsidiaries of
BMCA if, after giving effect thereto, the cumulative aggregate
amount (the amount so expended, if other than cash, to be
determined by the Board of Directors of BMCA, as evidenced by a
Board Resolution) of such Investments, as of the date of the
Investment, would exceed $50,000,000.
Section 4.18. Limitation on Dividend and Other
Payment Restrictions Affecting Subsidiaries. The Company shall
not, and shall not permit any of its Recourse Subsidiaries to,
directly or indirectly, create or otherwise cause to exist or
become effective any encumbrance or restriction on the ability
of any such Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock or pay any Debt owed to the
Company or any of its Subsidiaries, (b) make loans or advances
to, or Issue any Guarantee for the benefit of, the Company or
any of its Subsidiaries, (c) transfer any of its properties or
assets to the Company or any of its Subsidiaries or (d) incur
or suffer to exist Liens in favor of the Holders, except for
such encumbrances or restrictions existing under or by reason
of the following:
(1) applicable law;
(2) the Indenture and the indenture governing the
Exchange Offer Notes;
(3) customary provisions restricting subletting or
assignment of any lease or license or other commercial
agreement;
(4) any instrument governing Acquired Debt of any
Person, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person,
other than such Person and its Subsidiaries, or the
property or assets of such Person and its Subsidiaries, so
acquired;
<PAGE>
(5) Liens specifically permitted by Section 4.14;
provided that such Liens and the terms governing such
Liens do not, directly or indirectly, restrict the Company
or its Subsidiaries from granting other Liens, except as
to the assets subject to such Liens;
(6) the Credit Agreement or other Debt existing on
the Issue Date and any Refinancing of the Credit Agreement
or any such other Debt; provided that the terms and
conditions of any such Refinancing agreements relating to
the terms described under clauses (a)-(d) above are no
less favorable to the Company and its Subsidiaries than
those contained in the agreements governing the Debt being
Refinanced;
(7) covenants contained in agreements governing Debt
of BMCA Subsidiaries; provided, however, that such
covenants shall not prohibit the BMCA Subsidiaries from,
directly or indirectly, paying dividends or making loans
or advances to the Company in an aggregate amount less
than the positive difference, if any, between (i) the sum
of (A) $25,000,000 and (B) 50% of the cumulative
Consolidated Net Income (or minus 100% of the Consolidated
Net Loss) of BMCA for the period beginning on the first
day of the fiscal quarter during which such Debt was
issued, and (ii) the aggregate amount of Restricted
Payments and Restricted Investments made by BMCA
Subsidiaries since such date; and
(8) covenants contained in agreements governing Debt
of ISP Subsidiaries; provided, however, that such
covenants shall not prohibit the ISP Subsidiaries from,
directly or indirectly, paying dividends or making loans
or advances to the Company in an aggregate amount less
than the positive difference, if any, between (i) the sum
of (A) $25,000,000 and (B) 50% of the cumulative
Consolidated Net Income (or minus 100% of the Consolidated
Net Loss) of ISP for the period beginning on the first day
of the fiscal quarter during which such Debt was issued,
and (ii) the aggregate amount of Restricted Payments and
Restricted Investments made by ISP Subsidiaries since such
date.
Section 4.19. Change of Control. (a) In the event
of any Change of Control, each Holder shall have the right, at
such Holder's option, to require the Company to purchase all or
any portion (in integral multiples of $1,000) of such Holder's
Notes on the date (the "Change of Control Payment Date") which
is 25 Business Days after the date the Change of Control Notice
(as defined below) is mailed or is required to be mailed (or
<PAGE>
such later date as is required by applicable law) at 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect under the third paragraph of Section 5(a)
of the Notes) plus accrued interest thereon to the Change of
Control Payment Date.
(b) The Company or, at the request of the Company,
the Trustee shall send, by first-class mail, postage prepaid,
to all Holders, within ten Business Days after the occurrence
of each Change of Control, a notice of the occurrence of such
Change of Control (the "Change of Control Notice"), specifying
a date by which a Holder must notify the Company of such
Holder's intention to exercise the repurchase right and
describing the procedure that such Holder must follow to
exercise such right. The Company is required to deliver a copy
of such notice to the Trustee.
Each Change of Control Notice shall state:
(1) that the change of control offer is being made
pursuant to this Section 4.19 and that all Notes tendered
will be accepted for payment;
(2) the purchase price and the Change of Control
Payment Date;
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant
to the change of control offer shall cease to accrue
interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased
pursuant to a change of control offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business
Day prior to the Change of Control Payment Date;
(6) that the Company has the right, pursuant to the
second paragraph under Section 5(a) of the Notes, to
redeem Notes not tendered at 100% of the principal amount
thereof plus accrued interest to the redemption date, plus
the Applicable Premium;
(7) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five
<PAGE>
Business Days prior to the Change of Control Payment Date,
a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note
purchased;
(8) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered; and
(9) the circumstances and relevant facts regarding
such Change of Control.
No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase
right. The Company shall comply with all applicable Federal
and state securities laws in connection with each Change of
Control Notice.
On or before the Change of Control Payment Date, the
Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Change of Control Notice, (ii) deposit
with the Paying Agent money sufficient to pay the purchase
price of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so
purchased shall be promptly mailed by the Company to the Holder
thereof. For purposes of this Section 4.19, the Trustee shall
act as the Paying Agent.
Section 4.20. Limitation on Asset Sales. (a) The
Company shall not, and shall not permit any of its
Subsidiaries, directly or indirectly, to consummate an Asset
Sale unless:
(1) the Company or such Subsidiary, as the case may
be, receives consideration (including non-cash
consideration, whose fair market value shall be determined
in good faith by the Board of Directors of the Company or
such Subsidiary, as evidenced by a Board Resolution) at
the time of such Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of
(as determined in good faith by the Board of Directors, as
evidenced by a Board Resolution);
<PAGE>
(2) at least 75% of the consideration received by
the Company or such Subsidiary, as the case may be, shall
be cash or Cash Equivalents; provided, however, that this
clause (2) shall not prohibit any Asset Sale for which the
Company or such Subsidiary, as the case may be, receives
100% of the consideration, directly or through the
acquisition of Capital Stock of a Person, in operating
assets;
(3) in the case of an Asset Sale prior to the Spin
Off by G-I Holdings or any of its Post-Spin Off
Subsidiaries, the Company shall commit to apply the Net
Cash Proceeds of such Asset Sale within 300 days of the
consummation of such Asset Sale, and shall apply such Net
Cash Proceeds within 360 days of receipt thereof (if such
360th day is prior to the Spin Off), (i) to invest in the
businesses that G-I Holdings and its Post-Spin Off
Subsidiaries (or, on or after the Determination Date, the
Company and its Recourse Subsidiaries) are engaged in at
the time of such Asset Sale or any like or related
business, (ii) to pay the Debt referred to in the last
sentence of the definition of "Debt" or make provision for
the payment thereof, through an escrow or other fund,
(iii) to pay or satisfy Debt or Preferred Stock of any
BMCA Subsidiary and/or (iv) to offer to purchase the
Notes, the Exchange Offer Notes, the Senior Discount Notes
due 1998 and Series B Discount Notes due 1998 of G-I
Holdings (the "Discount Notes"), the Series B 10% Senior
Notes due 2006 of G-I Holdings and/or the 11-3/4% Senior
Deferred Coupon Notes due 2004 of BMCA in a tender offer
at a redemption price equal to 100% of the principal
thereof plus accrued interest thereon to the date of
redemption (or, in the case of such Discount Notes and, to
the extent provided in the indenture relating to such BMCA
Notes, 100% of the accreted value thereof); provided,
however, that the Company may defer making such an offer
until the aggregate Net Cash Proceeds from Asset Sales to
be applied pursuant to this clause (3)(iv) equal or exceed
$20,000,000; and
(4) in the case of an Asset Sale by the Company or
any of its Post-Spin Off Subsidiaries, the Company or such
Post-Spin Off Subsidiary, as the case may be, shall apply
the Net Cash Proceeds of such Asset Sale within one year
of receipt thereof (i) to invest in the businesses that
the Company and its Post-Spin Off Recourse Subsidiaries
(or, on or after the Determination Date, the Company and
its Recourse Subsidiaries) are engaged in at the time of
such Asset Sale or any like or related business, (ii) on
or after the Determination Date, to pay the Debt referred
<PAGE>
to in the last sentence of the definition of "Debt" or
make provision for the payment thereof, through an escrow
or other fund, (iii) to pay or satisfy Debt or Preferred
Stock of the Company or such Post-Spin Off Subsidiary, as
the case may be, and/or (iv) to offer to purchase the
Notes and the Exchange Offer Notes, on a pro rata basis,
in a tender offer at a redemption price equal to 100% of
the principal thereof plus accrued interest thereon to the
date of redemption; provided, however, that, prior to the
Spin Off, G-I Holdings shall, to the extent required under
the indentures governing the Discount Notes and the 10%
Senior Notes due 2006 of G-I Holdings (the "10% Notes"),
first offer to purchase any outstanding Discount Notes and
10% Notes in a tender offer at a redemption price equal
to, in the case of Discount Notes, 100% of the accreted
value thereof, and in the case of 10% Notes, 100% of the
principal thereof plus accrued interest thereon to the
date of redemption; provided, further, however, that the
Company may defer making any such offer until aggregate
Net Cash Proceeds from Asset Sales to be applied pursuant
to clause (4)(iv) equal or exceed $20,000,000;
provided, however, that (i) the Company and its Subsidiaries
may retain up to $5,000,000 of Net Cash Proceeds from Asset
Sales in any twelve-month period (without complying with clause
(3) or (4)) and (ii) any Asset Sale that would result in a
Change of Control shall not be governed by this Section 4.20
but shall be governed by Section 4.19.
(b) Notice of an offer to purchase the Notes
pursuant to Section 4.20(a) (a "Net Proceeds Offer") shall be
mailed or caused to be mailed, by first class mail, by the
Company, within 300 days after the relevant Asset Sale to all
Holders at their last registered addresses as of a date within
15 days prior to the mailing of such notice, with a copy to the
Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the
following terms:
(1) that the Net Proceeds Offer is being made
pursuant to this Section 4.20 and that all Notes tendered
will be accepted for payment; provided that if the
aggregate amount of Notes tendered in a Net Proceeds Offer
exceeds the aggregate amount available for the Net
Proceeds Offer, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company, so that only
Notes in denominations of $1,000 or multiples thereof
shall be purchased);
<PAGE>
(2) the purchase price and the purchase date (which
shall be determined in accordance with Section 4.20(a))
(the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless there is a default in making
payment therefor, any Note accepted for payment pursuant
to the Net Proceeds Offer shall cease to accrue interest
after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to a Net Proceeds Offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business
Day prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than two
Business Days prior to the Proceeds Purchase Date, a
facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Notes the Holder
delivered for purchase and a statement that such Holder is
withdrawing his or her election to have such Notes
purchased; and
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered.
On or before the Proceeds Purchase Date, the Company
or such Subsidiary, as the case may be, shall (i) accept for
payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with
item (b)(1) above, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes to be
purchased and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price. For purposes
of this Section 4.20, the Trustee shall act as the Paying
Agent.
Section 4.21. Investment Company Act. The Company
shall not take any action that would require it or any of its
<PAGE>
Subsidiaries to register as an investment company under the
Investment Company Act of 1940.
Section 4.22. Consents, etc. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any fee, interest or other
amount to any Holders in connection with any consent, waiver or
amendment to this Indenture or the Notes, unless such fee,
interest or other amount is offered or agreed to be paid to all
Holders who are given the same opportunity to so consent, waive
or agree to amend and who, in fact, so consent, waive or agree
to amend.
Section 4.23. Registration Rights. The Company
hereby grants to the Holders the registration rights set forth
on Schedule A hereto, the terms of which are hereby
incorporated by reference.
Section 4.24. Spin Off. Notwithstanding anything in
this Indenture to the contrary, as long as no Default or Event
of Default shall have occurred and be continuing, the Company
may consummate the Spin Off.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.01. When the Company May Merge, etc. The
Company shall not consolidate with or merge with or into or
sell, assign, transfer or lease all or substantially all of its
properties and assets (either in one transaction or series of
related transactions) to any Person, unless:
(1) the Company shall be the continuing Person,
or the resulting, surviving or transferee Person (if
other than the Company) shall be a corporation
organized and existing under the laws of the United
States or any State thereof or the District of Columbia
and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the
Trustee, all the obligations of the Company under the
Notes and this Indenture, and this Indenture shall
remain in full force and effect;
(2) immediately before and immediately after
giving effect to such transaction (and treating any
Debt which becomes an obligation of the resulting,
surviving or transferee Person or any of its
Subsidiaries as a result of such transaction as having
<PAGE>
been issued by such Person or such Subsidiary at the
time of such transaction), no Default or Event of
Default shall have occurred and be continuing; and
(3) immediately after giving effect to such
transaction (other than a merger of G-I Holdings with
the Company after the Determination Date), the
resulting, surviving or transferee Person shall have a
Consolidated Net Worth in an amount which is not less
than the Consolidated Net Worth of the Company
immediately prior to such transaction; provided,
however, that, so long as no Default or Event of
Default has occurred and is continuing or would result
therefrom this paragraph shall not prohibit the Spin
Off.
In connection with any consolidation, merger, sale,
assignment, transfer or lease contemplated by this Section
5.01, the Company shall deliver, or cause to be delivered, to
the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale,
assignment, transfer or lease and the supplemental indenture in
respect thereto comply with this Article V and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger or any sale, assignment,
transfer or lease of all or substantially all of the assets of
the Company in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the
Company is merged or to which such sale, assignment, transfer
or lease is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture, with the same effect as if such successor
corporation had been named as the Company herein, and, except
in the case of a lease, the Company will be discharged from all
obligations and covenants under this Indenture and the Notes.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. An "Event of
Default" occurs if:
(1) the Company defaults in the payment of
interest on, or Additional Interest (if any) with
respect to, any Note when the same becomes due and
<PAGE>
payable and the default continues for a period of 30
days;
(2) (i) the Company defaults in the payment of
the principal of any Note when the same becomes due and
payable at maturity or otherwise or (ii) the Company
fails to redeem or repurchase Notes when required
pursuant to this Indenture or the Notes;
(3) the Company fails to comply with
Section 5.01;
(4) the Company fails to comply for 30 days after
notice with any of its obligations under Sections 4.03,
4.06 and 4.09 through 4.20, inclusive;
(5) the Company fails to comply for 60 days after
notice with its other agreements contained in this
Indenture or the Notes (other than those referred to in
clauses (1)-(4) above);
(6) Debt of the Company or any Significant
Subsidiary is not paid within any applicable grace
period or is accelerated by the holders thereof because
of a default and the total principal amount of the
portion of such Debt that is unpaid or accelerated
exceeds $15,000,000 or its foreign currency equivalent
and such default continues for 5 days after notice;
(7) the Company or any of its Significant
Subsidiaries (A) admits in writing its inability to pay
its debts generally as they become due, (B) commences a
voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (C) consents to the entry of a
judgment, decree or order for relief against it in an
involuntary case or proceeding under any Bankruptcy
Law, (D) consents to the appointment of a Custodian of
it or for substantially all of its property, (E)
consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (F)
makes a general assignment for the benefit of its
creditors, or (G) takes any corporate action to
authorize or effect any of the foregoing; and
(8) any judgment or order for the payment of
money in excess of $15,000,000 in the aggregate is
rendered against the Company or any Significant
Subsidiary of the Company and (i) there is a period of
60 days following the entry of such judgment or order
during which such judgment or order is not discharged,
<PAGE>
waived or the execution thereof stayed and such default
continues for 10 days after the notice specified below
or (ii) foreclosure proceedings therefor have begun and
have not been stayed within five days of the
commencement of such foreclosure proceeding.
A Default under clause (4), (5), (6) or (8) is not an
Event of Default until the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Notes
notify the Company in writing of the Default, and the Company
does not cure the Default within the time specified in such
clause after receipt of such notice. Such notice shall be
given by the Trustee if so requested in writing by the Holders
of at least 25% in aggregate principal amount of the
outstanding Notes. When a Default under clause (4), (5), (6)
or (8) is cured or remedied within the specified period, it
ceases to exist.
Section 6.02. Acceleration. If an Event of Default
(other than an Event of Default with respect to the Company
specified in Section 6.01 clause (7) above) occurs and is
continuing, the Trustee, by written notice to the Company, or
the Holders of at least 25% in aggregate principal amount of
the outstanding Notes, by written notice to the Company and the
Trustee, may declare the principal of and accrued interest on
all Notes then outstanding to be due and payable (the "Default
Amount"). Upon a declaration of acceleration, such amount
shall be due and payable immediately.
If an Event of Default with respect to the Company
specified in clause (7) of Section 6.01 above occurs, the
Default Amount shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Holders of a majority in aggregate principal
amount at maturity of the Notes then outstanding, by written
notice to the Trustee and the Company, may rescind an
acceleration with respect to the Notes and its consequences if
(i) all existing Defaults and Events of Default, other than the
non-payment of the principal of the Notes which has become due
solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is
lawful, interest on overdue principal, which has become due
otherwise than by such declaration of acceleration, has been
paid and (iii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction.
Section 6.03. Other Remedies. Notwithstanding any
other provision of this Indenture, if an Event of Default
<PAGE>
occurs and is continuing and the Holders are entitled to
payment as a result of acceleration, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect
the payment of principal of and/or interest on the Notes or to
enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are
cumulative.
Section 6.04. Waiver of Past Defaults. Subject only
to the provisions of Sections 6.07 and 9.02, the Holders of a
majority in aggregate principal amount of the outstanding Notes
by notice to the Trustee may waive an existing Default or Event
of Default and its consequences, except a Default or Event of
Default in payment of principal or interest on any Note as
specified in clauses (1) and (2) of Section 6.01. When a
Default or Event of Default is waived, it is cured and ceases
to exist.
Section 6.05. Control by Majority. The Holders of a
majority in aggregate principal amount of the outstanding Notes
may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with
law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of another Holder as such, or
that may subject the Trustee to personal liability. The
Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.06. Limitation on Remedies. Except as
provided in Section 6.07, a Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(2) Holders of at least 25% in aggregate
principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy;
<PAGE>
(3) such Holder or Holders offer and provide to
the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the
offer of indemnity; and
(5) during such 60-day period, the Holders of a
majority in aggregate principal amount of the
outstanding Notes do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent
with the request.
A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority
over such other Holder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal
of and interest on the Note, on or after the respective due
dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.08. Collection Suit by Trustee. If an
Event of Default specified in clause (1) or (2) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount
due and payable on such Notes for principal, premium, if any,
interest and, to the extent that payment of such interest is
lawful, interest on overdue principal, at the rate per annum
specified in the Notes, and such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any
judicial proceedings relative to the Company (or any other
obligor upon the Notes), its creditors or its property. The
Trustee shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable
<PAGE>
on any such claims and any custodian in any such judicial
proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to the Trustee
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any
plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
Section 6.10. Priorities. If the Trustee collects
any money pursuant to this Article VI, it shall pay out the
money in the following order:
First: to the Trustee for amounts due under
Section 7.07;
Second: to Holders for amounts due and unpaid on
the Notes for principal and interest, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Notes for principal and
interest, respectively; and
Third: to the Company or any other obligors on
the Notes, as their interests may appear, or as a court
of competent jurisdiction may direct.
The Trustee may fix a record date and payment date
for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs. In any suit
for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking
to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard
to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 6.07, or
a suit by any Holder or a group of Holders of more than 10% in
principal amount of the outstanding Notes.
<PAGE>
Section 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such
Holder, then, and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
Section 7.01. Rights of Trustee. Subject to TIA
{ 315(a) through (d):
(A) The Trustee may rely on any document believed
by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(B) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Section
10.05. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(C) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care.
(D) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it
believes to be authorized or within its rights or
powers; provided that the Trustee's conduct does not
constitute negligence.
(E) The Trustee may consult with counsel of its
own choosing and the advice or opinion of such counsel
as to matters of law shall be full and complete
authorization and protection in respect of any action
taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of
such counsel.
<PAGE>
(F) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance
with such request or direction.
Section 7.02. Individual Rights of Trustee. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the
Company or any of its Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee is subject to TIA {{ 310(b)
and 311.
Section 7.03. Money Held in Trust. The Trustee
shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.04. Trustee's Disclaimer. The Trustee
makes no representation as to the legality or validity or
adequacy of this Indenture or the Notes, it shall not be
responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be
responsible for any statement in the Notes other than its
certificate of authentication.
Section 7.05. Notice of Defaults. If a Default
occurs and is continuing and if it is known to the Trustee, the
Trustee shall mail to each Holder notice of the Default within
90 days after it occurs. Except in the case of a Default in
the payment of the principal of or interest on any Note, the
Trustee may withhold notice if and so long as a committee of
its Trust Officers in good faith determines that the
withholding of such notice is in the interests of the Holders.
Section 7.06. Reports by Trustee to Holders. Within
60 days after each May 15 beginning with the May 15 following
the Issue Date, the Trustee shall mail to each Holder a report
dated as of May 15 if required by TIA { 313(a). The Trustee
also shall comply with TIA {{ 313(b) and 313(c).
A copy of each such report at the time of its mailing
to Holders shall be filed with the Commission and each stock
exchange, if any, on which the Notes are listed.
<PAGE>
The Company shall promptly notify the Trustee in
writing if the Notes become listed on any national securities
exchange or of any delisting thereof.
Section 7.07. Compensation and Indemnity. The
Company agrees that it shall pay to the Trustee from time to
time such compensation as the Company and the Trustee shall
agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation relating to the
trustee of an express trust. The Company agrees that it shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it.
Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
Such expenses shall also include any taxes or other reasonable
costs incurred by the trust created under Section 8.03.
The Company shall indemnify each of the Trustee and
any predecessor Trustee for, and hold it harmless against, any
and all loss, damage, claim or liability or expense, including
taxes (other than taxes based on or measured by the income or
gross receipts of the Trustee) incurred by it in connection
with the administration of this trust and its duties hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the acceptance,
exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek
indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder
unless the Company is actually prejudiced thereby. The Company
shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel.
The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through
negligence or bad faith.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a Lien prior to the Notes
on all money or property held or collected by the Trustee
except money or property held in trust to pay principal of or
interest on particular Notes.
When the Trustee incurs expenses or renders services
in connection with an Event of Default specified in
Section 6.01(7), the expenses and the compensation for the
services are intended to constitute expenses of administration
under any Bankruptcy Law.
<PAGE>
The Company's obligations under this Section 7.07 and
any Lien arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Company's
obligations pursuant to Article VIII and/or the termination of
this Indenture.
Section 7.08. Replacement of Trustee. A resignation
or removal of the Trustee and the appointment of a successor
Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Sec-
tion 7.08. The Trustee may resign by so notifying the Company
in writing at least 30 days prior to the date of the proposed
resignation. The Holders of a majority in aggregate principal
amount of the outstanding Notes may remove the Trustee by so
notifying the Trustee in writing and may appoint a successor
Trustee with the Company's consent. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with
Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company
shall promptly appoint a successor Trustee. The Trustee shall
be entitled to payment of its fees and reimbursement of its
expenses while acting as Trustee, and to the extent such
amounts remain unpaid, the Trustee that has resigned or has
been removed shall retain the Lien afforded by Section 7.07.
Within one year after the successor Trustee takes office, the
Holders of a majority in aggregate principal amount of the
outstanding Notes may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. Immediately thereafter, subject to the Lien
provided in Section 7.07, the retiring Trustee shall transfer
all property held by it as Trustee to the successor Trustee,
the resignation or removal of the retiring Trustee shall become
effective and the successor Trustee shall have all the rights,
powers and duties of the retiring Trustee under this Indenture.
<PAGE>
A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
aggregate principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If any Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee. Any successor Trustee shall comply with TIA
{ 310(a)(5).
Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring
Trustee.
Section 7.09. Successor Trustee by Merger, etc. If
the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation or national banking
association, the resulting, surviving or transferee corporation
or national banking association without any further act shall
be the successor Trustee, if such corporation or association
complies with Section 7.10.
Section 7.10. Eligibility; Disqualification. This
Indenture shall always have a Trustee who satisfies the
requirements of TIA { 310(a)(1). The Trustee shall have (or,
in the case of a corporation included in a bank holding company
system, the related bank holding company subsidiary shall have)
a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.
The Trustee also shall comply with TIA { 310(b).
Section 7.11. Preferential Collection of Claims
Against the Company. The Trustee is subject to TIA { 311(a),
excluding from the operation of TIA { 311(a) any creditor
relationship listed in TIA { 311(b). A Trustee who has
resigned or been removed shall be subject to TIA { 311(a) to
the extent indicated therein.
Section 7.12. Duties of Trustee. (A) If a Default
or an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill
<PAGE>
in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
(B) Except during the continuance of a Default or an
Event of Default:
(1) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no others
and no implied covenants or obligation shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and which conform to the requirements of this
Indenture; provided, however, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements
of this Indenture.
(C) The Trustee shall not be relieved from liability
for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (B) of this Section 7.12;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05.
(D) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if
it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
<PAGE>
(E) Every provision of this Indenture that in any
way relates to the Trustee is subject to Sections 7.12(A), (B),
(C) and (D).
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01. Discharge of Liability on Notes;
Defeasance. (a) When (i) the Company delivers to the Trustee
all outstanding Notes (other than Notes replaced pursuant to
Section 2.07) for cancellation or (ii) all outstanding Notes
have become due and payable, and the Company irrevocably
deposits with the Trustee money sufficient to pay at maturity
all outstanding Notes, including interest thereon (other than
Notes replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Sections 8.01(c)
and 8.06, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel as to the satisfaction of all
conditions to such satisfaction and discharge of this Indenture
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the
Company may at any time terminate (i) all its obligations under
the Notes and this Indenture ("legal defeasance"), or (ii) its
obligations under Sections 4.03, 4.04, 4.06, 4.08 through 4.21
and 4.23 and the operation of Section 6.01(3), 6.01(4),
6.01(5), 6.01(6), 6.01(7) (with respect only to Significant
Subsidiaries) and 6.01(8) and the limitation contained in
Section 5.01(3) ("covenant defeasance").
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event
of Default with respect thereto.
Upon satisfaction of the conditions set forth herein
and upon request of the Company, the Trustee shall acknowledge
in writing the discharge of those obligations that the Company
terminates.
(c) Notwithstanding clauses (a) and (b) above, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Notes
have been paid in full. Thereafter, the Company's obligations
in Sections 7.07, 8.04 and 8.05 shall survive.
<PAGE>
Section 8.02. Conditions to Defeasance. The Company
may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations for the
payment of principal and interest, if any, on the Notes to
maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a
certificate from a nationally recognized firm of
independent accountants expressing their opinion that the
payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide
cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all
the Notes to maturity or redemption, as the case may be;
(3) no Default has occurred and is continuing on the
date of such deposit and after giving effect thereto;
(4) the deposit does not constitute a default under
any other agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion
of Counsel to the effect that the trust resulting from the
deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company
Act of 1940;
(6) the Company delivers to the Trustee an Opinion
of Counsel stating that the Holders will not recognize
income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject
to federal income tax on the same amount and in the same
manner and at the same times as would have been the case
if such deposit and defeasance had not occurred, and, in
the case of legal defeasance only, such Opinion of Counsel
shall be based on a ruling of the Internal Revenue Service
or other change in applicable federal income tax law; and
(7) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that
all conditions precedent to the defeasance and discharge
of the Notes as contemplated by this Article VIII have
been complied with.
Notwithstanding the foregoing provisions of this
Section, the conditions set forth in the foregoing paragraphs
<PAGE>
(2), (3), (4), (5), (6) and (7) need not be satisfied so long
as, at the time the Company makes the deposit described in
paragraph (1), (i) no Default under Section 6.01(1), 6.01(2),
6.01(7) or 6.01(8) has occurred and is continuing on the date
of such deposit and after giving effect thereto and (ii) either
(x) a notice of redemption has been mailed pursuant to Section
3.03 providing for redemption of all the Notes 30 days after
such mailing and the provisions of Section 3.01 with respect to
such redemption shall have been complied with or (y) the Stated
Maturity of all of the Notes will occur within 30 days. If the
conditions of the preceding sentence are satisfied the Company
shall be deemed to have exercised its covenant defeasance
option.
Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of
Notes at a future date in accordance with Article III
(including by utilizing amounts under deposit).
Section 8.03. Application of Trust Money. The
Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article VIII.
It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of
and interest, if any, on the Notes.
Section 8.04. Repayment to Company. The Trustee and
the Paying Agent shall promptly turn over to the Company upon
request any excess money or securities held by them at any
time.
Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of
principal or interest that remains unclaimed for two years,
and, thereafter, Holders entitled to the money must look to the
Company for payment as general creditors.
Section 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against
any tax, fee or other charges imposed on or assessed against
U.S. Government Obligations deposited with the Trustee
hereunder or the principal and interest received on such U.S.
Government Obligations.
Section 8.06. Reinstatement. If the Trustee or
Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article VIII by reason of
any legal proceeding or by reason of any order or judgment of
<PAGE>
any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to
this Article VIII until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided
that, if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the
money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders. The
Company, when authorized by a resolution of its Board of
Directors, and the Trustee may amend or supplement this
Indenture or the Notes without notice to or consent of any
Holder:
(1) to cure any ambiguity, defect or
inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Notes in
addition to certificated Notes;
(4) to comply with any requirements of the
Commission in order to effect or maintain the
qualification of this Indenture under the TIA;
(5) to make any change that would provide any
additional benefit or rights to the Holders or that
does not adversely affect the rights of any Holder; or
(6) to provide for issuance of the Exchange
Notes, which will have terms substantially identical in
all material respects to the Initial Notes (except that
the transfer restrictions contained in the Initial
Notes will be modified or eliminated, as appropriate),
and which will be treated together with any outstanding
Initial Notes, as a single issue of securities.
<PAGE>
Notwithstanding the above, the Trustee and the
Company may not make any change that adversely affects the
rights of any Holders hereunder.
Section 9.02. With Consent of Holders. Subject to
Section 6.07, the Company, when authorized by resolution of its
Board of Directors, and the Trustee may amend this Indenture or
the Notes with the written consent of the Holders of a majority
in aggregate principal amount of the Notes then outstanding,
and the Holders of a majority in aggregate principal amount of
the Notes then outstanding by written notice to the Trustee may
waive future compliance by the Company with any provision of
this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 6.04, may not:
(A) change the stated maturity of the principal
of, or any installment of interest on, any Note or
reduce the principal amount thereof, the rate of
interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in
which any Note or any premium or the interest thereon
is payable, or impair the right to institute suit for
the enforcement of any such payment after the stated
maturity thereof (or, in the case of redemption, on or
after the redemption date);
(B) reduce the percentage in principal amount of
the outstanding Notes, the consent of the Holders of
which is required for any supplemental indenture or the
consent of such Holders is required for any waiver of
compliance with provisions of this Indenture or
Defaults hereunder and their consequences provided for
in this Indenture;
(C) modify any of the provisions relating to
supplemental indentures requiring the consent of
Holders or relating to the waiver of past defaults or
relating to the waiver of covenants, except to increase
any such percentage of outstanding Notes required for
such actions or to provide that certain other
provisions of this Indenture cannot be modified or
waived without the consent of each Holder affected
thereby;
(D) waive a default in the payment of the
principal of or interest on any Note or modify or waive
<PAGE>
the Company's obligation to repurchase Notes under
Section 4.19 or 4.20;
(E) except as otherwise permitted by the
covenants contained in Article V, consent to the
assignment or transfer by the Company of any of its
rights and obligations under this Indenture;
(F) make any change in this Section 9.02 or
Section 6.04 or 6.07; or
(G) change the time at which any Note must be
redeemed or repaid in accordance with the terms of this
Indenture and the Notes.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
Any amendment, waiver or consent shall be deemed effective upon
receipt by the Trustee of the necessary consents and shall not
require execution of any supplemental indenture to be
effective.
After an amendment or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of
each Note affected thereby, with a copy to the Trustee, a
notice briefly describing the amendment or waiver. Any failure
of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of
any such amendment, waiver or consent. Except as otherwise
provided in this Section 9.02, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with
any provisions of this Indenture or the Notes.
Section 9.03. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by such
Holder and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the
consent as to his Note or portion of a Note. Such revocation
shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver
becomes effective.
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder; provided that if such
<PAGE>
amendment, supplement or waiver makes a change described in any
of clauses (A) through (G) of Section 9.02, such amendment,
supplement or waiver shall bind each Holder of a Note who has
consented to it; and provided, further, that if notice of such
amendment, supplement or waiver is reflected on a Note that
evidences the same debt as the consenting Holder's Note, such
amendment, supplement or waiver shall bind every subsequent
Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note.
Section 9.04. Record Date. The Company shall be
permitted to set a record date for purposes of determining the
identity of Holders entitled to vote or consent on any matter
arising under this Indenture. In the Company's sole
discretion, the record date shall be either (i) the record date
as determined pursuant to { 316(c) of the TIA or (ii) such
other record date as the Company shall select.
Section 9.05. Notation on or Exchange of Notes. If
an amendment, supplement or waiver changes the terms of a Note,
the Trustee may (and, at the request of the Company, shall)
require the Holder of the Note to deliver it to the Trustee.
The Trustee may (and, at the request of the Company, shall)
place an appropriate notation on the Note about the changed
terms and return it to the Holder and the Trustee may (and, at
the request of the Company, shall) place an appropriate
notation on any Note thereafter authenticated. Alternatively,
if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall
authenticate a new Note that reflects the changed terms.
Section 9.06. Trustee May Sign Amendments, etc. The
Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article IX if the amendment,
supplement or waiver does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing
to sign such amendment, supplement or waiver, the Trustee shall
be entitled to receive and, subject to TIA { 315(a) through
(d), shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence
that such amendment, supplement or waiver is authorized or
permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.01. Trust Indenture Act of 1939. This
Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the
extent applicable, be governed by such provisions.
Section 10.02. Notices. Any notice or communication
shall be sufficiently given if in writing and delivered in
person or mailed by first class mail, postage prepaid,
addressed as follows:
If to the Company, to:
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: General Counsel
If to the Trustee, to:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
The parties hereto by notice to the other parties may
designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed, postage prepaid,
to a Holder shall be mailed by first class mail to him at his
address as it appears on the Notes register maintained by the
Registrar and shall be sufficiently given to him if so mailed
within the time prescribed. Copies of any such communication
or notice to a Holder shall also be mailed to the Trustee.
Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with
respect to other Holders. Except for a notice to the Trustee
or the Company, which is deemed given only when received, if a
notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
Section 10.03. Communication by Holders with Other
Holders. Holders may communicate pursuant to TIA { 312(b) with
other Holders with respect to their rights under this Indenture
<PAGE>
or the Notes. The Company, the Trustee, the Registrar and any
other person shall have the protection of TIA { 312(c).
Section 10.04. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by the
Company to the Trustee to take any action under this Indenture,
the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
Section 10.05. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture (other than pursuant to Section 4.05(b)) shall
include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statement
or opinions contained in such certificate or opinion are
based;
(3) a brief statement that, in the opinion of such
Person, he has made such examination or investigation as
is necessary to enable him to express an opinion as to
whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
complied with; provided that with respect to matters of
fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
Section 10.06. Rules by Trustee, Paying Agent,
Registrar. The Trustee may make reasonable rules for action by
or at a meeting of Holders. The Paying Agent or Registrar may
make reasonable rules for its functions.
<PAGE>
Section 10.07. Governing Law. The laws of the State
of New York shall govern this Indenture and the Notes without
regard to principles of conflicts of law. The Trustee, the
Company and the Holders agree to submit to the jurisdiction of
the courts of the State of New York in any action or proceeding
arising out of or relating to this Indenture or the Notes.
Section 10.08. No Interpretation of Other
Agreements. This Indenture may not be used to interpret
another indenture, loan or debt agreement of the Company or any
of its Subsidiaries. No such indenture, loan or debt agreement
may be used to interpret this Indenture.
Section 10.09. No Recourse Against Others. No
director, officer, employee, stockholder or Affiliate, as such,
of the Company shall have any liability for any obligations of
the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and
releases all such liability.
Section 10.10. Legal Holidays. A "Legal Holiday" is
a Saturday, Sunday or a day on which banking institutions in
New York, New York are not required to be open. If a payment
date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a
Legal Holiday and interest shall not accrue for the intervening
period.
Section 10.11. Successors. All agreements of the
Company in this Indenture and the Notes shall bind its
successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 10.12. Duplicate Originals. The parties may
sign any number of copies of this Indenture. Each signed copy
shall be an original, but all such executed copies together
represent the same agreement.
Section 10.13. Separability. In case any provision
in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor
against any party hereto.
Section 10.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
<PAGE>
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 10.15. Benefits of Indenture. Nothing in
this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their
successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first
written above.
ISP HOLDINGS INC.
By: /s/James P. Rogers
------------------------------
Name: James P. Rogers
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/Timothy J. Shea
------------------------------
Name: Timothy J. Shea
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT
IS THREE YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE
OF THIS NOTE AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OF
THE ISSUER WAS THE OWNER OF THIS NOTE (THE "RESALE RESTRICTION
TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF
NEW YORK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, SUBJECT IN EACH OF
THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE
AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS; AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE BEFORE THE RESALE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSES (C),
(D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
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<PAGE>
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
FOREGOING RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO
THE RESALE RESTRICTION TERMINATION DATE.
A-2
<PAGE>
No. $________
CUSIP No. 450302AA2
ISP HOLDINGS INC.
9% SENIOR NOTES DUE 2003
ISP HOLDINGS INC., a Delaware corporation (the
"Company"), promises to pay to
, or registered assigns, the principal sum of
Dollars on October 15, 2003 and to pay interest
thereon on April 15 and October 15, in each year, commencing on
April 15, 1997 (each an "Interest Payment Date"), accruing from
the Issue Date or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate
specified herein, until the principal hereof is paid or duly
provided for. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note is registered at the close of
business on the April 1 or October 1, whether or not a Business
Day, as the case may be, immediately preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
extent lawful, shall forthwith cease to be payable to the
Holder on such Interest Payment Date, and may be paid to the
Person in whose name this Note is registered at the close of
business on a special record date for the payment of such
defaulted interest to be fixed by the Trustee, notice of which
shall be given to Holders not less than 15 days prior to such
special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon
such notice as may be required by such exchange, all as more
fully provided in such Indenture.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
ISP HOLDINGS INC.
[Seal]
By: ____________________________
Name:
Title:
By: __________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the 9% Senior
Notes due 2003 described in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: ___________________________
Authorized Signatory
A-4
<PAGE>
[FORM OF REVERSE SIDE INITIAL NOTE]
ISP HOLDINGS INC.
9% Senior Notes due 2003
1. Interest. (a) ISP HOLDINGS INC., a Delaware
corporation (the "Company"), shall pay interest on overdue
principal at the rate of 9% per annum.
(b) Notwithstanding the foregoing, if the Spin Off
has not been consummated before the Interest Increase Trigger
Date, the Notes will be deemed to have borne interest at a rate
of 9.75% per annum from (and including) the Issue Date (the
"New Interest Rate"). The additional interest that is deemed
to have accrued prior to the Interest Increase Trigger Date
shall be paid by the Company on the Interest Payment Date
immediately following the Interest Increase Trigger Date (the
"Special Payment Date") to the persons who are registered
Holders on the Interest Record Date for such Interest Payment
Date. The default interest referred to in Section 2.12 of the
Indenture shall not apply to such additional interest except to
the extent not paid on the Special Payment Date. The New
Interest Rate shall be in effect until the earlier of (x) the
Spin Off Date and (y) if the Determination Date occurs, the
date on which all of the Notes are redeemed, defeased or
otherwise discharged.
(c) Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Holder must surrender
this Note to a Paying Agent to collect principal payments. the
Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment
of public and private debts. With respect to certificated
Notes, the Company, however, may pay interest by a check
payable in such money. The Company may mail an interest check
to the Holder's registered address. If a payment date is a
Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening
period.
3. Paying Agent and Registrar. Initially, The Bank
of New York (the "Trustee") or its agent will act as Paying
Agent and Registrar. The Company may change any Paying Agent,
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<PAGE>
Registrar or co-Registrar without prior notice to any Holder.
The Company or any of its Subsidiaries or Affiliates may act in
any such capacity, except in certain circumstances.
4. Indenture. The Company issued the Notes under an
Indenture dated as of October 18, 1996 (the "Indenture")
between the Company and the Trustee. Capitalized terms used in
this Note and not defined in this Note shall have the meaning
set forth in the Indenture. The terms of the Notes include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in
effect on the date of the Indenture. The Notes are subject to
all such terms, and Holders are referred to the Indenture and
said Act for a statement of such terms.
The Notes are senior unsecured obligations of the
Company limited to $325,000,000 in aggregate principal amount.
This Note is one of the Initial Notes referred to in the
Indenture. The Notes include the Initial Notes, any Exchange
Notes, as defined below, issued in exchange for the Initial
Notes pursuant to the Indenture and the Private Exchange Notes.
The Initial Notes, the Exchange Notes and the Private Exchange
Notes are treated as a single class of securities under the
Indenture.
5. Redemption.
(a) Optional Redemption. In the event that on or
prior to October 15, 1999, (x) the Company consummates a sale
of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP or (z) on and after the
Determination Date, BMCA or its parent consummates sale of the
Common Stock of BMCA, the Company may, at its option, redeem,
but only to the extent of net cash proceeds therefrom actually
received by the Company, up to 50% (in the case of a redemption
under clause (x) or (y)) or 25% (in the case of a redemption
under clause (z)) of the principal amount of the Notes then
outstanding at a redemption price equal to 109% of the
principal amount thereof plus accrued interest thereon to the
date of redemption; provided, however, that, no such redemption
may be made if and to the extent that, after giving effect
thereto, less than 50% of the principal amount of Notes
originally issued would be outstanding. Any such redemption
shall be made within 75 days of the first consummation of any
such sale.
In the event a Change of Control occurs, the Company
may redeem all, but not less than all, of the Notes then
outstanding, at a redemption price equal to 100% of the
A-6
<PAGE>
principal amount thereof plus accrued interest to the
redemption date, plus the Applicable Premium. Notice of any
redemption to be made pursuant to this paragraph as a result of
the occurrence of a Change of Control must be given no later
than 10 days after the Change of Control Payment Date
applicable to the Change of Control giving rise to such
redemption, and redemption must be made within 30 days of the
date of the notice.
The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on
and after October 15, 1999, upon not less than 30 nor more than
60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the
year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
YEAR PERCENTAGE
1999 ..................... 104.5%
2000 ..................... 103.0%
2001 ..................... 101.5%
2002 ..................... 100.0%
(b) Mandatory Redemption. The Notes will not have
the benefit of any sinking fund.
6. Put Provisions. Upon a Change of Control, each
Holder of Notes will have the right to cause the Company to
repurchase all or any part (in integral multiples of $1,000) of
the Notes of such Holder at a repurchase price equal to 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect as set forth in the third paragraph of
Section 5(a)) plus accrued interest thereon to the date of
repurchase, as provided in, and subject to the terms of, the
Indenture.
7. Notice of Redemption. Notice of redemptions
pursuant to Section 5 will be mailed at least 30 days but not
more than 60 days before the applicable redemption date (or, if
applicable at such other time as is provided by Section 5(a))
to each Holder of Notes to be redeemed at the Holder's
registered address. If money sufficient to pay the redemption
price and accrued interest on all Notes to be redeemed on the
redemption date is deposited with the Paying Agent on the
redemption date, on and after such date interest ceases to
accrue on such Notes or portions of them. Notes in
A-7
<PAGE>
denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000.
8. Proceeds on Disposition of Assets. Under certain
circumstances, the Company is required to apply the Net Cash
Proceeds (or a portion thereof) from Asset Sales to offer to
purchase Notes at a price equal to 100% of the principal amount
thereof plus accrued interest thereon to the date of purchase.
9. Denominations, Transfer, Exchange. The Notes are
in registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder may register the transfer or
exchange of Notes as provided in the Indenture. The Registrar
may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee
and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered with the Registrar
as the owner for all purposes.
11. Unclaimed Money. If money for the payment of
interest or principal remains unclaimed for two years, the
Trustee and the Paying Agent will pay the money back to the
Company at its written request. After such time, Holders
entitled to the money must look to the Company for payment
unless an abandoned property law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
12. Discharge Prior to Maturity. Subject to certain
conditions, if the Company deposits with the Trustee money or
U.S. Government Obligations sufficient for the payment of
principal and interest on the Notes to maturity, the Company
will be discharged (to the extent provided in the Indenture)
from the Indenture and the Notes.
13. Amendments, Supplements and Waivers. Subject to
certain exceptions requiring the consent of each Holder
affected, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and
any existing Default may be waived with the consent of the
Holders of a majority in principal amount of the then
outstanding Notes. Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for assumption of
A-8
<PAGE>
the obligations of the Company to Holders in accordance with
the terms of the Indenture or make any change that does not
adversely affect the rights of any Holder.
14. Restrictive Covenants. The Indenture imposes
certain limitations on, among other things, the ability of the
Company to merge or consolidate with any other Person or sell,
lease or otherwise transfer all or substantially all of its
properties or assets, the ability of the Company or certain of
its Subsidiaries to make Restricted Payments and Restricted
Investments and the ability of the Company and certain of its
Subsidiaries to incur Debt, create Liens or engage in
transactions with Affiliates or issue Preferred Stock, all
subject to certain important limitations and qualifications
described in the Indenture. The Indenture allows for the
consummation of the Spin Off.
15. Successor Corporation. When a successor Person
or other entity assumes all the obligations of its predecessor
under the Notes and the Indenture, the predecessor Person will
be released from those obligations.
16. Defaults and Remedies. The Notes have the
Events of Default as set forth in Section 6.01 of the
Indenture. Subject to certain limitations in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy, insolvency
or reorganization relating to the Company, all outstanding
Notes shall become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any
trust or power. the Company must furnish quarterly compliance
certificates to the Trustee.
17. Trustee Dealings with the Company. The Trustee
under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services
for the Company or any of its Affiliates, and may otherwise
deal with the Company or any of its Affiliates, as if it were
not the Trustee.
A-9
<PAGE>
18. No Recourse Against Others. A director,
officer, employee, stockholder or Affiliate, as such, of the
Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
19. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or
any authenticating agent.
20. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other
identification numbers placed thereon.
22. Registration Rights. Pursuant to the
Registration Rights Agreement, the Company has certain
obligations regarding an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note
for the Company's Series B 9% Senior Notes due 2003 (the
"Exchange Notes"), which have been registered under the
Securities Act, in like principal amount and having identical
terms as the Initial Notes (other than certain restrictions on
transfers). The Holders of the Initial Notes shall be entitled
to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other
conditions, all pursuant to and in accordance with the terms of
the Registration Rights. Within five days after the occurrence
of an event so resulting in such additional interest payments,
the Company shall provide the Trustee with an Officers'
Certificate describing such event and providing the Trustee
with all necessary details relating to the payment of such
interest, including, without limitation, the interest rate, the
A-10
<PAGE>
effective date of such interest rate and the method of
calculating interest.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request
may be made to:
ISP Holdings Inc.
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: Secretary
A-11
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(insert assignee's social security or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: ___________________ Your Signature:
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee:_________________________
In connection with any transfer of any of the Notes evidenced
by this certificate occurring prior to the date that is three
years after the later of the date of original issuance of such
Notes and the last date, if any, on which such Notes were owned
by the Company or any Affiliate of the Company, the undersigned
confirms that such Notes are being transferred:
A-12
<PAGE>
CHECK ONE BOX BELOW
(1) __ to the Company or a subsidiary thereof; or
(2) __ to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act of 1933, as
amended) in compliance with Rule 144A; or
(3) __ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) that has
furnished to the Trustee a signed letter containing
certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) __ outside the United States in compliance with Rule 903
or Rule 904 of Regulation S under the Securities Act
of 1933, as amended; or
(5) __ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933, as
amended.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered Holder thereof;
provided that if box (3), (4) or (5) is checked, the Company or
the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions,
certifications and other information as the Trustee or the
Company has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act of 1933, as amended.
Signature Guarantee: Signature
___________________
Signature
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, check the appropriate box:
__ __
Section 4.19 / / Section 4.20 / /
____
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, state the principal amount:
$
Date:________________________Your Signature:
(Sign exactly as your name appears
on the other side of the Note)
Signature Guarantee:
(Signature must be guaranteed)
A-14
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE*]
No. $________
CUSIP No.
ISP HOLDINGS INC.
[SERIES B 9% SENIOR NOTES DUE 2003]
[PRIVATE EXCHANGE 9% SENIOR NOTES DUE 2003]
ISP HOLDINGS INC., a Delaware corporation (the
"Company"), promises to pay to
, or registered assigns, the principal sum of
Dollars on October 15, 2003 and to pay interest
thereon on April 15 and October 15, in each year, commencing on
April 15, 1997 (each an "Interest Payment Date"), accruing from
the Issue Date or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at the rate
specified herein, until the principal hereof is paid or duly
provided for. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note is registered at the close of
business on the April 1 or October 1, whether or not a Business
Day, as the case may be, immediately preceding such Interest
Payment Date. Any such interest not so punctually paid, or
duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Notes, to the
_________________________
* If the certificate is a Private Exchange Note issued
pursuant to the Registration Rights Agreement in a Private
Exchange (as defined therein), add the restricted
securities legend from Exhibit A to this Indenture and
replace the Assignment Form included in this Exhibit B
with the Assignment Form included in such Exhibit A.
B-1
<PAGE>
extent lawful, shall forthwith cease to be payable to the
Holder on such Interest Payment Date, and may be paid to the
Person in whose name this Note is registered at the close of
business on a special record date for the payment of such
defaulted interest to be fixed by the Trustee, notice of which
shall be given to Holders not less than 15 days prior to such
special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon
such notice as may be required by such exchange, all as more
fully provided in such Indenture.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
ISP HOLDINGS INC.
[Seal]
By: ____________________________
Name:
Title:
By: __________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the [Series B 9% Senior
Notes due 2003] [Private Exchange 9% Senior
Notes due 2003] described in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: ___________________________
Authorized Signatory
B-3
<PAGE>
[FORM OF REVERSE SIDE EXCHANGE NOTE AND PRIVATE EXCHANGE NOTE]
ISP HOLDINGS INC.
(Series B 9% Senior Notes due 2003)
(Private Exchange 9% Senior Notes due 2003)
1. Interest. (a) ISP HOLDINGS INC., a Delaware
corporation (the "Company"), shall pay interest on overdue
principal at the rate of 9% per annum.
(b) Notwithstanding the foregoing, if the Spin Off
has not been consummated before the Interest Increase Trigger
Date, the Notes will be deemed to have borne interest at a rate
of 9.75% per annum from (and including) the Issue Date (the
"New Interest Rate"). The additional interest that is deemed
to have accrued prior to the Interest Increase Trigger Date
shall be paid by the Company on the Interest Payment Date
immediately following the Interest Increase Trigger Date (the
"Special Payment Date") to the persons who are registered
Holders on the Interest Record Date for such Interest Payment
Date. The default interest referred to in Section 2.12 of the
Indenture shall not apply to such additional interest except to
the extent not paid on the Special Payment Date. The New
Interest Rate shall be in effect until the earlier of (x) the
Spin Off Date and (y) if the Determination Date occurs, the
date on which all of the Notes are redeemed, defeased or
otherwise discharged.
(c) Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Holder must surrender
this Note to a Paying Agent to collect principal payments. the
Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment
of public and private debts. With respect to certificated
Notes, the Company, however, may pay interest by a check
payable in such money. The Company may mail an interest check
to the Holder's registered address. If a payment date is a
Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening
period.
3. Paying Agent and Registrar. Initially, The Bank
of New York (the "Trustee") or its agent will act as Paying
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<PAGE>
Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without prior notice to any Holder.
The Company or any of its Subsidiaries or Affiliates may act in
any such capacity, except in certain circumstances.
4. Indenture. The Company issued the Notes under
an Indenture dated as of October 18, 1996 (the "Indenture")
between the Company and the Trustee. Capitalized terms used in
this Note and not defined in this Note shall have the meaning
set forth in the Indenture. The terms of the Notes include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in
effect on the date of the Indenture. The Notes are subject to
all such terms, and Holders are referred to the Indenture and
said Act for a statement of such terms.
The Notes are senior unsecured obligations of the
Company limited to $325,000,000 in aggregate principal amount.
This Note is one of the Exchange Notes referred to in the
Indenture. The Notes include the Exchange Notes and any
Initial Notes in exchange for which the Exchange Notes were
issued pursuant to the Indenture. The Initial Notes and the
Exchange Notes are treated as a single class of securities
under the Indenture.
5. Redemption.
(a) Optional Redemption. In the event that on or
prior to October 15, 1999, (x) the Company consummates a sale
of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP or (z) on and after the
Determination Date, BMCA or its parent consummates sale of the
Common Stock of BMCA, the Company may, at its option, redeem,
but only to the extent of net cash proceeds therefrom actually
received by the Company, up to 50% (in the case of a redemption
under clause (x) or (y)) or 25% (in the case of a redemption
under clause (z)) of the principal amount of the Notes then
outstanding at a redemption price equal to 109% of the
principal amount thereof plus accrued interest thereon to the
date of redemption; provided, however, that, no such redemption
may be made if and to the extent that, after giving effect
thereto, less than 50% of the principal amount of Notes
originally issued would be outstanding. Any such redemption
shall be made within 75 days of the first consummation of any
such sale.
In the event a Change of Control occurs, the Company
may redeem all, but not less than all, of the Notes then
outstanding, at a redemption price equal to 100% of the
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<PAGE>
principal amount thereof plus accrued interest to the
redemption date, plus the Applicable Premium. Notice of any
redemption to be made pursuant to this paragraph as a result of
the occurrence of a Change of Control must be given no later
than 10 days after the Change of Control Payment Date
applicable to the Change of Control giving rise to such
redemption, and redemption must be made within 30 days of the
date of the notice.
The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on
and after October 15, 1999, upon not less than 30 nor more than
60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the
year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
YEAR PERCENTAGE
1999 ..................... 104.5%
2000 ..................... 103.0%
2001 ..................... 101.5%
2002 ..................... 100.0%
(b) Mandatory Redemption. The Notes will not have
the benefit of any sinking fund.
6. Put Provisions. Upon a Change of Control, each
Holder of Notes will have the right to cause the Company to
repurchase all or any part (in integral multiples of $1,000) of
the Notes of such Holder at a repurchase price equal to 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect as set forth in the third paragraph of
Section 5(a)) plus accrued interest thereon to the date of
repurchase, as provided in, and subject to the terms of, the
Indenture.
7. Notice of Redemption. Notice of redemptions
pursuant to Section 5 will be mailed at least 30 days but not
more than 60 days before the applicable redemption date (or, if
applicable at such other time as is provided by Section 5(a))
to each Holder of Notes to be redeemed at the Holder's
registered address. If money sufficient to pay the redemption
price and accrued interest on all Notes to be redeemed on the
redemption date is deposited with the Paying Agent on the
redemption date, on and after such date interest ceases to
accrue on such Notes or portions of them. Notes in
B-6
<PAGE>
denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000.
8. Proceeds on Disposition of Assets. Under
certain circumstances, the Company is required to apply the Net
Cash Proceeds (or a portion thereof) from Asset Sales to offer
to purchase Notes at a price equal to 100% of the principal
amount thereof plus accrued interest thereon to the date of
purchase.
9. Denominations, Transfer, Exchange. The Notes
are in registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder may register the transfer or
exchange of Notes as provided in the Indenture. The Registrar
may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee
and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered with the Registrar
as the owner for all purposes.
11. Unclaimed Money. If money for the payment of
interest or principal remains unclaimed for two years, the
Trustee and the Paying Agent will pay the money back to the
Company at its written request. After such time, Holders
entitled to the money must look to the Company for payment
unless an abandoned property law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
12. Discharge Prior to Maturity. Subject to certain
conditions, if the Company deposits with the Trustee money or
U.S. Government Obligations sufficient for the payment of
principal and interest on the Notes to maturity, the Company
will be discharged (to the extent provided in the Indenture)
from the Indenture and the Notes.
13. Amendments, Supplements and Waivers. Subject to
certain exceptions requiring the consent of each Holder
affected, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and
any existing Default may be waived with the consent of the
Holders of a majority in principal amount of the then
outstanding Notes. Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any
B-7
<PAGE>
ambiguity, defect or inconsistency, provide for assumption of
the obligations of the Company to Holders in accordance with
the terms of the Indenture or make any change that does not
adversely affect the rights of any Holder.
14. Restrictive Covenants. The Indenture imposes
certain limitations on, among other things, the ability of the
Company to merge or consolidate with any other Person or sell,
lease or otherwise transfer all or substantially all of its
properties or assets, the ability of the Company or certain of
its Subsidiaries to make Restricted Payments and Restricted
Investments and the ability of the Company and certain of its
Subsidiaries to incur Debt, create Liens or engage in
transactions with Affiliates or issue Preferred Stock, all
subject to certain important limitations and qualifications
described in the Indenture. The Indenture allows for the
consummation of the Spin Off.
15. Successor Corporation. When a successor Person
or other entity assumes all the obligations of its predecessor
under the Notes and the Indenture, the predecessor Person will
be released from those obligations.
16. Defaults and Remedies. The Notes have the
Events of Default as set forth in Section 6.01 of the
Indenture. Subject to certain limitations in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy, insolvency
or reorganization relating to the Company, all outstanding
Notes shall become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any
trust or power. the Company must furnish quarterly compliance
certificates to the Trustee.
17. Trustee Dealings with the Company. The Trustee
under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services
for the Company or any of its Affiliates, and may otherwise
deal with the Company or any of its Affiliates, as if it were
not the Trustee.
B-8
<PAGE>
18. No Recourse Against Others. A director,
officer, employee, stockholder or Affiliate, as such, of the
Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
19. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or
any authenticating agent.
20. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request
may be made to:
ISP Holdings Inc.
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: Secretary
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(insert assignee's social security or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: ___________________ Your Signature:
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee:_________________________
B-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, check the appropriate box:
__ __
Section 4.19 / / Section 4.20 / /
____
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, state the principal amount:
$
Date:________________________Your Signature:
(Sign exactly as your name appears
on the other side of the Note)
Signature Guarantee:
(Signature must be guaranteed)
B-11
<PAGE>
EXHIBIT C
[FORM OF LEGEND FOR BOOK-ENTRY SECURITIES]
Any Global Note authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other
legends required in the case of a Restricted Security) in
substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF
THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
C-1
<PAGE>
_______________________________________________________________
_______________________________________________________________
ISP HOLDINGS INC.
9 3/4% Senior Notes due 2002
and
Series B 9 3/4% Senior Notes due 2002
______________
INDENTURE
Dated as of October 18, 1996
______________
THE BANK OF NEW YORK
______________
Trustee
_______________________________________________________________
_______________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)......................................... 7.10
(a)(2)......................................... 7.10
(a)(3)......................................... N.A.
(a)(4)......................................... N.A.
(a)(5)......................................... 7.08
(b)............................................ 7.08; 7.10; 10.02
(c)............................................ N.A.
311(a)............................................ 7.11
(b)............................................ 7.11
(c)............................................ N.A.
312(a)............................................ 2.05
(b)............................................ 10.03
(c)............................................ 10.03
313(a)............................................ 7.06
(b)(1)......................................... N.A.
(b)(2)......................................... 7.06
(c)............................................ 7.06; 10.02
(d)............................................ 7.06
314(a)............................................ 4.05; 4.06; 10.02
(b)............................................ N.A.
(c)(1)......................................... 10.04
(c)(2)......................................... 10.04
(c)(3)......................................... N.A.
(d)............................................ N.A.
(e)............................................ 10.05
(f)............................................ N.A.
315(a)............................................ 7.12(b)
(b)............................................ 7.05; 10.02
(c)............................................ 7.12(a)
(d)............................................ 7.12(c)
(e)............................................ 6.11
316(a)(last sentence)............................. 2.09
(a)(1)(A)...................................... 6.05
(a)(1)(B)...................................... 6.04
(a)(2)......................................... N.A.
(b)............................................ 6.07
(c)............................................ 9.04
317(a)(1)......................................... 6.08
(a)(2)......................................... 6.09
(b)............................................ 2.04
318(a)............................................ 10.01
_______________
N.A. means "not applicable."
* This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..................................... 1
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act................................. 26
SECTION 1.03. Rules of Construction........................... 26
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating................................. 27
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount.................... 27
SECTION 2.03. Registrar and Paying Agent...................... 29
SECTION 2.04. Paying Agent To Hold Money in Trust............. 29
SECTION 2.05. Holder Lists.................................... 30
SECTION 2.06. Transfer and Exchange........................... 30
SECTION 2.07. Replacement Notes............................... 32
SECTION 2.08. Outstanding Notes............................... 32
SECTION 2.09. Treasury Notes.................................. 33
SECTION 2.10. Temporary Notes................................. 33
SECTION 2.11. Cancellation.................................... 33
SECTION 2.12. Defaulted Interest.............................. 33
SECTION 2.13. CUSIP Number.................................... 34
SECTION 2.14. Deposit of Moneys............................... 34
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee.............................. 34
SECTION 3.02. Selection of Notes To Be Redeemed............... 35
SECTION 3.03. Notice of Redemption............................ 35
SECTION 3.04. Effect of Notice of Redemption.................. 36
SECTION 3.05. Deposit of Redemption Price..................... 36
SECTION 3.06. Notes Redeemed in Part.......................... 36
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<PAGE>
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes................................ 37
SECTION 4.02. Maintenance of Office or Agency................. 37
SECTION 4.03. Corporate Existence............................. 38
SECTION 4.04. Payment of Taxes and Other Claims............... 38
SECTION 4.05. Compliance Certificates......................... 38
SECTION 4.06. Securities and Exchange Commission
Reports....................................... 39
SECTION 4.07. Waiver of Stay, Extension or Usury
Laws.......................................... 40
SECTION 4.08. Maintenance of Properties....................... 40
SECTION 4.09. Limitation on Debt and Preferred
Stock of the Company and ISP
Subsidiaries.................................. 41
SECTION 4.10. Limitation on Debt and Preferred
Stock of BMCA Subsidiaries.................... 43
SECTION 4.11. Limitation on Debt and Preferred
Stock of Specified Subsidiaries............... 44
SECTION 4.12. Prohibition on Debt and Capital
Stock of Intermediate Parents of
ISP and BMCA.................................. 45
SECTION 4.13. Limitation on Restricted Payments
and Restricted Investments.................... 46
SECTION 4.14. Limitation on Liens............................. 48
SECTION 4.15. Prohibition on Certain Transactions............. 49
SECTION 4.16. Limitation on Transactions with
Affiliates.................................... 50
SECTION 4.17. Limitation on Investments in Non-
Recourse Subsidiaries by ISP
Subsidiaries and BMCA
Subsidiaries.................................. 52
SECTION 4.18. Limitation on Dividend and Other
Payment Restrictions Affecting
Subsidiaries.................................. 52
SECTION 4.19. Change of Control............................... 54
SECTION 4.20. Limitation on Asset Sales....................... 56
SECTION 4.21. Investment Company Act.......................... 59
SECTION 4.22. Consents, etc................................... 59
SECTION 4.23. Registration Rights............................. 60
SECTION 4.24. Spin Off........................................ 60
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ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.01. When the Company May Merge, etc................. 60
SECTION 5.02. Successor Corporation Substituted............... 61
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default............................... 61
SECTION 6.02. Acceleration.................................... 63
SECTION 6.03. Other Remedies.................................. 64
SECTION 6.04. Waiver of Past Defaults......................... 64
SECTION 6.05. Control by Majority............................. 64
SECTION 6.06. Limitation on Remedies.......................... 64
SECTION 6.07. Rights of Holders To Receive
Payment....................................... 65
SECTION 6.08. Collection Suit by Trustee...................... 65
SECTION 6.09. Trustee May File Proofs of Claim................ 65
SECTION 6.10. Priorities...................................... 66
SECTION 6.11. Undertaking for Costs........................... 66
SECTION 6.12. Restoration of Rights and Remedies.............. 67
ARTICLE VII
TRUSTEE
SECTION 7.01. Rights of Trustee............................... 67
SECTION 7.02. Individual Rights of Trustee.................... 68
SECTION 7.03. Money Held in Trust............................. 68
SECTION 7.04. Trustee's Disclaimer............................ 68
SECTION 7.05. Notice of Defaults.............................. 68
SECTION 7.06. Reports by Trustee to Holders................... 69
SECTION 7.07. Compensation and Indemnity...................... 69
SECTION 7.08. Replacement of Trustee.......................... 70
SECTION 7.09. Successor Trustee by Merger, etc................ 71
SECTION 7.10. Eligibility; Disqualification................... 72
SECTION 7.11. Preferential Collection of Claims
Against the Company........................... 72
SECTION 7.12. Duties of Trustee............................... 72
-iv-
<PAGE>
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes;
Defeasance.................................... 73
SECTION 8.02. Conditions to Defeasance........................ 74
SECTION 8.03. Application of Trust Money...................... 76
SECTION 8.04. Repayment to Company............................ 76
SECTION 8.05. Indemnity for Government Obliga-
tions......................................... 76
SECTION 8.06. Reinstatement................................... 76
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders...................... 77
SECTION 9.02. With Consent of Holders......................... 77
SECTION 9.03. Revocation and Effect of Consents............... 79
SECTION 9.04. Record Date..................................... 80
SECTION 9.05. Notation on or Exchange of Notes................ 80
SECTION 9.06. Trustee May Sign Amendments, etc................ 80
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939..................... 80
SECTION 10.02. Notices......................................... 81
SECTION 10.03. Communication by Holders with Other
Holders....................................... 81
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent.......................... 81
SECTION 10.05. Statements Required in Certificate
or Opinion.................................... 82
SECTION 10.06. Rules by Trustee, Paying Agent,
Registrar..................................... 82
SECTION 10.07. Governing Law................................... 82
SECTION 10.08. No Interpretation of Other
Agreements.................................... 83
SECTION 10.09. No Recourse Against Others...................... 83
SECTION 10.10. Legal Holidays.................................. 83
SECTION 10.11. Successors...................................... 83
SECTION 10.12. Duplicate Originals............................. 83
SECTION 10.13. Separability.................................... 83
-v-
<PAGE>
SECTION 10.14. Table of Contents, Headings, etc................ 83
SECTION 10.15. Benefits of Indenture........................... 84
SIGNATURES........................................................ 85
EXHIBITS
EXHIBIT A -- Form of Initial Note................................. A-1
EXHIBIT B -- Form of Exchange Note................................ B-1
EXHIBIT C -- Form of Legend for Book-Entry
Securities...................................... C-1
SCHEDULES
Schedule A -- Registration Rights
-vi-
<PAGE>
INDENTURE, dated as of October 18, 1996, between ISP
HOLDINGS INC. (the "Company"), a Delaware corporation, and THE
BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), having its Corporate Trust Office at 101 Barclay
Street, New York, New York 10286.
The parties agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of
ISP Holdings' 9 3/4% Senior Notes due 2002 (the "Initial
Notes") and Series B 9 3/4% Senior Notes due 2002 (the
"Exchange Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"10% Notes" means the Series B 10% Senior Notes due
2006 of G-I Holdings.
"Acquired Debt", with respect to any Person, means
(i) Debt (including any then unutilized commitment under any
revolving working capital facility) of an entity, which entity
is acquired by such Person or any of its Subsidiaries after the
Issue Date; provided that such Debt (including any such
facility) is outstanding at the time of the acquisition of such
entity, is not created in contemplation of such acquisition and
is not, directly or indirectly, recourse (including by way of
set-off) to such Person or its Subsidiaries or any of their
respective assets other than to the entity and its Subsidiaries
so acquired and the assets of the entity and its Subsidiaries
so acquired, (ii) Debt of such Person that is not, directly or
indirectly, recourse (including by way of set-off) to such
Person and its Subsidiaries or any of their respective assets
other than to specified assets acquired by such Person or its
Subsidiaries after the Issue Date, which Debt is outstanding at
the time of the acquisition of such assets and is not created
in contemplation of such acquisition, or (iii) Refinancings of
Debt described in clauses (i) or (ii), provided that the
recourse with respect to such Refinancing Debt is limited to
the same extent as the Debt so Refinanced.
"Additional Interest" means all additional interest
owing under the Registration Rights Agreement.
<PAGE>
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled"
having meanings correlative to the foregoing. For the
avoidance of doubt, GAF and its Affiliates (so long as they are
under common control with the Company) shall, both before and
after the Spin Off, be deemed to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or co-
Registrar of the Notes.
"Applicable Date" has the meaning set forth in
Section 4.13(a)(3).
"Applicable Premium" means, with respect to any Note,
the greater of (x) 1.0% of the principal amount of such Note
and (y) the excess, if any, of (a) the present value of the
required remaining interest payments, principal and future
optional redemption premium (if applicable) of such Note,
discounted on a semi-annual bond equivalent basis from either
the maturity date of the Note or the optional redemption date
to the applicable redemption date at a per annum interest rate
equal to the Treasury Yield for such redemption date plus 100
basis points, over (b) the sum of the principal amount of such
Note plus accrued and unpaid interest to the redemption date.
"Asset Sale" means, with respect to any Person, the
sale, lease, assignment or other disposition (including,
without limitation, dispositions pursuant to any consolidation,
merger or sale and leaseback transaction) by such Person or any
of its Subsidiaries in any single transaction or series of
related transactions of (x) any Capital Stock of any Subsidiary
of such Person or (y) all or substantially all of the
properties and assets of any division or line of business of
such Person or any of its Recourse Subsidiaries, in either
case, other than (i) by the Company or any of its Post-Spin Off
Subsidiaries to the Company or any of its Post-Spin Off
Subsidiaries, (ii) by G-I Holdings or any of its Post-Spin Off
Subsidiaries to G-I Holdings or any of its Post-Spin Off
Subsidiaries and (iii) after the Determination Date, by the
Company or any of its Subsidiaries to the Company or any of its
Subsidiaries. For the purposes of this definition, the term
"Asset Sale" shall not include (A) any sale, lease, assignment
or other disposition of properties or assets that is governed
by Section 5.01, (B) any sale, lease, assignment or other
<PAGE>
disposition by a Person that has outstanding Long-Term Debt all
of which (x) are rated BBB- or higher by S&P and are not on
credit watch by S&P for a possible downgrade below BBB- or
(y) are rated Baa3 or higher by Moody's and are not on credit
watch by Moody's for a possible downgrade below Baa3, (C) any
sale of Common Stock the proceeds of which are used pursuant to
the provisions described in the first paragraph of Section 5(a)
of the Notes or (D) prior to the Spin Off, the retirement,
liquidation, redemption or extinguishment of the indirect
interest of the Company and its Subsidiaries in Rhone-Poulenc
Surfactants and Specialties L.P.
"Average Life" means, with respect to any Debt, the
quotient obtained by dividing (i) the sum of the products of
(a) the number of years from the date of the transaction or
event giving rise to the need to calculate the Average Life of
such Debt to the date, or dates, of each successive scheduled
principal payment of such Debt multiplied by (b) the amount of
each such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of
debtors.
"BMCA" means Building Materials Corporation of
America, a Delaware corporation, and its successors.
"BMCA Subsidiaries" means BMCA and its Subsidiaries.
"Board of Directors" of any Person means the Board of
Directors or similar governing body of such Person, or any duly
authorized committee of such Board of Directors or similar
governing body.
"Board Resolution" means, with respect to the Board
of Directors of any Person, a copy of a resolution certified by
the Secretary or Assistant Secretary of such Person to have
been duly adopted by such Board of Directors and to be in full
force and effect on the date of such certification and
delivered to the Trustee.
"Book-Entry Note" means a Note represented by a
Global Note and registered in the name of the Depository or a
nominee of the Depository.
"Business Day" means a day that is not a Legal
Holiday.
<PAGE>
"Capitalized Lease Obligation" means any rental
obligation that, in accordance with GAAP, is required to be
classified and accounted for as a capitalized lease and the
amount of Debt represented by such obligation shall be the
capitalized amount of such obligation determined in accordance
with GAAP; and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due in respect of
such obligation.
"Capital Stock" of any Person means any and all
shares, interests (including partnership interests), warrants,
rights, options or other interests, participations or other
equivalents of or interests in (however designated) equity of
such Person, including Common Stock or Preferred Stock, whether
now outstanding or issued after the Issue Date, but excluding
any debt securities convertible into or exchangeable for such
equity.
"Cash Equivalents" means (i) marketable direct
obligations Issued by, or unconditionally Guaranteed by, the
United States Government or Issued by any agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition
thereof, (ii) marketable direct obligations Issued by any state
of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's, (iii) commercial paper
maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's, (iv)
certificates of deposit or bankers' acceptances maturing no
more than one year from the date of acquisition thereof Issued
by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital surplus of not
less than $250,000,000, (v) repurchase obligations with a term
of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above and
(vi) investments in money market funds having assets in excess
of $500,000,000 and which invest substantially all their assets
in securities of the types described in clauses (i) through (v)
above.
"Change of Control" means the occurrence of any of
the following events:
<PAGE>
(i) prior to the first public offering of Voting
Stock of the Company, the Permitted Holders cease to be
the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of
majority voting power of the Voting Stock of the Company,
whether as a result of issuance of securities of the
Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect
transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (i) and clauses
(ii) and (iv) below, the Permitted Holders shall be deemed
to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation
(the "parent corporation") so long as the Permitted
Holders beneficially own (as so defined), directly or
indirectly, a majority of the Voting Stock of the parent
corporation);
(ii) any "Person" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (i) above, except
that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly
or indirectly, of more than 35% of the Voting Stock of the
Company, but only if Permitted Holders beneficially own
(as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the Voting Stock
of the Company than such other Person and do not have the
right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of
Directors of the Company;
(iii) during any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of the Company or its
predecessor (together with any new directors whose
election by such Board or whose nomination for election by
the shareholders of the Company or its predecessor was
approved by a vote of a majority of the directors of the
Company then still in office who were either directors at
the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors of the Company then in office; or
(iv) either (x) the Permitted Holders or (y) the
Company ceases, for any reason, to be the beneficial owner
<PAGE>
(as defined in clause (i) above), directly or indirectly,
of majority voting power of the Voting Stock of ISP,
whether as a result of issuance of securities, any merger,
consolidation, liquidation or dissolution, any direct or
indirect transfer of securities by any Permitted Holder or
otherwise.
"Change of Control Notice" has the meaning specified
in Section 4.19(b).
"Change of Control Payment Date" has the meaning set
forth in Section 4.19(a).
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act, or if at any time after the execution of the
Indenture such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body
performing such duties at such time.
"Common Stock" of any Person means any and all
shares, interests, participations, or other equivalents
(however designated) of such Person's common stock whether now
outstanding or issued after the Issue Date.
"Consolidated EBITDA Coverage Ratio" means, with
respect to any Person, for any period, the ratio of (i) EBITDA
of such Person for such period to (ii) Consolidated Interest
Expense of such Person for such period; provided, however, that
(A) if such Person or any of its Subsidiaries has Issued any
Debt or Capital Stock since the beginning of such period that
remains outstanding on the date such calculation is made or if
the transaction giving rise to the need to calculate the
Consolidated EBITDA Coverage Ratio is an Issuance of Debt or
Capital Stock, or both, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving
effect, on a pro forma basis, to the issuance of such Debt or
Capital Stock as if such Debt or Capital Stock had been Issued
on the first day of such period and the discharge of any other
Debt or Capital Stock Refinanced or otherwise discharged with
the proceeds of such new Debt or Capital Stock as if such
discharge had occurred on the first day of such period; (B) if
since the beginning of such period such Person or any of its
Subsidiaries shall have made any asset sale out of the ordinary
course of business, EBITDA for such period shall be reduced by
an amount equal to the EBITDA (if positive) directly
attributable to the assets which are the subject of such asset
sale for such period, or increased by an amount equal to the
EBITDA (if negative), directly attributable thereto for such
period and Consolidated Interest Expense for such period shall
<PAGE>
be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Debt or Capital Stock of
such Person or any Subsidiary of such Person and the amount of
any other Debt or Capital Stock Refinanced or otherwise
discharged with respect to such Person and its continuing
Subsidiaries (including as a result of the assumption of such
Debt or Capital Stock by the purchaser of such assets, provided
that such Person or any of its Subsidiaries is no longer liable
therefor) in connection with such Asset Sale for such period
(or if the Capital Stock of any Subsidiary of such Person is
sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the
extent such Person and its continuing Subsidiaries are no
longer liable for such Debt after such sale) (it being
understood that the Spin Off shall be considered an Asset Sale
outside of the ordinary course of business for purposes of this
clause (B)); and (C) if since the beginning of the period such
Person or any of its Subsidiaries (by merger or otherwise)
shall have made an Investment in any Subsidiary of such Person
(or any Person which becomes a Subsidiary of such Person) or an
acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all of an
operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro
forma effect thereto, as if such Investment or acquisition
occurred on the first day of such period. For purposes of this
definition, pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the
Person with respect to which the calculation is being made. If
any Debt or Capital Stock bears a floating rate of interest or
dividends and is being given pro forma effect, the interest on
such Debt and the dividends on such Capital Stock shall be
calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire
period.
"Consolidated Interest Expense" means with respect to
any Person, for any period, the sum of (a) the interest expense
of such Person and its consolidated Subsidiaries (other than
interest expense related to Non-Recourse Debt) for such period
as determined in accordance with GAAP consistently applied,
plus (b) the product of (x) the amount of all dividends paid or
accrued on any series of preferred stock of such Person (other
than non-Redeemable Stock) and its Recourse Subsidiaries times
(y) a fraction, the numerator of which is one and the
denominator of which is one minus the effective combined
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
<PAGE>
"Consolidated Net Income (Loss)" means with respect
to any Person, for any period, the consolidated net income (or
loss) of such Person and its consolidated Subsidiaries for such
period as determined in accordance with GAAP, adjusted to the
extent included in calculating such net income (or loss), by
excluding (i) all extraordinary gains in such period net of all
extraordinary losses in such period; (ii) net income (or loss)
of any other Person attributable to any period prior to the
date of combination of such other Person with such Person or
any of its Subsidiaries on a "pooling of interests" basis;
(iii) net gains or losses in respect of dispositions of assets
by such Person or any of its Subsidiaries (including pursuant
to a sale-and-leaseback arrangement) other than in the ordinary
course of business; (iv) the net income (loss) of any
Subsidiary of such Person (other than, in calculating the
consolidated net income (loss) of the Company, the consolidated
net income (loss) of ISP, USI or BMCA) to the extent that the
declaration of dividends or distributions by that Subsidiary of
that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulations applicable to that Subsidiary or
its shareholders; (v) the net income (or net loss) of any other
Person that is not a Subsidiary of the first Person with
respect to which Consolidated Net Income is being calculated
(the "first Person") and in which any other Person (other than
such first Person and or any of its Subsidiaries) has an equity
interest or of a Non-Recourse Subsidiary of such first Person,
except to the extent of the amount of dividends or other
distributions actually paid or made to such first Person or any
of its Subsidiaries by such other Person during such period
(subject in the case of a dividend or distribution received by
a Subsidiary of such first Person, to the limitations contained
in clause (iv) above); (vi) any interest income resulting from
loans or investments in Affiliates, other than cash interest
income actually received; (vii) charges relating to the
Transactions or the offering of the 10% Senior Notes and
Series B 10% Senior Notes due 2006 of G-I Holdings; and
(viii) the cumulative effect of a change in accounting
principles.
"Consolidated Net Worth" of any Person means, at any
date, all amounts that would, in conformity with GAAP, be
included under shareholders' equity on a consolidated balance
sheet of such Person as at such date less (to the extent
otherwise included therein) any amounts attributable to
Redeemable Stock.
"Credit Agreement" means the credit agreement dated
as of July 26, 1996, among ISP, certain of its Subsidiaries,
<PAGE>
the financial institutions named therein and Chase Manhattan
Bank, as agent thereunder, as the same may be amended or
supplemented.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any
Bankruptcy Law.
"Debt" of any Person means, without duplication,
(i) the principal in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment
of which such Person is responsible or liable (other than those
payable to government agencies to defer the payment of workers'
compensation liabilities, taxes, assessments or other
obligations, and provided in the ordinary course of business of
such Person); (ii) all Capital Lease Obligations of such
Person; (iii) all obligations of such Person issued or assumed
as the deferred purchase price of property, all conditional
sale obligations of such Person and all obligations of such
Person under any title retention agreement (but excluding trade
accounts payable and other accrued current liabilities arising
in the ordinary course of business); (iv) all obligations of
such Person for the reimbursement of any obligor on any letter
of credit, bankers' acceptance or similar credit transaction
(other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement
following payment on the letter of credit); (v) all obligations
of the type referred to in clauses (i) through (iv) of other
Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise,
including guarantees of such obligations and dividends; and
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such
obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
For purposes of Section 4.20, Debt of the Company (prior to the
Spin Off) and any BMCA Subsidiary shall include the provision
for existing or future asbestos-related bodily injury claims,
as set forth in the then most recent consolidated financial
statement of the Company.
<PAGE>
"Default" means any event which is, or after notice
or passage of time or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued
in the form of one or more Book-Entry Notes, The Depository
Trust Company or another person designated as Depository by the
Company, which must be a clearing agency registered under the
Exchange Act.
"Determination Date" means the date (if any) on which
the Company delivers a notice to the Trustee that the Board of
Directors of the Company has determined not to effect the Spin
Off, which notice shall be irrevocable and include a copy of
the Board Resolution of such Board of Directors making such
determination.
"Discount Notes" has the meaning set forth in
Section 4.20(a)(3).
"EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such
period, adjusted to the extent deducted in calculating such
Consolidated Net Income by adding back (without duplication):
(i) income tax expense of such Person and its Subsidiaries
accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary items or other items
excluded from the definition of Consolidated Net Income),
(ii) Consolidated Interest Expense of such Person,
(iii) depreciation expense, (iv) amortization expense and (v)
minority interest in any Recourse Subsidiary that is not a
Wholly Owned Subsidiary but is otherwise consolidated in the
financial statements of such Person, but only so long as such
Subsidiary is consolidated with such Person for such period for
U.S. federal income tax purposes.
"Events of Default" has the meaning set forth in
Section 6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and the rules and
regulations of the Commission thereunder.
"Exchange Notes" has the meaning assigned to that
term in the preambles to this Indenture.
"Exchange Offer" means the registration by the
Company under the Securities Act pursuant to a registration
statement of the offer by the Company to each Holder of the
Initial Notes to exchange all the Initial Notes held by such
Holder for the Exchange Notes in an aggregate principal amount
<PAGE>
equal to the aggregate principal amount of the Initial Notes
held by such Holder, all in accordance with the terms and
conditions of the Registration Rights Agreement.
"Exchange Offer Circular" means the Exchange Offer
Circular and Consent Solicitation Statement dated September 13,
1996, as supplemented through the Issue Date.
"Existing Management Agreement" means the Amended and
Restated Management Agreement dated as of March 3, 1992 by and
among GAF and certain of its Subsidiaries as amended through
the Issue Date.
"G-I Holdings" means G-I Holdings Inc., a Delaware
corporation, and its successors.
"Generally Accepted Accounting Principles" or "GAAP"
means generally acceptable accounting principles set forth in
the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting
Standards Board.
"GAF" means GAF Corporation, a Delaware corporation,
and its successors.
"Global Note" means a Note evidencing all or a part
of the Notes to be issued as Book-Entry Notes, issued to the
Depository in accordance with Section 2.02 and bearing the
legend prescribed in Exhibit C.
"Granules Contracts" means (i) the Supply Agreement
dated as of January 1, 1995 between ISP Technologies Inc. and
BCMA, as amended by amendment dated as of December 31, 1995 and
(ii) the letter dated November 9, 1995 from ISP Mineral
Products Inc. to USI.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation, contingent or
otherwise, 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 or other obligation of such other Person
(whether arising by virtue of participation 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 the obligee of such Debt or other obligation in any
<PAGE>
other manner of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means incur, create, assume, Guarantee or
otherwise become liable; and the terms "incurred" and
"incurrence" having meanings correlative to the foregoing.
"Indemnification Agreement" means the indemnification
agreement dated as of the Issue Date among GAF and certain of
its Subsidiaries.
"Indenture" means this Indenture, as amended or
supplemented from time to time.
"Initial Notes" has the meaning assigned to that term
in the preamble to this Indenture.
"Initial Notes Amount" has the meaning set forth in
Section 2.02.
"Interest Payment Date" means the Stated Maturity of
an installment of interest on the Notes.
"Investment" means any direct or indirect advance,
loan (other than advances or loans to customers in the ordinary
course of business, which are recorded, in accordance with
GAAP, at the time made as accounts receivable on the balance
sheet of the Person making such advance or loan) or other
extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities Issued by, any other Person.
"ISP" means International Specialty Products Inc., a
Delaware corporation, and its successors.
"ISP Holdings Transactions" means the transactions
described in the Exchange Offer Circular under the heading "The
ISP Holdings Transactions," including the offering of the New
Money Notes, substantially on the terms described therein.
"ISP Subsidiaries" means ISP and its Subsidiaries.
<PAGE>
"Issue" means issue, assume, Guarantee, incur or
otherwise become liable for; provided, however, that any Debt
or Capital Stock of a Person existing at the time such Person
becomes a Subsidiary of another Person (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be
Issued by such Subsidiary at the time it becomes a Subsidiary
of such other Person.
"Issue Date" means October [18], 1996, the date of
original issuance of the Initial Notes.
"Legal Holiday" has the meaning set forth in
Section 10.10.
"Lien" means any lien, mortgage, charge, pledge,
security interest, or other encumbrance of any kind (including
any conditional sale or other title retention agreement and any
lease in the nature thereof).
"Linden Dividend" means the payment of a dividend or
distribution in respect of the Company's Common Stock of the
assets comprising the Linden Property or of the shares of
Capital Stock of a Subsidiary of the Company all or
substantially all of the assets of which consist of the Linden
Property.
"Linden Property" means that property consisting of
approximately 140 acres (40 acres developed) located in Union
County, New Jersey at the foot of South Wood Avenue, Linden and
owned by ISP Environmental Services Inc., which is the site of
a former chemicals manufacturing facility of ISP.
"Long-Term Debt" of any Person means outstanding
long-term debt securities of such Person (or, in the event that
such Person has no outstanding long-term debt securities, a
credit facility of such Person) that (i) is unsecured, (ii) not
subordinated in right of payment to any other Debt of such
Person and (iii) is not guaranteed and does not have credit
support provided by any other Person (other than, in the case
of Long-Term Debt of any ISP Subsidiary, any ISP Subsidiary).
"Moody's" means Moody's Investors Service, Inc. or
its successor.
"Net Cash Proceeds" means, with respect to any Asset
Sale, the proceeds in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations
when received in the form of cash or Cash Equivalents, received
by the Company or any of its Subsidiaries from such Asset Sale
net of (a) reasonable out-of-pocket expenses and fees relating
<PAGE>
to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees and sales commissions),
(b) taxes paid or payable ((1) including, without limitation,
income taxes reasonably estimated to be actually payable as a
result of any disposition of property within two years of the
date of disposition, including under any tax sharing
arrangements, and (2) after taking into account any reduction
in tax liability due to available tax credits or deductions
applicable to the transaction), (c) a reasonable reserve for
the after-tax cost of any indemnification obligations (fixed
and/or contingent) attributable to seller's indemnities to the
purchaser undertaken by the Company or any of its Subsidiaries
in connection with such Asset Sale and (d) repayment of Debt
that is required to be repaid in connection with such Asset
Sale, under agreements governing such Debt or Asset Sale.
"Net Proceeds Offer" shall have the meaning provided
in Section 4.20.
"New Management Agreement" means the Existing
Management Agreement as amended to add the Company as a party
thereto.
"New Money Notes" means the 9% Senior Notes due 2003,
the Senior B 9% Senior Notes due 2003 and the 9% Private
Exchange Senior Notes due 2003 of the Company.
"Non-Recourse Debt" of any Person means Debt or the
portion of Debt (i) as to which neither GAF, the Company nor
any of its Recourse Subsidiaries (A) provides credit support
(including any undertaking, agreement or instrument which would
constitute Debt), (B) is directly or indirectly liable or (C)
constitutes the lender and (ii) no default with respect to
which (including any rights which the holders thereof may have
to take enforcement action against the assets of a Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both)
any holder of any other Debt of such Person or its Recourse
Subsidiaries to declare a default on such other Debt or cause
the payment thereof to be accelerated or payable prior to its
Stated Maturity.
"Non-Recourse Subsidiary" of any Person means a
Subsidiary (A) which has been designated as such by the Board
of Directors of such Person, (B) which has not acquired any
assets directly or indirectly from GAF, the Company or any of
its Subsidiaries other than at fair market value, including by
the receipt of Capital Stock of such Non-Recourse Subsidiary,
provided, however, that if any such acquisition or series of
related acquisitions involves assets having a value in excess
of $2,000,000, such acquisition or series of related
<PAGE>
acquisitions shall be approved by a majority of the members of
the Board of Directors of the Company in a Board Resolution
which shall set forth that such acquisitions are being, or have
been, made at fair market value, and (C) which has no Debt
other than Non-Recourse Debt. Subsidiaries of Non-Recourse
Subsidiaries shall be deemed Non-Recourse Subsidiaries.
"Notes" means the Initial Notes and the Exchange
Notes treated as a single class of securities.
"Obligations" means (a) the full and punctual payment
of the principal of, and interest on, the Notes when due,
whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company
under this Indenture and the Notes and (b) the full and
punctual performance of all other obligations of the Company
under this Indenture and the Notes.
"Officer" of any corporation means the Chairman of
the Board, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Secretary or the
Controller of such corporation.
"Officers' Certificate" of any corporation means a
certificate signed by two Officers or by an Officer and an
Assistant Treasurer or Assistant Secretary of such corporation
and delivered to the Trustee and which complies with
Section 10.05.
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee and
which complies with Section 10.05. Such legal counsel may be
an employee of or counsel to the Company or its Affiliates.
"Paying Agent" has the meaning set forth in Sec-
tion 2.03, except that, for the purposes of Article VIII and
Sections 4.19 and 4.20, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any
thereof.
"Permitted Holders" means (i) Samuel J. Heyman, his
heirs, administrators, executors and entities of which a
majority of the Voting Stock is owned by Samuel J. Heyman, his
heirs, administrators or executors and (ii) any Person
controlled, directly or indirectly, by Samuel J. Heyman or his
heirs, administrators or executors.
<PAGE>
"Permitted Lien" means:
(1) Liens for taxes, assessments and governmental
charges to the extent not required to be paid under this
Indenture;
(2) statutory Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen
or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or
being contested in good faith by an appropriate process of
law, and for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have
been made;
(3) pledges or deposits in the ordinary course of
business to secure lease obligations or non-delinquent
obligations under workers' compensation, unemployment
insurance or similar legislation;
(4) Liens to secure the performance of public
statutory obligations that are not delinquent, appeal
bonds, performance bonds or other obligations of a like
nature (other than for borrowed money);
(5) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar
charges or encumbrances not interfering in any material
respect with the business of the Company and its
Subsidiaries taken as a whole;
(6) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment
of nondelinquent customs duties in connection with the
importation of goods;
(7) judgment and attachment Liens not giving rise to
a Default or Event of Default;
(8) leases or subleases granted to others not
interfering in any material respect with the business of
the Company and its Subsidiaries, taken as a whole;
(9) Liens encumbering deposits made in the ordinary
course of business to secure nondelinquent obligations
arising from statutory, regulatory, contractual or
warranty requirements of the Company or its Subsidiaries
for which a reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made;
<PAGE>
(10) any interest or title of a lessor in the
property subject to any lease, whether characterized as
capitalized or operating other than any such interest or
title resulting from or arising out of default by the
Company or any of its Subsidiaries of its obligations
under any such lease which is material;
(11) Liens arising from filing UCC financing
statements for precautionary purposes in connection with
true leases or conditional sales of personal property that
are otherwise permitted under this Indenture and under
which the Company or any of its Subsidiaries is lessee;
(12) broker's Liens securing the payment of
commissions and management fees in the ordinary course of
business;
(13) Liens on cash and Cash Equivalents posted as
margin pursuant to the requirements of any bona fide hedge
agreement relating to interest rates, foreign exchange or
commodities listed on public exchanges, but only to the
extent such Liens are required from customers generally
(regardless of creditworthiness) in accordance with
customary market practice;
(14) Liens on cash collateralizing reimbursement
obligations in respect of letters of credit issued for the
account of the Company or any of its Subsidiaries in the
ordinary course of business (other than letters of credit
issued as credit support for any Debt);
(15) Liens arising in respect of accounts receivable
arising as a result of non-recourse sales thereof;
(16) Liens arising by reason of consignment sales of
inventory in the ordinary course of business; and
(17) Liens on stock or assets of any Non-Recourse
Subsidiary securing Debt owing by such Non-Recourse
Subsidiary.
"Person" means any individual, corporation,
partnership, joint venture, incorporated or unincorporated
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Post-Spin Off Subsidiary" of any Person means any
Subsidiary of such Person after giving effect to the Spin Off.
<PAGE>
"Preferred Stock", as applied to the Capital Stock of
any corporation, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of
such corporation. Preferred Stock of any Person shall include
Redeemable Stock of such Person.
"Principal" of a debt security, including the Notes,
means the principal of such security plus, when appropriate,
the premium, if any, on such security.
"Principal Amount at Maturity" of a security means
the amount specified as such on the face of such security.
"Proceeds Purchase Date" shall have the meaning
provided in Section 4.20.
"Purchase Money Obligation" of any Person means any
Debt secured by a Lien on assets related to the business of
such Person, and any additions and accessions thereto or
replacements thereof, which are purchased or constructed by
such Person at any time after the Issue Date; provided,
however, that (i) the aggregate outstanding principal amount of
such Debt (determined on a per asset basis in the case of any
additions, accessions or replacements) shall not at any time
exceed 100% of the purchase price to such Person of the related
assets or (ii) such Debt shall be with recourse solely to the
assets so purchased or acquired, any additions and accessions
thereto or replacements thereof and any proceeds therefrom.
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Ratings Event" means any of the following:
(i) the rating of ISP's Long-Term Debt being below
Baa3 (in the case of the rating by Moody's) and below BB+
(in the case of the rating by S&P); or
(ii) at any time that ISP's Long-Term Debt is rated
below Baa3 by Moody's, the rating of ISP's Long-Term Debt
being placed on credit watch for a ratings downgrade below
BB+ by S&P; or
(iii) at any time that ISP's Long-Term Debt is rated
below BB+ by S&P, the rating of ISP's Long-Term Debt being
placed on credit watch for a ratings downgrade below Baa3
by Moody's.
<PAGE>
"Recourse Subsidiaries", of any Person, means all
Subsidiaries of such Person other than Non-Recourse
Subsidiaries of such Person.
"Redeemable Stock" means, with respect to any Person,
Capital Stock of such Person that by its terms or otherwise
(x) is required, directly or indirectly, to be redeemed on or
prior to the ninetieth day after the Stated Maturity of the
Notes, (y) is redeemable or puttable, directly or indirectly,
at the option of the holder thereof at any time on or prior to
the ninetieth day after the Stated Maturity of the Notes, or
(z) is exchangeable or convertible into another security (other
than a security that is not itself Redeemable Stock).
"Refinance" means, in respect of any Debt, to
refinance, extend, renew, refund, repay, prepay, redeem,
defease or retire, or to issue Debt in exchange or replacement
for, such Debt. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Refinancing Debt" means Debt Issued to Refinance any
other Debt; provided, however, that (i) the amount of the Debt
so Issued shall not exceed the principal amount or the accreted
value (in the case of Debt Issued at a discount) of the Debt so
Refinanced plus, in each case, the reasonable costs incurred by
the issuer in connection with such Refinancing, (ii) the
Average Life and Stated Maturity of the Debt so Issued shall
equal or exceed that of the Debt so Refinanced, (iii) the Debt
so Issued shall not rank senior in right of payment to the Debt
being Refinanced, (iv) if the Debt being Refinanced does not
bear interest in cash prior to a specified date, the
Refinancing Debt shall not bear interest in cash prior to such
specified date, (v) if the Debt being Refinanced is a Purchase
Money Obligation, Refinancing Debt shall not be secured by any
assets not securing the Debt so Refinanced or improvements or
additions thereto, or replacements thereof, and (vi) the
obligors with respect to the Refinancing Debt shall not include
any persons who were not obligors (including predecessors
thereof) with respect to the Debt being Refinanced.
"Registrar" has the meaning set forth in
Section 2.03.
"Registration Rights Agreement" means the agreement
of the Company set forth on Schedule A hereto.
"Restricted Investment" means, with respect to the
Company or any of its Subsidiaries, an Investment by such
Person in an Affiliate of the Company; provided, however, that
the following shall not be Restricted Investments:
<PAGE>
(a) any Investment by the Company or any ISP Subsidiary
(or on and after the Determination Date, any
Subsidiary of the Company) in any Unrestricted
Affiliate;
(b) prior to the Determination Date:
(i) any Investment by the Company or any of its
Post-Spin Off Subsidiaries in (x) the Company or
any of its Post-Spin Off Recourse Subsidiaries
or (y) any such Affiliate that becomes, as a
result of such Investment, a Recourse Subsidiary
of any Post-Spin Off Recourse Subsidiary of the
Company; and
(ii) any Investment by G-I Holdings or any of its
Post-Spin Off Subsidiaries in (x) G-I Holdings
or any of its Post-Spin Off Recourse
Subsidiaries or (y) any such Affiliate that
becomes, as a result of such Investment, a
Recourse Subsidiary of any Post-Spin Off
Recourse Subsidiary of G-I Holdings;
(c) prior to the Spin Off, loans and advances bearing
market rates of interest between the Company and any
of its Subsidiaries or between or among Subsidiaries
of the Company so long as such loans and advances, if
they are not permitted under clause (b)(i) or (ii),
are repaid in full in cash at the consummation of the
Spin Off; and
(d) on and after the Determination Date:
(i) any Investment in the Company or any of its
Recourse Subsidiaries; and
(ii) any Investment in any such Affiliate that
becomes, as a result of such Investment, a
Recourse Subsidiary of the Company.
"Restricted Payment" means (i) the declaration or
making of any dividend or of any other payment or distribution
(other than dividends, payments or distributions payable solely
in shares of the Company's Capital Stock other than Redeemable
Stock) on or with respect to the Company's Capital Stock (other
than Redeemable Stock) and (ii) any payment on account of the
purchase, redemption, retirement or other acquisition for value
of the Company's Capital Stock (other than Redeemable Stock);
provided, however, that the Linden Dividend shall not be deemed
to be a Restricted Payment.
<PAGE>
"Restricted Security" has the meaning set forth in
Rule 144(a)(3) under the Securities Act.
"S&P" means Standard & Poor's Rating Services or its
successor.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and the rules and regulations of the
Commission thereunder.
"Shelf Registration Statement" means the shelf
registration statement, which the Company will use its best
efforts to cause to become effective with respect to the resale
of the Initial Notes in the event that the Exchange Offer is
not completed, pursuant to the terms of the Registration Rights
Agreement.
"Significant Subsidiary" means (i) any Recourse
Subsidiary of the Company which at the time of determination
either (A) had assets which, as of the date of the Company's
most recent quarterly consolidated balance sheet, constituted
at least 5% of the Company's total assets on a consolidated
basis as of such date, in each case determined in accordance
with GAAP, or (B) had revenues for the 12-month period ending
on the date of the Company's most recent quarterly consolidated
statement of income which constituted at least 5% of the
Company's total revenues on a consolidated basis for such
period, or (ii) any Recourse Subsidiary of the Company which,
if merged with all Defaulting Subsidiaries (as defined below)
of the Company, would at the time of determination either
(A) have had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, would have
constituted at least 10% of the Company's total assets on a
consolidated basis as of such date or (B) have had revenues for
the 12-month period ending on the date of the Company's most
recent quarterly consolidated statement of income which would
have constituted at least 10% of the Company's total revenues
on a consolidated basis for such period (each such
determination being made in accordance with GAAP). "Defaulting
Subsidiary" means any Recourse Subsidiary of the Company with
respect to which an event described under clause (6), (7), or
(8) of Section 6.01 has occurred and is continuing.
"Specified Agreements" means (i) the Tax Sharing
Agreements (but, after a company leaves the applicable
consolidated group, only with respect to the indemnities that
survive thereunder), (ii) the Existing Management Agreement and
the New Management Agreement, (iii) the Granules Contracts and
(iv) the Indemnification Agreement and other similar
indemnification agreements in effect prior to the Issue Date.
<PAGE>
"Specified Subsidiaries" means Subsidiaries of the
Company other than (i) ISP Subsidiaries and (ii) BMCA
Subsidiaries.
"Spin Off" means the consummation of the transactions
described in items (1) through (9) in the first paragraph under
the section of the Exchange Offer Circular entitled "The Spin
Off Transactions," substantially on the terms described in such
paragraph.
"Spin Off Date" means the date on which the Spin Off
is consummated.
"Stated Maturity" when used with respect to any Note
or any installment of interest thereon, means the date
specified in such Note as the fixed date on which the principal
of such Note or such installment of interest is due and
payable, and when used with respect to any other Debt, means
the date specified in the instrument governing such Debt as the
fixed date on which the principal of such Debt or any
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person at any
time of determination, (i) a corporation a majority of whose
Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof
or (ii) any other Person (other than a corporation) in which
such Person, one or more Subsidiaries thereof or such Person
and one or more Subsidiaries thereof, directly or indirectly,
at the date of determination thereof has at least majority
ownership interest and the power to direct the policies,
management and affairs thereof. For purposes of this
definition, any director's qualifying shares or investments by
foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tax Sharing Agreements" means, collectively, (i) the
tax sharing agreement dated as of September 7, 1993, as amended
on the Issue Date, among GAF, G-I Holdings, G Industries and
the Company, (ii) the amended and restated tax sharing
agreement dated as of March 3, 1992 among GAF, G Industries,
ISP and certain of ISP's Subsidiaries, (iii) the tax sharing
agreement among ISP Holdings and certain of its Subsidiaries,
described in the Exchange Offer Circular under "Tax Sharing
Agreements -- ISP Holdings Tax Sharing Agreement," and (iv)
prior to the Spin Off, the tax sharing agreement dated as of
January 31, 1994 among GAF, G-I Holdings, BMCA and BMCA's
Subsidiaries.
<PAGE>
"TIA" means the Trust Indenture Act of 1939, as
amended, as in effect on the date hereof.
"Transactions" means the Spin Off and the ISP
Holdings Transactions.
"Treasury Yield" means the yield to maturity at the
time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) which has become
publicly available at least two Business Days prior to the
applicable redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar
data)) most nearly equal to the then remaining Average Life of
the Notes; provided, however, that if the Average Life of the
Notes is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given,
the Treasury Yield shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life of
the Notes is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trustee" means the party named as such in this
Indenture until a successor replaces such party in accordance
with the provisions of this Indenture, and thereafter means
such successor.
"Trust Officer" means the Chairman of the Board, the
President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate
trust matters.
"Unrestricted Affiliate" means: (a) prior to the
Determination Date, any Person (other than any Subsidiary of
the Company) controlled (as defined in the definition of
"Affiliate") by the Company in which no Affiliate of the
Company (other than (i) so long as ISP is a Recourse Subsidiary
of the Company, ISP or any of its Wholly-Owned Recourse
Subsidiaries, (ii) any director or officer of the Company or
any of its Post-Spin off Subsidiaries (so long as such person
is not also a director or officer of GAF or any of its
Affiliates (other than the Company and its Post-Spin Off
Subsidiaries, except for Non-Recourse Subsidiaries in which GAF
has an interest other than through the Company)) and
(iii) another Unrestricted Affiliate under this paragraph (a))
has an Investment; and (b) on and after the Determination Date,
any Person (other than any Subsidiary of the Company)
<PAGE>
controlled (as defined in the definition of "Affiliate") by the
Company in which no Affiliate of the Company (other than (i) so
long as ISP is a Recourse Subsidiary of the Company, ISP or any
of its Wholly-Owned Recourse Subsidiaries, (ii) so long as BMCA
is a Recourse Subsidiary of the Company, BMCA or any of its
Wholly-Owned Recourse Subsidiaries, (iii) a Wholly-Owned
Recourse Subsidiary of the Company, (iv) any director or
officer of the Company or any of its Subsidiaries (so long as
such Person is not also a director or officer of GAF or any of
its Affiliates (other than the Company and its Subsidiaries,
except for Non-Recourse Subsidiaries in which GAF has an
interest other than through the Company)) and (v) another
Unrestricted Affiliate under this paragraph (b)) has an
Investment.
"U.S. Government Obligations" means money or direct
non-callable obligations of the United States of America for
the payment of which the full faith and credit of the United
States is pledged.
"USI" means U.S. Intec, Inc., a Texas corporation,
and its successors.
"Voting Stock" means, with respect to any Person,
Capital Stock of any class or kind normally entitled to vote in
the election of the board of directors or other governing body
of such Person.
"Wholly-Owned Recourse Subsidiary" of any Person
means a Wholly-Owned Subsidiary of such Person that is a
Recourse Subsidiary of such Person.
"Wholly-Owned Subsidiary" means a Subsidiary all the
Capital Stock of which (other than directors' qualifying
shares) is owned by the applicable corporation or another
Wholly-Owned Subsidiary of the applicable corporation.
Section 1.02. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision
of the TIA, the provision is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in
this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a
Holder;
"indenture to be qualified" means this Indenture;
<PAGE>
"indenture trustee" or "institutional trustee" means
the Trustee; and
"obligor" on the indenture securities means the
Company and any other obligor on the Notes.
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by Commission rule and not otherwise defined herein
have the meanings assigned to them therein.
Section 1.03. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and
words in the plural include the singular;
(4) provisions apply to successive events and
transactions;
(5) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) all calculations made for the purpose of
determining compliance with the terms of the covenants set
forth in Article IV and other provisions of this Indenture
shall utilize GAAP in effect at the time of preparation
of, and in conformity with those used to prepare, the
historical consolidated financial statements of the
Company at and for the fiscal year ended December 31,
1995. All financial calculations shall be made as if the
Spin Off occurred as of the Issue Date; provided, however,
that if the Determination Date occurs, all subsequent
financial calculations shall be made without giving effect
to the Spin Off; provided, further, however, that, in such
event, cumulative Consolidated Net Income for purposes of
Section 4.13(a) shall be recalculated from the Applicable
Date without giving effect to the Spin Off.
ARTICLE II
THE NOTES
Section 2.01. Form and Dating. The Initial Notes
and the Trustee's certificate of authentication thereon shall
<PAGE>
be substantially in the form of Exhibit A hereto. The Exchange
Notes and the Trustee's certificate of authentication thereon
shall be substantially in the form of Exhibit B. The Notes may
have notations, legends or endorsements required by law, stock
exchange rule or agreements to which the Company is subject, if
any, or usage. The Company shall approve the form of the Notes
and any notation, legend or endorsement on them, and such
approval shall be evidenced by the execution of such Notes by
two Officers of the Company. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the form of the
Notes, annexed hereto as Exhibits A and B, shall constitute,
and are hereby expressly made, a part of this Indenture.
Section 2.02. Execution and Authentication;
Aggregate Principal Amount. Two Officers shall sign the Notes
for the Company by facsimile or manual signature. The
Company's seal may be reproduced or imprinted on the Notes, by
facsimile or otherwise.
If a Person whose signature is on a Note as an
Officer no longer holds that office or position at the time the
Trustee authenticates the Note, the Note shall be valid
nevertheless.
A Note shall not be valid until the Trustee manually
signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for
delivery (i) Initial Notes for original issue in an aggregate
principal amount (the "Initial Notes Amount") equal to $1,000
principal amount of Initial Notes for each $1,000 principal
amount of 10% Notes exchanged for the Initial Notes pursuant to
the Exchange Offer Circular and Consent Solicitation Statement
dated September 13, 1996, as supplemented by the Supplement to
Exchange Offer Circular and Consent Solicitation Statement
dated October 1, 1996 and (ii) Exchange Notes from time to time
for issue only in exchange for a like principal amount of
Initial Notes, in each case upon a written order of the Company
signed by an Officer of the Company to a Trust Officer. The
order shall specify the amount of Notes to be authenticated,
the date on which the Notes are to be authenticated and whether
the Notes are to be Initial Notes or Exchange Notes. The
aggregate principal amount of Notes outstanding at any time may
not exceed the Initial Notes Amount, except as provided in
Section 2.07.
<PAGE>
The Notes shall be issuable only in registered form
and only in denominations of $1,000 and any integral multiple
thereof.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate the Notes, which
authenticating agent shall be compensated by the Company.
Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the
Trustee may do so, except with regard to the original issuance
of the Notes and pursuant to Section 2.06. Except as provided
in the preceding sentence, each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any
Agent.
If the Notes are to be issued in the form of one or
more Global Notes, then the Company shall execute and the
Trustee shall authenticate and deliver one or more Global Notes
that (i) shall represent and shall be in minimum denominations
of $1,000 or in the approximate equivalent amount, (ii) shall
be registered in the name of the Depository for such Global
Note or Notes or the nominee of such Depository, (iii) shall be
delivered by the Trustee to such Depository or pursuant to such
Depository's instructions and (iv) shall bear the legend set
forth in Exhibit C.
Section 2.03. Registrar and Paying Agent. The
Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Notes and of their transfer and
exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent.
The Company shall enter into an appropriate written
agency agreement with any Agent not a party to this Indenture.
Each such agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of
any such Agent and any change in the address of such Agent.
The Company may change an Agent without prior notice to the
Holders. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints the Trustee as
Registrar and Paying Agent in connection with the Notes.
<PAGE>
Section 2.04. Paying Agent To Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold
in trust for the benefit of Holders all money held by the
Paying Agent for the payment of principal of or interest on the
Notes, and such Paying Agent shall notify the Trustee of any
default by the Company in making any such payment. If the
Company or any of its Subsidiaries acts as Paying Agent, it
shall segregate the money and hold it as a separate trust fund.
The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds
disbursed, and the Trustee may at any time during the
continuance of any payment default, upon written request to a
Paying Agent, require such Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed.
Upon doing so, the Paying Agent shall have no further liability
for the money so paid over to the Trustee.
Section 2.05. Holder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA { 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the
Trustee at least ten Business Days before each Interest Payment
Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of the
Holders, and the Company shall otherwise comply with TIA
{ 312(a).
The Trustee shall be entitled to rely upon a
certificate of the Registrar, the Company or such other Paying
Agent, as the case may be, as to the names and addresses of the
Holders and the principal amounts and serial numbers of the
Notes.
Section 2.06. Transfer and Exchange. The Notes
shall be issued in registered form and shall be transferable
only upon the surrender of such Notes for registration of
transfer. When Notes are presented to the Registrar or a co-
Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met; provided, however, that every
Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument or transfer in a form satisfactory to the Company
and the Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations
<PAGE>
of transfer and exchanges, the Company shall execute the Notes,
and the Trustee shall authenticate the Notes at the Registrar's
request. No service charge to the Holder shall be made for any
registration of transfer or exchange, but the Company or the
Trustee may require from the transferring or exchanging Holder
payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 4.19,
4.20 or 9.05). The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of any Note
(i) during a period beginning at the opening of business 15
days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Note being
redeemed in part.
If a Note is a Restricted Security in certificated
form, then as provided in this Indenture and subject to the
limitations herein set forth, the Holder, provided it is a
Qualified Institutional Buyer, may exchange such Note for a
Book-Entry Note by instructing the Trustee to arrange for such
Note to be represented by a beneficial interest in a Global
Note in accordance with the customary procedures of the
Depository.
In accordance with the provisions of this Indenture
and subject to certain limitations herein set forth, an owner
of a beneficial interest in a Global Note which has not been
exchanged for an Exchange Note may request a Note in
certificated form, in exchange in whole or in part, as the case
may be, for such beneficial owner's interest in the Global
Note.
Upon any exchange provided for in the preceding
paragraph, the Company shall execute and the Trustee shall
authenticate and deliver to the person specified by the
Depository a new Note or Notes registered in such names and in
such authorized denominations as the Depository, pursuant to
the instructions of the beneficial owner of the Notes
requesting the exchange, shall instruct the Trustee.
Thereupon, the beneficial ownership of such Global Note shown
on the records maintained by the Depository or its nominee
shall be reduced by the amounts so exchanged and an appropriate
endorsement shall be made by or on behalf of the Trustee on the
Global Note. Any such exchange shall be effected through the
Depository in accordance with the procedures of the Depository
therefor.
<PAGE>
Notwithstanding the foregoing, no Global Note shall
be registered for transfer or exchange, or authenticated and
delivered, whether pursuant to this Section, Section 2.07, 2.10
or 3.06 or otherwise, in the name of a person other than the
Depository for such Global Note or its nominee until (i) the
Depository notifies the Company that it is unwilling or unable
to continue as Depository for such Global Note or if at any
time the Depository ceases to be a clearing agency registered
under the Exchange Act, and a successor depository is not
appointed by the Company within 30 days, (ii) the Company
executes and delivers to the Trustee a written notice that all
such Global Notes shall be exchangeable or (iii) there shall
have occurred and be continuing an Event of Default. Upon the
occurrence in respect of any Global Note representing the Notes
of any one or more of the conditions specified in clause (i),
(ii) or (iii) of the preceding sentence, such Global Note may
be registered for transfer or exchange for Notes registered in
the names of, and authenticated and delivered to, such persons
as the Trustee or the Depository, as the case may be, shall
direct.
Except as provided above, any Note authenticated and
delivered upon registration of transfer of, or in exchange for,
or in lieu of, any Global Note, whether pursuant to this
Section, Section 2.07, 2.10 or 3.06 or otherwise, shall also be
a Global Note and bear the legend specified in Exhibit C.
Section 2.07. Replacement Notes. If a mutilated
Note is surrendered to the Trustee or if the Holder of a Note
claims that such Note has been lost, destroyed or wrongfully
taken, the Company shall issue a replacement Note, and the
Trustee shall authenticate such replacement Note if the
Trustee's requirements are met. If required by the Trustee or
the Company, an indemnity bond must be provided by the Holder
that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced.
The Company or the Trustee may charge such Holder for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of
the Company.
Section 2.08. Outstanding Notes. Notes outstanding
at any time are all Notes that have been authenticated by the
Trustee, except for those cancelled by it, those delivered to
it for cancellation and those described in this Section 2.08 as
not outstanding. A Note does not cease to be outstanding
because the Company or one of its Affiliates holds the Note.
<PAGE>
If a Note is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona
fide purchaser.
If the Paying Agent holds (or, if the Company or a
Subsidiary is the Paying Agent, segregates and holds in trust),
in accordance with this Indenture, on the maturity or
redemption date, money sufficient to pay Notes payable on that
date, then on and after that date such Notes shall be deemed to
be no longer outstanding and interest on them shall cease to
accrue.
Section 2.09. Treasury Notes. In determining
whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned
by the Company or any of its Affiliates shall be disregarded,
except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or
consent, only Notes which the Trustee actually knows are so
owned shall be so disregarded.
Section 2.10. Temporary Notes. Until definitive
Notes are ready for delivery, the Company may prepare, and the
Trustee shall authenticate upon written order of the Company
signed by an Officer thereof, temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate, definitive Notes
in exchange for temporary Notes.
Until such exchange, such temporary Notes shall be
entitled to the same rights, benefits and privileges as the
definitive Notes.
Section 2.11. Cancellation. The Company at any time
may deliver Notes to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel
all Notes surrendered for registration of transfer, exchange,
payment or cancellation. The Company may not issue new Notes
to replace Notes it has paid or delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest. If the Company
defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus, to the extent permitted by law,
any interest payable on the defaulted interest, to the Persons
<PAGE>
who are Holders on a subsequent special record date. Such
special record date shall be the fifteenth day next preceding
the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least
15 days before the special record date, the Company shall mail
or cause to be mailed to each Holder and the Trustee a notice
that states the special record date, the payment date and the
amount of defaulted interest to be paid.
Section 2.13. CUSIP Number. The Company in issuing
the Notes may use a "CUSIP" number. If so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience
to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any
notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any
such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the
Trustee of any change in the CUSIP number.
Section 2.14. Deposit of Moneys. On or before
11:00 A.M., New York City time, on each payment date, the
Company shall deposit with the Trustee or Paying Agent in
immediately available funds money sufficient to make cash
payments, if any, due on such payment date. The principal of
and interest on Book-Entry Notes shall be payable to the
Depository or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Book-Entry Notes
represented thereby. The principal of and interest on any
Notes other than Book-Entry Notes shall be payable to the
registered owner of the Notes represented thereby. The
principal of and interest on Notes in certificated form shall
be payable at the office of the Paying Agent; provided,
however, that the Company, at its option, may pay interest by
check by mailing such check to the Holder's registered address.
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee. If the Company
elects to redeem Notes pursuant to Section 5(a) of the Notes,
it shall notify the Trustee in writing of the redemption date
and the principal amount of Notes to be redeemed.
The Company shall give the notice to the Trustee
provided for in this Section at least 45 days before the
redemption date, unless the Trustee consents in writing to a
shorter notice period. Such notice shall be accompanied by an
<PAGE>
Officers' Certificate and an Opinion of Counsel to the effect
that such redemption will comply with the conditions contained
in this Indenture and will set forth the redemption price. If
fewer than all the Notes are to be redeemed, the record date
relating to such redemption shall be selected by the Company
and given to the Trustee together with the 45-day notice, which
record date shall not be prior to the date of such notice nor
more than 15 days after the date of notice to the Trustee.
Section 3.02. Selection of Notes To Be Redeemed. In
the event that less than all of the Notes are to be redeemed at
any time, selection of such Notes for redemption will be made
by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which such
Notes are listed or, if such Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of
$1,000 or less shall be redeemed in part; provided, further,
that if a partial redemption is made in accordance with the
first paragraph of Section 5(a) of the Notes, selection of the
Notes or portions thereof for redemption shall be made by the
Trustee only on a pro rata basis or on as nearly a pro rata
basis as is practicable (subject to procedures of The
Depository Trust Company), unless such method is otherwise
prohibited. The Trustee shall make the selection from
outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal
amount at maturity of Notes that have denominations larger than
$1,000, subject to the restriction that Notes and portions of
Notes which the Trustee selects shall be in amounts of $1,000
or a whole multiple of $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to
portions of Notes called for redemption. The Trustee shall
notify the Company promptly of the Notes or portions of Notes
to be redeemed.
Section 3.03. Notice of Redemption. Notice of
redemption shall be mailed by first-class mail at least 30 but
not more than 60 days before the redemption date (or, if
applicable, at such other time as is provided by Section 5(a)
of the Notes) to each Holder of Notes to be redeemed at its
registered address.
The notice shall identify the Notes to be redeemed
and shall state:
(A) the redemption date;
(B) the redemption price;
<PAGE>
(C) the name and address of the Paying Agent;
(D) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(E) if fewer than all the outstanding Notes are to
be redeemed, the identification and principal amounts of
the particular Notes to be redeemed;
(F) that, unless the Company has failed to deposit
with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to this Indenture,
the interest on Notes called for redemption ceases to
accrue on and after such redemption date; and
(G) the CUSIP number, if any, and that no
representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's
expense. In such event, the Company shall provide the Trustee
with the information required by clauses (A), (B), (C) and (E)
at least 45 days before the redemption date.
Section 3.04. Effect of Notice of Redemption. Once
notice of redemption is mailed, Notes called for redemption
become due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the
Paying Agent, subject to the Company's compliance with
Section 3.05 herein, such Notes shall be paid at the redemption
price stated in the notice, plus accrued and unpaid interest,
if any, to the redemption date.
Section 3.05. Deposit of Redemption Price. On or
prior to the redemption date, the Company shall deposit with
the Paying Agent in immediately available funds (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price
of and accrued and unpaid interest, if any, on all Notes to be
redeemed on that date other than Notes or portions of Notes
called for redemption which have been delivered by the Company
to the Trustee for cancellation.
Section 3.06. Notes Redeemed in Part. Upon
surrender of a Note that is redeemed in part, the Company shall
execute and the Trustee shall authenticate for the Holder (at
<PAGE>
the Company's expense) a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
ARTICLE IV
COVENANTS
Section 4.01. Payment of Notes. The Company shall
pay, or cause to be paid, the principal of and interest on the
Notes on the dates and in the manner provided herein and in the
Notes. Principal or interest shall be considered paid on the
date due if the Trustee or Paying Agent holds on that date
money designated for and sufficient to pay all principal and
interest payable in cash in each case as then due. The Company
shall pay interest on overdue principal at the rate specified
therefor in the Notes.
Section 4.02. Maintenance of Office or Agency. The
Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Notes may be surrendered
for registration of transfer or exchange or for presentation
for payment and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company fails to
maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the address of the Trustee as set forth in
Section 10.02.
The Company may also from time to time designate one
or more other offices or agencies where the Notes may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any matter
relieve the Company of its obligation to maintain an office or
agency pursuant to this Section 4.02. The Company shall give
prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the office of
the Trustee or its agent located in the Borough of Manhattan,
The City of New York, as such office of the Company in
accordance with Section 2.03.
Section 4.03. Corporate Existence. The Company
shall do or cause to be done all things necessary to preserve
<PAGE>
and keep in full force and effect (i) its corporate existence
and the corporate existence of each of its Subsidiaries (other
than Non-Recourse Subsidiaries) in accordance with their
respective organizational documents and (ii) the material
rights (charter and statutory), licenses and franchises of the
Company and each of its Subsidiaries; provided, however, that
(i) neither the Company nor any of its Subsidiaries shall be
required to preserve any such right or franchise, or corporate
existence, if the Board of Directors of the Company or such
Subsidiary shall determine that the loss thereof is not, and
will not be, adverse in any material respect to the Company or
the Holders and (ii) nothing in this Section 4.03 shall prevent
the Company from taking any action that complies with the
provisions of Section 5.01.
Section 4.04. Payment of Taxes and Other Claims.
The Company shall, and shall cause each of its Subsidiaries
(other than Non-Recourse Subsidiaries) to, pay or discharge or
cause to be paid or discharged, before any penalty accrues from
the failure to so pay or discharge, (i) all material taxes,
assessments and governmental charges levied or imposed upon it
or any of such Subsidiaries or upon the income, profits or
property of it or any of such Subsidiaries, and (ii) all
material, lawful claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon its property
or the property of any Specified Subsidiary; provided, however,
that there shall not be required to be paid or discharged any
such tax, assessment, charge or claim if the amount,
applicability or validity thereof is being contested in good
faith by appropriate proceedings and adequate provision
therefor has been made.
Section 4.05. Compliance Certificates. (a) The
Company shall deliver to the Trustee within 60 days after the
end of each of the Company's fiscal quarters (120 days after
the end of the Company's last fiscal quarter of its fiscal
year) an Officers' Certificate, stating whether or not the
signers, after due inquiry, know of any Default or Event of
Default which occurred during such fiscal quarter. An
Officers' Certificate delivered within 120 days after the end
of the Company's fiscal year shall also contain a certification
from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to
such officer's knowledge of the Company's compliance with all
conditions and covenants under this Indenture. For purposes of
this Section 4.05(a), such compliance shall be determined
without regard to any period of grace or requirement of notice
provided under this Indenture. If the officer does know of
such a Default or Event of Default, the certificate shall
describe any such Default or Event of Default, and its status.
<PAGE>
The first certificate to be delivered pursuant to this
Section 4.05(a) shall be for the first fiscal quarter beginning
after the execution of this Indenture.
(b) The Company shall deliver to the Trustee, as
soon as possible and in any event within 10 days after the
Company becomes aware of the occurrence of each Default or
Event of Default which is continuing, an Officers' Certificate
setting forth the details of such Default or Event of Default,
and the action which the Company has taken and proposes to take
with respect thereto. Following receipt of such Officers'
Certificate, the Trustee shall send the notice called for by
Section 7.05, except as provided therein.
Section 4.06. Securities and Exchange Commission
Reports. (a) At all times from and after the earlier of
(i) the date of the commencement of the Exchange Offer or the
effectiveness of the Shelf Registration Statement and (ii) the
date that is six months after the Issue Date, in either case,
whether or not the Company is then required to file reports
with the Commission, the Company shall file with the Commission
all such reports and other information as would be required to
be filed with the Commission under the Exchange Act. The
Company shall supply to each Holder and to any other Person who
reasonably requests in writing, without cost, copies of such
reports or other information. In addition, the Company shall,
at its cost, deliver to each Holder, and a prospective
purchaser designated by such Holder, from and after the earlier
of the dates referred to in clauses (i) and (ii) of this
Section 4.06(a), quarterly and annual reports substantially
equivalent to those which would be required under the Exchange
Act if at the time of such request the Company is not a
reporting company under Section 13 or Section 15(d) of the
Exchange Act. The Company also will comply with the other
provisions of TIA { 314(a).
(b) So long as any of the Notes remain outstanding,
the Company shall cause each annual, quarterly and other
financial report mailed or otherwise furnished by it generally
to public stockholders to be filed with the Trustee and mailed
to the Holders at their addresses appearing in the register of
Notes maintained by the Registrar, in each case at the time of
such mailing or furnishing to such stockholders.
(c) Delivery of such reports to the Trustee is for
informational purposes only and the Trustee's receipt of such
reports shall not constitute constructive notice of any
information contained therein or determinable from information
contained therein, including the Company's compliance with any
<PAGE>
of its covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officers' Certificates).
(d) The Company shall provide to any holder or any
beneficial owner of Initial Notes any information reasonably
requested by such holder or such beneficial owner concerning
the Company and its Subsidiaries (including financial
statements) necessary in order to permit such holder or such
beneficial owner to sell or transfer Initial Notes in
compliance with Rule 144A under the Securities Act or any
similar rule or regulation adopted by the Commission.
Section 4.07. Waiver of Stay, Extension or Usury
Laws. The Company covenants (to the full extent permitted by
applicable law) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or
advantage of, and will actively resist any attempts to claim
the benefit of any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants
or the performance of this Indenture; and (to the full extent
permitted by applicable law) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had
been enacted.
Section 4.08. Maintenance of Properties. Subject to
this Article IV, the Company shall cause all material
properties owned by or leased to it or any of its Subsidiaries
(other than Non-Recourse Subsidiaries) and used or useful in
the conduct of its business or the business of such
Subsidiaries to be maintained and kept in normal condition,
repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company or such Subsidiary may be
necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section 4.08
shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is not, in the judgment of the Board of Directors
of the Company or such Subsidiary, adverse in any material
respect, to the Company or the Holders.
<PAGE>
Section 4.09. Limitation on Debt and Preferred Stock
of the Company and ISP Subsidiaries. (a) The Company shall
not Issue, directly or indirectly, any Debt or any Preferred
Stock unless, at the time of such Issuance and after giving
effect thereto, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Consolidated EBITDA
Coverage Ratio of the Company for the period of its most
recently completed four consecutive fiscal quarters ending at
least 45 days prior to the date such Debt is Issued is at least
2.00 to 1.00.
(b) The Company shall not permit any ISP Subsidiary
(so long as such ISP Subsidiary is a Subsidiary of the Company)
to Issue, directly or indirectly, any Debt or any Preferred
Stock unless, at the time of such Issuance and after giving
effect thereto, (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Consolidated EBITDA
Coverage Ratio of ISP for the period of its most recently
completed four consecutive fiscal quarters ending at least 45
days prior to the date such Debt is Issued is at least 2.00 to
1.00.
(c) Notwithstanding the foregoing, the Company and
ISP Subsidiaries may Issue the following:
(1) Debt Issued pursuant to the Credit Agreement or
any Refinancing Debt thereof in an aggregate principal
amount outstanding at any time not to exceed $500,000,000;
(2) Debt or Preferred Stock of the Company or any of
its Post-Spin Off Subsidiaries Issued to and held by
(i) ISP or any of its Wholly-Owned Recourse Subsidiaries,
(ii) the Company or any of its Wholly-Owned Recourse Post-
Spin Off Subsidiaries or (iii) on and after the
Determination Date, the Company or any of its Wholly-Owned
Recourse Subsidiaries; provided, however, that (x) any
subsequent transfer of such Debt or such Preferred Stock
to any Person not permitted by the foregoing or (y) any
Wholly-Owned Recourse Subsidiary of ISP or of the Company
that holds such Debt or Preferred Stock ceasing to be a
Wholly-Owned Recourse Subsidiary of ISP or of the Company,
as the case may be, shall be deemed, in each case, to
constitute the Issuance of such Debt or such Preferred
Stock by the Company or such ISP Subsidiary, as the case
may be;
(3) Purchase Money Obligations, including
Refinancing Debt thereof, in an aggregate amount
outstanding at any time not to exceed $30,000,000;
<PAGE>
(4) Acquired Debt;
(5) Debt outstanding on the Issue Date (including,
without limitation, the New Money Notes) and the Exchange
Notes;
(6) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (2)-(5) above;
(7) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of ISP and (y) Guarantees of Non-Recourse Debt
of any Non-Recourse Subsidiary of ISP which Guarantees are
recourse only to the stock of such Non-Recourse
Subsidiary;
(8) on and after the Determination Date, (x) Non-
Recourse Debt of a Non-Recourse Subsidiary of the Company
and (y) Guarantees of Non-Recourse Debt of any Non-
Recourse Subsidiary of the Company which Guarantees are
recourse only to the stock of such Non-Recourse
Subsidiary;
(9) Preferred Stock (other than Redeemable Stock) of
the Company;
(10) so long as no Default or Event of Default has
occurred and is continuing and no Ratings Event has
occurred and is continuing, Debt of any ISP Subsidiary;
and
(11) Debt (other than Debt described in clauses (1)
through (8) and (10) above) in an aggregate principal
amount outstanding at any time not to exceed $50,000,000.
(d) To the extent the Company or any ISP Subsidiary
Guarantees any Debt of the Company or any ISP Subsidiary, such
Guarantee and such Debt will be deemed to be the same Debt and
only the amount of the Debt will be deemed to be outstanding.
If the Company or an ISP Subsidiary Guarantees any Debt of a
Person that, subsequent to the Issuance of such Guarantee,
becomes an ISP Subsidiary, such Guarantee and the Debt so
Guaranteed shall be deemed to be the same Debt, which shall be
deemed to have been Issued when the Guarantee was Issued and
shall be deemed to be permitted to the extent the Guarantee was
permitted when Issued.
Section 4.10. Limitation on Debt and Preferred Stock
of BMCA Subsidiaries. (a) The Company shall not permit any
BMCA Subsidiary (so long as such BMCA Subsidiary is a
Subsidiary of the Company) to Issue, directly or indirectly,
<PAGE>
any Debt or any Preferred Stock unless, at the time of such
Issuance and after giving effect thereto, (i) no Default or
Event of Default shall have occurred and be continuing and
(ii) the Consolidated EBITDA Coverage Ratio of BMCA for the
period of its most recently completed four consecutive fiscal
quarters ending at least 45 days prior to the date such Debt is
Issued is at least 2.00 to 1.00.
(b) Notwithstanding the foregoing, BMCA Subsidiaries
may Issue the following:
(1) Debt or Preferred Stock of any BMCA Subsidiary
Issued to and held by (i) BMCA or any of its Wholly-Owned
Recourse Subsidiaries, (ii) any Wholly-Owned Recourse
Subsidiary of the Company other than any ISP Subsidiary or
(iii) on and after the Determination Date, the Company or
any of its Wholly-Owned Recourse Subsidiaries; provided,
however, that (x) any subsequent transfer of such Debt or
Preferred Stock to any Person not permitted by the
foregoing or (y) any Wholly-Owned Recourse Subsidiary of
BMCA (or, if applicable, of the Company) that holds such
Debt or Preferred Stock ceasing to be a Wholly-Owned
Recourse Subsidiary of BMCA (or, if applicable, of the
Company) shall be deemed, in each case, to constitute the
Issuance of such Debt or such Preferred Stock by such BMCA
Subsidiary;
(2) Purchase Money Obligations, including
Refinancing Debt thereof, in an aggregate amount
outstanding at any time not to exceed $35,000,000;
(3) Acquired Debt;
(4) Debt outstanding on the Issue Date;
(5) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (1)-(4) above;
(6) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of BMCA and (y) Guarantees of Non-Recourse Debt
of any Non-Recourse Subsidiary of BMCA which Guarantees
are recourse only to the stock of such Non-Recourse
Subsidiary; and
(7) Debt (other than Debt described in clauses (1)
through (6) above) in an aggregate principal amount
outstanding at any time not to exceed $35,000,000.
(c) To the extent any BMCA Subsidiary Guarantees any
Debt of any other BMCA Subsidiary, such Guarantee and such Debt
<PAGE>
will be deemed to be the same Debt and only the amount of the
Debt will be deemed to be outstanding. If a BMCA Subsidiary
Guarantees any Debt of a Person that, subsequent to the
Issuance of such Guarantee, becomes a BMCA Subsidiary, such
Guarantee and the Debt so Guaranteed shall be deemed to be the
same Debt which shall be deemed to have been Issued when the
Guarantee was Issued and shall be deemed to be permitted to the
extent the Guarantee was permitted when Issued.
Section 4.11. Limitation on Debt and Preferred Stock
of Specified Subsidiaries. (a) The Company shall not permit
any Specified Subsidiary (so long as such Specified Subsidiary
is a Subsidiary of the Company) to Issue, directly or
indirectly, any Debt or any Preferred Stock unless, at the time
of such Issuance and after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be
continuing and (ii) the Consolidated EBITDA Coverage Ratio of
the Specified Subsidiaries (determined on a combined basis) for
its most recently completed four consecutive fiscal quarter
period ending at least 45 days prior to the date such Debt is
Issued is at least 2.00 to 1.00.
(b) Notwithstanding the foregoing, Specified
Subsidiaries may Issue the following:
(1) Debt or Preferred Stock of any Specified
Subsidiary Issued to and held by any Wholly-Owned Recourse
Subsidiary of such Specified Subsidiary or the Company or
any of its Wholly-Owned Recourse Subsidiaries; provided,
however, that (x) any transfer of such Debt or such
Preferred Stock to any Person not permitted by the
foregoing or (y) such Wholly-Owned Recourse Subsidiary
ceasing to be a Wholly-Owned Recourse Subsidiary of such
Specified Subsidiary or of the Company, as the case may
be, shall, in each case, be deemed to constitute the
Issuance of such Debt or such Preferred Stock by such
Specified Subsidiary;
(2) Purchase Money Obligations in an aggregate
amount outstanding at any time not to exceed $50,000,000;
(3) Acquired Debt;
(4) Debt outstanding on the Issue Date;
(5) Refinancing Debt Issued to Refinance any Debt
permitted by clauses (1)-(4) above;
(6) (x) Non-Recourse Debt of a Non-Recourse
Subsidiary of any Specified Subsidiary and (y) Guarantees
<PAGE>
of Non-Recourse Debt of Non-Recourse Subsidiaries which
Guarantees are recourse only to the stock of such Non-
Recourse Subsidiary; and
(7) Debt (other than Debt described in clauses
(1)-(6) above) in an aggregate principal amount
outstanding at any time not to exceed $50,000,000.
(c) To the extent any Specified Subsidiary
Guarantees any Debt of any other Specified Subsidiary, such
Guarantee and such Debt will be deemed to be the same Debt and
only the amount of the Debt will be deemed to be outstanding.
If a Specified Subsidiary Guarantees any Debt of a Person that,
subsequent to the Issuance of such Guarantee, becomes a
Specified Subsidiary, such Guarantee and the Debt so Guaranteed
shall be deemed to be the same Debt which shall be deemed to
have been Issued when the Guarantee was Issued and shall be
deemed to be permitted to the extent the Guarantee was
permitted when Issued.
Section 4.12. Prohibition on Debt and Capital Stock
of Intermediate Parents of ISP and BMCA. Notwithstanding
Section 4.11 (a) and (b):
(a) The Company shall not permit any of its
Subsidiaries (other than, subject to Section 4.09, ISP
Subsidiaries) that, directly or indirectly, owns any
Capital Stock or Debt of any ISP Subsidiary to Issue any
Debt or Capital Stock other than Debt or Capital Stock
Issued to and held by (x) so long as ISP is a Recourse
Subsidiary of the Company, ISP or any of its Wholly-Owned
Recourse Subsidiaries or (y) the Company (or, on and after
the Determination Date, any of its Wholly-Owned Recourse
Subsidiaries); and
(b) The Company shall not permit any of its
Subsidiaries (other than, subject to Section 4.10, BMCA
Subsidiaries) that, directly or indirectly, owns any
Capital Stock or Debt of any BMCA Subsidiary to Issue any
Debt or Capital Stock other than Debt or Capital Stock
Issued to and held by (x) so long as BMCA is a Recourse
Subsidiary of the Company, BMCA or any of its Wholly-Owned
Recourse Subsidiaries or (y) G-I Holdings or any of its
Post-Spin Off Wholly-Owned Recourse Subsidiaries (or, on
and after the Determination Date, the Company or any of
its Wholly-Owned Recourse Subsidiaries).
Section 4.13. Limitation on Restricted Payments and
Restricted Investments. (a) The Company shall not make, and
shall not permit any of its Subsidiaries to make, directly or
<PAGE>
indirectly, any Restricted Payment or Restricted Investment at
any time on or after the Issue Date if, at the time of such
Restricted Payment or Restricted Investment or immediately
after giving effect thereto:
(1) a Default or an Event of Default shall have
occurred and be continuing;
(2) the Company is not able to incur at least $1.00
of additional Debt under Section 4.09(a); or
(3) the aggregate amount of Restricted Payments made
since June 30, 1996 (the "Applicable Date") and the
aggregate amount of Restricted Investments made since the
Applicable Date and then outstanding (the amount expended
for such purposes, if other than in cash, shall be the
fair market value of such property as determined by the
Board of Directors of the Company in good faith as of the
date of payment or investment) shall exceed the sum of:
(i) 50% of the cumulative Consolidated Net
Income (or minus 100% of the cumulative Consolidated
Net Loss) of the Company accrued during the period
beginning on the Applicable Date and ending on the
last day of the fiscal quarter for which financial
information has been made publicly available by the
Company but ending no more than 135 days prior to the
date of such Restricted Payment or Restricted
Investment (treating such period as a single
accounting period);
(ii) 100% of the net cash proceeds, including
the fair market value of property other than cash as
determined by the Board of Directors of the Company
in good faith, as evidenced by a Board Resolution,
received by the Company from any Person (other than a
Subsidiary of the Company) from the Issuance and sale
subsequent to the Applicable Date of Capital Stock of
the Company (other than Redeemable Stock) or as a
capital contribution;
(iii) 100% of the net cash proceeds received by
the Company from any Person (other than a Subsidiary
of the Company) from the exercise of options or
warrants on Capital Stock of the Company (other than
Redeemable Stock);
(iv) 100% of the net cash proceeds received by
the Company from the conversion into Capital Stock
(other than Redeemable Stock) of convertible Debt or
<PAGE>
convertible Preferred Stock issued and sold (other
than to a Subsidiary of the Company) since the
Applicable Date; and
(v) $30,000,000.
The designation by the Company or any of its Subsidiaries of a
Subsidiary as a Non-Recourse Subsidiary shall be deemed to be
the making of a Restricted Investment by the Company in an
amount equal to the outstanding Investments made by the Company
and its Subsidiaries in such Person being designated a Non-
Recourse Subsidiary at the time of such designation.
(b) The foregoing paragraph (a) shall not prevent
the following, as long as no Default or Event of Default shall
have occurred and be continuing (or would result therefrom
other than pursuant to paragraph (a)):
(1) the making of any Restricted Payment or
Restricted Investment within 60 days after (x) the date of
declaration thereof or (y) the making of a binding
commitment in respect thereof; provided that at such date
of declaration or commitment such Restricted Payment or
Restricted Investment complied with paragraph (a); or
(2) any Restricted Payment or Restricted Investment
made out of the net cash proceeds received by the Company
from the substantially concurrent sale of its Common Stock
(other than to a Subsidiary of the Company); provided,
however, that such net cash proceeds so utilized shall not
be included in paragraph (a)(3) in determining the amount
of Restricted Payments or Restricted Investments the
Company could make under paragraph (a), and Restricted
Payments or Restricted Investments made pursuant to this
clause (2) shall not be included in determining the amount
of Restricted Payments or Restricted Investments made or
then outstanding under paragraph (a)(3); or
(3) repurchases of Capital Stock of the Company (or,
prior to the Spin Off, dividends used to repurchase
Capital Stock of GAF), in each case, from employees of the
Company or any of its Subsidiaries (other than any
Permitted Holder); provided, however, that the aggregate
amount of Restricted Payments made under this clause shall
not exceed $3,000,000 in any fiscal year; provided,
further, however, that the amount of Restricted Payments
made pursuant to this clause (3) shall not be included in
determining the amount of Restricted Payments made under
paragraph (a)(3).
<PAGE>
Section 4.14. Limitation on Liens. (a) The Company
shall not, and shall not permit any of its Specified
Subsidiaries to, directly or indirectly, incur or suffer to
exist any Liens (other than Permitted Liens) upon their
respective properties or assets whether owned on the Issue Date
or acquired after such date, or on any income or profits
therefrom, other than the following:
(1) Liens securing intercompany Debt permitted by
Section 4.11(b)(1);
(2) Liens existing on the Issue Date;
(3) Purchase money Liens on assets of the Company
and its Specified Subsidiaries or improvements or
additions thereto existing or created within 180 days
after the time of acquisition of or improvement or
addition to such assets, or replacements thereof; provided
that (i) such acquisition, improvement or addition is
otherwise permitted by the Indenture, (ii) the principal
amount of Debt (including Debt in respect of Capitalized
Lease Obligations) secured by each such Lien in each asset
shall not exceed the cost (including all such Debt secured
thereby, whether or not assumed) of the item subject
thereto, and such Liens shall attach solely to the
particular item of property so acquired, improved or
added, and any additions or accessions thereto, or
replacements thereof, and (iii) the aggregate amount of
Debt secured by Liens permitted by this clause (3) shall
not at any one time exceed $50,000,000;
(4) Liens securing Acquired Debt; provided, however,
that (i) any such Lien secured the Acquired Debt at the
time of the incurrence of such Acquired Debt by the
Company or by one of its Specified Subsidiaries and such
Lien and Acquired Debt were not incurred by the Company or
any of its Specified Subsidiaries or by the Person being
acquired or from whom the assets were acquired in
connection with, or in anticipation of, the incurrence of
such Acquired Debt by the Company or by one of its
Specified Subsidiaries, and (ii) any such Lien does not
extend to or cover any property or assets of the Company
or of any of its Specified Subsidiaries other than the
property or assets that secured the Acquired Debt prior to
the time such Debt became Acquired Debt of the Company or
of one of its Specified Subsidiaries;
(5) Liens to secure Refinancing of any Debt secured
by Liens described in clauses (1)-(4) above and (6) below;
provided that (i) the Refinancing does not increase the
<PAGE>
principal amount of Debt being so Refinanced and (ii) the
Lien of the Refinancing Debt does not extend to any asset
not securing the Debt being Refinanced or improvements or
additions thereto, or replacements thereof; and
(6) Liens on assets of the Company and its Specified
Subsidiaries (other than the Liens described above),
provided that such Liens only secure Debt of the Company
and its Specified Subsidiaries in an aggregate amount not
to exceed at any one time outstanding $50,000,000.
Section 4.15. Prohibition on Certain Transactions.
After the Spin Off, the Company shall not, and shall not permit
any of its Post-Spin Off Subsidiaries to, enter, directly or
indirectly, into, or suffer to exist, any transaction or series
of transactions (including, without limitation, any loan,
advance or investment or any purchase, sale, lease or exchange
of property or the rendering of any service) with GAF or any of
its Post-Spin Off Subsidiaries. The foregoing shall not
prohibit any transaction permitted by Section 4.16(b)(5) or
(c).
Section 4.16. Limitation on Transactions with
Affiliates. (a) The Company shall not enter, and shall not
permit any of its Subsidiaries to enter, directly or
indirectly, into any transaction or series of related
transactions with any Affiliate of the Company, including,
without limitation, any loan, advance or investment or any
purchase, sale, lease or exchange of property or the rendering
of any service, unless the terms of such transaction or series
of transactions are set forth in writing and at least as
favorable as those available in a comparable transaction in
arms-length dealings from an unrelated Person; provided,
however, that (i) if any such transaction or series of related
transactions (other than any purchase or sale of inventory in
the ordinary course of business) involves aggregate payments or
other consideration in excess of $2,000,000, such transaction
or series of related transactions shall be approved (and the
value of any non-cash consideration shall be determined) by a
majority of those members of the Board of Directors of the
Company or such Subsidiary, as the case may be, having no
personal stake in such business, transaction or transactions;
and (ii) in the event that such transaction or series of
related transactions (other than any purchase or sale of
inventory in the ordinary course of business) involves
aggregate payments or other consideration in excess of
$20,000,000 (with the value of any non-cash consideration being
determined by a majority of those members of the Board of
Directors of the Company or such Subsidiary, as the case may
be, having no personal stake in such business, transaction or
<PAGE>
transactions), the Company or such Subsidiary, as the case may
be, shall have also received a written opinion from a
nationally recognized investment banking firm that such
transaction or series of related transactions is fair to the
shareholders, in their capacity as such, of the Company or such
Subsidiary from a financial point of view and such opinion has
been delivered to the Trustee; provided, further, in the event
that the Board of Directors of the Company or the Subsidiary,
as the case may be, proposing to engage in a transaction or
series of related transactions described in the preceding
proviso does not have any members having no personal stake in
such business, transaction or transactions, the Company or such
Subsidiary may enter into such transaction or series of
transactions if the Company or such Subsidiary, as the case may
be, shall have received the written opinion of a nationally
recognized investment banking firm that the terms thereof, from
a financial point of view, are fair to the shareholders of the
Company or such Subsidiary, in their capacity as such (the
determination as to the value of any non-cash consideration
referred to in the preceding proviso to be made by such
investment banking firm), and such opinion shall have been
delivered to the Trustee.
(b) The foregoing paragraph (a) shall not prevent
the following:
(1) any transaction between a Subsidiary of the
Company and its own employee stock ownership or benefit
plan;
(2) any transaction with an officer or director of
the Company or any of its Subsidiaries entered into in the
ordinary course of business (including compensation or
employee benefit arrangements with any such officer or
director);
(3) any business or transaction by an ISP
Subsidiary, the Company or, after the Determination Date,
any Subsidiary of the Company with an Unrestricted
Affiliate;
(4) transactions permitted by Section 4.17;
(5) payments made or actions taken pursuant to any
of the Specified Agreements (or any new agreement referred
to in paragraph (c) below), as any such Specified
Agreement (or new agreement) is, subject to paragraph (c)
below, amended, modified, extended or waived from time to
time;
<PAGE>
(6) the making of a Restricted Payment or Restricted
Investment otherwise permitted by Section 4.13(a) or those
transactions specifically permitted by Section 4.13(b);
(7) (i) transactions between or among Non-Recourse
Subsidiaries of ISP, (ii) transactions between or among
Non-Recourse Subsidiaries of BMCA, (iii) transactions
between or among Non-Recourse Subsidiaries of any
Specified Subsidiary and (iv) on or after the
Determination Date, transactions between or among Non-
Recourse Subsidiaries of the Company; or
(8) (i) so long as ISP is a Recourse Subsidiary of
the Company, transactions between or among ISP, its
Recourse Subsidiaries and the Company, (ii) transactions
between or among BMCA and its Recourse Subsidiaries,
(iii) transactions between or among any Specified
Subsidiary and its Recourse Subsidiaries and (iv) on or
after the Determination Date, transactions between or
among the Company and its Recourse Subsidiaries.
(c) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, extend or waive any
provision of any of the Specified Agreements in any manner
which is significantly adverse to the Company or the Holders
(it being understood that an extension or modification of
either of the Granules Contracts (or any similar granules
purchase contract) on terms at least as favorable to the
Company as those available at the time of the extension or
modification (or any such new agreement) in a comparable
transaction in arms-length dealings with an unrelated Person
shall not be deemed significantly adverse to the Company or the
Holders).
Section 4.17. Limitation on Investments in Non-
Recourse Subsidiaries by ISP Subsidiaries and BMCA
Subsidiaries. (a) The Company shall not, and shall not permit
any ISP Subsidiary (so long as such ISP Subsidiary is a
Subsidiary of the Company) to, make Investments in Non-Recourse
Subsidiaries of ISP if, after giving effect thereto, the
cumulative aggregate amount (the amount so expended, if other
than in cash, to be determined by the Board of Directors of
ISP, as evidenced by a Board Resolution) of such Investments,
as of the date of the Investment, made by the Company and ISP
Subsidiaries would exceed 20% of the Consolidated Net Worth of
ISP.
(b) The Company shall not permit any BMCA Subsidiary
(so long as such BMCA Subsidiary is a Subsidiary of the
Company) to make Investments in Non-Recourse Subsidiaries of
<PAGE>
BMCA if, after giving effect thereto, the cumulative aggregate
amount (the amount so expended, if other than cash, to be
determined by the Board of Directors of BMCA, as evidenced by a
Board Resolution) of such Investments, as of the date of the
Investment, would exceed $50,000,000.
Section 4.18. Limitation on Dividend and Other
Payment Restrictions Affecting Subsidiaries. The Company shall
not, and shall not permit any of its Recourse Subsidiaries to,
directly or indirectly, create or otherwise cause to exist or
become effective any encumbrance or restriction on the ability
of any such Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock or pay any Debt owed to the
Company or any of its Subsidiaries, (b) make loans or advances
to, or Issue any Guarantee for the benefit of, the Company or
any of its Subsidiaries, (c) transfer any of its properties or
assets to the Company or any of its Subsidiaries or (d) incur
or suffer to exist Liens in favor of the Holders, except for
such encumbrances or restrictions existing under or by reason
of the following:
(1) applicable law;
(2) the Indenture and the indenture governing the
New Money Notes;
(3) customary provisions restricting subletting or
assignment of any lease or license or other commercial
agreement;
(4) any instrument governing Acquired Debt of any
Person, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person,
other than such Person and its Subsidiaries, or the
property or assets of such Person and its Subsidiaries, so
acquired;
(5) Liens specifically permitted by Section 4.14;
provided that such Liens and the terms governing such
Liens do not, directly or indirectly, restrict the Company
or its Subsidiaries from granting other Liens, except as
to the assets subject to such Liens;
(6) the Credit Agreement or other Debt existing on
the Issue Date and any Refinancing of the Credit Agreement
or any such other Debt; provided that the terms and
conditions of any such Refinancing agreements relating to
the terms described under clauses (a)-(d) above are no
less favorable to the Company and its Subsidiaries than
<PAGE>
those contained in the agreements governing the Debt being
Refinanced;
(7) covenants contained in agreements governing Debt
of BMCA Subsidiaries; provided, however, that such
covenants shall not prohibit the BMCA Subsidiaries from,
directly or indirectly, paying dividends or making loans
or advances to the Company in an aggregate amount less
than the positive difference, if any, between (i) the sum
of (A) $25,000,000 and (B) 50% of the cumulative
Consolidated Net Income (or minus 100% of the Consolidated
Net Loss) of BMCA for the period beginning on the first
day of the fiscal quarter during which such Debt was
issued, and (ii) the aggregate amount of Restricted
Payments and Restricted Investments made by BMCA
Subsidiaries since such date; and
(8) covenants contained in agreements governing Debt
of ISP Subsidiaries; provided, however, that such
covenants shall not prohibit the ISP Subsidiaries from,
directly or indirectly, paying dividends or making loans
or advances to the Company in an aggregate amount less
than the positive difference, if any, between (i) the sum
of (A) $25,000,000 and (B) 50% of the cumulative
Consolidated Net Income (or minus 100% of the Consolidated
Net Loss) of ISP for the period beginning on the first day
of the fiscal quarter during which such Debt was issued,
and (ii) the aggregate amount of Restricted Payments and
Restricted Investments made by ISP Subsidiaries since such
date.
Section 4.19. Change of Control. (a) In the event
of any Change of Control, each Holder shall have the right, at
such Holder's option, to require the Company to purchase all or
any portion (in integral multiples of $1,000) of such Holder's
Notes on the date (the "Change of Control Payment Date") which
is 25 Business Days after the date the Change of Control Notice
(as defined below) is mailed or is required to be mailed (or
such later date as is required by applicable law) at 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect under the third paragraph of Section 5(a)
of the Notes) plus accrued interest thereon to the Change of
Control Payment Date.
(b) The Company or, at the request of the Company,
the Trustee shall send, by first-class mail, postage prepaid,
to all Holders, within ten Business Days after the occurrence
of each Change of Control, a notice of the occurrence of such
Change of Control (the "Change of Control Notice"), specifying
a date by which a Holder must notify the Company of such
<PAGE>
Holder's intention to exercise the repurchase right and
describing the procedure that such Holder must follow to
exercise such right. The Company is required to deliver a copy
of such notice to the Trustee.
Each Change of Control Notice shall state:
(1) that the change of control offer is being made
pursuant to this Section 4.19 and that all Notes tendered
will be accepted for payment;
(2) the purchase price and the Change of Control
Payment Date;
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making
payment therefor, any Note accepted for payment pursuant
to the change of control offer shall cease to accrue
interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased
pursuant to a change of control offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business
Day prior to the Change of Control Payment Date;
(6) that the Company has the right, pursuant to the
second paragraph under Section 5(a) of the Notes, to
redeem Notes not tendered at 100% of the principal amount
thereof plus accrued interest to the redemption date, plus
the Applicable Premium;
(7) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five
Business Days prior to the Change of Control Payment Date,
a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note
purchased;
(8) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered; and
<PAGE>
(9) the circumstances and relevant facts regarding
such Change of Control.
No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase
right. The Company shall comply with all applicable Federal
and state securities laws in connection with each Change of
Control Notice.
On or before the Change of Control Payment Date, the
Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Change of Control Notice, (ii) deposit
with the Paying Agent money sufficient to pay the purchase
price of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so
purchased shall be promptly mailed by the Company to the Holder
thereof. For purposes of this Section 4.19, the Trustee shall
act as the Paying Agent.
Section 4.20. Limitation on Asset Sales. (a) The
Company shall not, and shall not permit any of its
Subsidiaries, directly or indirectly, to consummate an Asset
Sale unless:
(1) the Company or such Subsidiary, as the case may
be, receives consideration (including non-cash
consideration, whose fair market value shall be determined
in good faith by the Board of Directors of the Company or
such Subsidiary, as evidenced by a Board Resolution) at
the time of such Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of
(as determined in good faith by the Board of Directors, as
evidenced by a Board Resolution);
(2) at least 75% of the consideration received by
the Company or such Subsidiary, as the case may be, shall
be cash or Cash Equivalents; provided, however, that this
clause (2) shall not prohibit any Asset Sale for which the
Company or such Subsidiary, as the case may be, receives
100% of the consideration, directly or through the
acquisition of Capital Stock of a Person, in operating
assets;
<PAGE>
(3) in the case of an Asset Sale prior to the Spin
Off by G-I Holdings or any of its Post-Spin Off
Subsidiaries, the Company shall commit to apply the Net
Cash Proceeds of such Asset Sale within 300 days of the
consummation of such Asset Sale, and shall apply such Net
Cash Proceeds within 360 days of receipt thereof (if such
360th day is prior to the Spin Off), (i) to invest in the
businesses that G-I Holdings and its Post-Spin Off
Subsidiaries (or, on or after the Determination Date, the
Company and its Recourse Subsidiaries) are engaged in at
the time of such Asset Sale or any like or related
business, (ii) to pay the Debt referred to in the last
sentence of the definition of "Debt" or make provision for
the payment thereof, through an escrow or other fund,
(iii) to pay or satisfy Debt or Preferred Stock of any
BMCA Subsidiary and/or (iv) to offer to purchase the
Notes, the New Money Notes, the Senior Discount Notes due
1998 and Series B Discount Notes due 1998 of G-I Holdings
(the "Discount Notes"), the 10% Notes and/or the 11-3/4%
Senior Deferred Coupon Notes due 2004 of BMCA in a tender
offer at a redemption price equal to 100% of the principal
thereof plus accrued interest thereon to the date of
redemption (or, in the case of such Discount Notes and, to
the extent provided in the indenture relating to such BMCA
Notes, 100% of the accreted value thereof); provided,
however, that the Company may defer making such an offer
until the aggregate Net Cash Proceeds from Asset Sales to
be applied pursuant to this clause (3)(iv) equal or exceed
$20,000,000; and
(4) in the case of an Asset Sale by the Company or
any of its Post-Spin Off Subsidiaries, the Company or such
Post-Spin Off Subsidiary, as the case may be, shall apply
the Net Cash Proceeds of such Asset Sale within one year
of receipt thereof (i) to invest in the businesses that
the Company and its Post-Spin Off Recourse Subsidiaries
(or, on or after the Determination Date, the Company and
its Recourse Subsidiaries) are engaged in at the time of
such Asset Sale or any like or related business, (ii) on
or after the Determination Date, to pay the Debt referred
to in the last sentence of the definition of "Debt" or
make provision for the payment thereof, through an escrow
or other fund, (iii) to pay or satisfy Debt or Preferred
Stock of the Company or such Post-Spin Off Subsidiary, as
the case may be, and/or (iv) to offer to purchase the
Notes and the New Money Notes, on a pro rata basis, in a
tender offer at a redemption price equal to 100% of the
principal thereof plus accrued interest thereon to the
date of redemption; provided, however, that, prior to the
Spin Off, G-I Holdings shall, to the extent required under
<PAGE>
the indentures governing the Discount Notes and the 10%
Notes, first offer to purchase any outstanding Discount
Notes and 10% Notes in a tender offer at a redemption
price equal to, in the case of Discount Notes, 100% of the
accreted value thereof, and in the case of 10% Notes, 100%
of the principal thereof plus accrued interest thereon to
the date of redemption; provided, further, however, that
the Company may defer making any such offer until
aggregate Net Cash Proceeds from Asset Sales to be applied
pursuant to clause (4)(iv) equal or exceed $20,000,000;
provided, however, that (i) the Company and its Subsidiaries
may retain up to $5,000,000 of Net Cash Proceeds from Asset
Sales in any twelve-month period (without complying with clause
(3) or (4)) and (ii) any Asset Sale that would result in a
Change of Control shall not be governed by this Section 4.20
but shall be governed by Section 4.19.
(b) Notice of an offer to purchase the Notes
pursuant to Section 4.20(a) (a "Net Proceeds Offer") shall be
mailed or caused to be mailed, by first class mail, by the
Company, within 300 days after the relevant Asset Sale to all
Holders at their last registered addresses as of a date within
15 days prior to the mailing of such notice, with a copy to the
Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the
following terms:
(1) that the Net Proceeds Offer is being made
pursuant to this Section 4.20 and that all Notes tendered
will be accepted for payment; provided that if the
aggregate amount of Notes tendered in a Net Proceeds Offer
exceeds the aggregate amount available for the Net
Proceeds Offer, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company, so that only
Notes in denominations of $1,000 or multiples thereof
shall be purchased);
(2) the purchase price and the purchase date (which
shall be determined in accordance with Section 4.20(a))
(the "Proceeds Purchase Date");
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless there is a default in making
payment therefor, any Note accepted for payment pursuant
<PAGE>
to the Net Proceeds Offer shall cease to accrue interest
after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to a Net Proceeds Offer will be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business
Day prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than two
Business Days prior to the Proceeds Purchase Date, a
facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Notes the Holder
delivered for purchase and a statement that such Holder is
withdrawing his or her election to have such Notes
purchased; and
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal
to the unpurchased portion of the Notes surrendered.
On or before the Proceeds Purchase Date, the Company
or such Subsidiary, as the case may be, shall (i) accept for
payment Notes or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with
item (b)(1) above, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes to be
purchased and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price. For purposes
of this Section 4.20, the Trustee shall act as the Paying
Agent.
Section 4.21. Investment Company Act. The Company
shall not take any action that would require it or any of its
Subsidiaries to register as an investment company under the
Investment Company Act of 1940.
Section 4.22. Consents, etc. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, pay or cause to be paid any fee, interest or other
amount to any Holders in connection with any consent, waiver or
amendment to this Indenture or the Notes, unless such fee,
interest or other amount is offered or agreed to be paid to all
Holders who are given the same opportunity to so consent, waive
<PAGE>
or agree to amend and who, in fact, so consent, waive or agree
to amend.
Section 4.23. Registration Rights. The Company
hereby grants to the Holders the registration rights set forth
on Schedule A hereto, the terms of which are hereby
incorporated by reference.
Section 4.24. Spin Off. Notwithstanding anything in
this Indenture to the contrary, as long as no Default or Event
of Default shall have occurred and be continuing, the Company
may consummate the Spin Off.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.01. When the Company May Merge, etc. The
Company shall not consolidate with or merge with or into or
sell, assign, transfer or lease all or substantially all of its
properties and assets (either in one transaction or series of
related transactions) to any Person, unless:
(1) the Company shall be the continuing Person,
or the resulting, surviving or transferee Person (if
other than the Company) shall be a corporation
organized and existing under the laws of the United
States or any State thereof or the District of Columbia
and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the
Trustee, all the obligations of the Company under the
Notes and this Indenture, and this Indenture shall
remain in full force and effect;
(2) immediately before and immediately after
giving effect to such transaction (and treating any
Debt which becomes an obligation of the resulting,
surviving or transferee Person or any of its
Subsidiaries as a result of such transaction as having
been issued by such Person or such Subsidiary at the
time of such transaction), no Default or Event of
Default shall have occurred and be continuing; and
(3) immediately after giving effect to such
transaction (other than a merger of G-I Holdings with
the Company after the Determination Date), the
resulting, surviving or transferee Person shall have a
Consolidated Net Worth in an amount which is not less
than the Consolidated Net Worth of the Company
<PAGE>
immediately prior to such transaction; provided,
however, that, so long as no Default or Event of
Default has occurred and is continuing or would result
therefrom this paragraph shall not prohibit the Spin
Off.
In connection with any consolidation, merger, sale,
assignment, transfer or lease contemplated by this Section
5.01, the Company shall deliver, or cause to be delivered, to
the Trustee, in form and substance reasonably satisfactory to
the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale,
assignment, transfer or lease and the supplemental indenture in
respect thereto comply with this Article V and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger or any sale, assignment,
transfer or lease of all or substantially all of the assets of
the Company in accordance with Section 5.01, the successor
corporation formed by such consolidation or into which the
Company is merged or to which such sale, assignment, transfer
or lease is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture, with the same effect as if such successor
corporation had been named as the Company herein, and, except
in the case of a lease, the Company will be discharged from all
obligations and covenants under this Indenture and the Notes.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. An "Event of
Default" occurs if:
(1) the Company defaults in the payment of
interest on, or Additional Interest (if any) with
respect to, any Note when the same becomes due and
payable and the default continues for a period of 30
days;
(2) (i) the Company defaults in the payment of
the principal of any Note when the same becomes due and
payable at maturity or otherwise or (ii) the Company
fails to redeem or repurchase Notes when required
pursuant to this Indenture or the Notes;
<PAGE>
(3) the Company fails to comply with
Section 5.01;
(4) the Company fails to comply for 30 days after
notice with any of its obligations under Sections 4.03,
4.06 and 4.09 through 4.20, inclusive;
(5) the Company fails to comply for 60 days after
notice with its other agreements contained in this
Indenture or the Notes (other than those referred to in
clauses (1)-(4) above);
(6) Debt of the Company or any Significant
Subsidiary is not paid within any applicable grace
period or is accelerated by the holders thereof because
of a default and the total principal amount of the
portion of such Debt that is unpaid or accelerated
exceeds $15,000,000 or its foreign currency equivalent
and such default continues for 5 days after notice;
(7) the Company or any of its Significant
Subsidiaries (A) admits in writing its inability to pay
its debts generally as they become due, (B) commences a
voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (C) consents to the entry of a
judgment, decree or order for relief against it in an
involuntary case or proceeding under any Bankruptcy
Law, (D) consents to the appointment of a Custodian of
it or for substantially all of its property, (E)
consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (F)
makes a general assignment for the benefit of its
creditors, or (G) takes any corporate action to
authorize or effect any of the foregoing; and
(8) any judgment or order for the payment of
money in excess of $15,000,000 in the aggregate is
rendered against the Company or any Significant
Subsidiary of the Company and (i) there is a period of
60 days following the entry of such judgment or order
during which such judgment or order is not discharged,
waived or the execution thereof stayed and such default
continues for 10 days after the notice specified below
or (ii) foreclosure proceedings therefor have begun and
have not been stayed within five days of the
commencement of such foreclosure proceeding.
A Default under clause (4), (5), (6) or (8) is not an
Event of Default until the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Notes
<PAGE>
notify the Company in writing of the Default, and the Company
does not cure the Default within the time specified in such
clause after receipt of such notice. Such notice shall be
given by the Trustee if so requested in writing by the Holders
of at least 25% in aggregate principal amount of the
outstanding Notes. When a Default under clause (4), (5), (6)
or (8) is cured or remedied within the specified period, it
ceases to exist.
Section 6.02. Acceleration. If an Event of Default
(other than an Event of Default with respect to the Company
specified in Section 6.01 clause (7) above) occurs and is
continuing, the Trustee, by written notice to the Company, or
the Holders of at least 25% in aggregate principal amount of
the outstanding Notes, by written notice to the Company and the
Trustee, may declare the principal of and accrued interest on
all Notes then outstanding to be due and payable (the "Default
Amount"). Upon a declaration of acceleration, such amount
shall be due and payable immediately.
If an Event of Default with respect to the Company
specified in clause (7) of Section 6.01 above occurs, the
Default Amount shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Trustee or any Holder.
The Holders of a majority in aggregate principal
amount at maturity of the Notes then outstanding, by written
notice to the Trustee and the Company, may rescind an
acceleration with respect to the Notes and its consequences if
(i) all existing Defaults and Events of Default, other than the
non-payment of the principal of the Notes which has become due
solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is
lawful, interest on overdue principal, which has become due
otherwise than by such declaration of acceleration, has been
paid and (iii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction.
Section 6.03. Other Remedies. Notwithstanding any
other provision of this Indenture, if an Event of Default
occurs and is continuing and the Holders are entitled to
payment as a result of acceleration, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect
the payment of principal of and/or interest on the Notes or to
enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in
<PAGE>
the proceeding. A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are
cumulative.
Section 6.04. Waiver of Past Defaults. Subject only
to the provisions of Sections 6.07 and 9.02, the Holders of a
majority in aggregate principal amount of the outstanding Notes
by notice to the Trustee may waive an existing Default or Event
of Default and its consequences, except a Default or Event of
Default in payment of principal or interest on any Note as
specified in clauses (1) and (2) of Section 6.01. When a
Default or Event of Default is waived, it is cured and ceases
to exist.
Section 6.05. Control by Majority. The Holders of a
majority in aggregate principal amount of the outstanding Notes
may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with
law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of another Holder as such, or
that may subject the Trustee to personal liability. The
Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.06. Limitation on Remedies. Except as
provided in Section 6.07, a Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(2) Holders of at least 25% in aggregate
principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer and provide to
the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the
offer of indemnity; and
(5) during such 60-day period, the Holders of a
majority in aggregate principal amount of the
<PAGE>
outstanding Notes do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent
with the request.
A Holder may not use this Indenture to prejudice the
rights of another Holder or to obtain a preference or priority
over such other Holder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal
of and interest on the Note, on or after the respective due
dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.08. Collection Suit by Trustee. If an
Event of Default specified in clause (1) or (2) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount
due and payable on such Notes for principal, premium, if any,
interest and, to the extent that payment of such interest is
lawful, interest on overdue principal, at the rate per annum
specified in the Notes, and such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any
judicial proceedings relative to the Company (or any other
obligor upon the Notes), its creditors or its property. The
Trustee shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable
on any such claims and any custodian in any such judicial
proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to the Trustee
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any
<PAGE>
plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
Section 6.10. Priorities. If the Trustee collects
any money pursuant to this Article VI, it shall pay out the
money in the following order:
First: to the Trustee for amounts due under
Section 7.07;
Second: to Holders for amounts due and unpaid on
the Notes for principal and interest, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Notes for principal and
interest, respectively; and
Third: to the Company or any other obligors on
the Notes, as their interests may appear, or as a court
of competent jurisdiction may direct.
The Trustee may fix a record date and payment date
for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs. In any suit
for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking
to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard
to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder pursuant to Section 6.07, or
a suit by any Holder or a group of Holders of more than 10% in
principal amount of the outstanding Notes.
Section 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such
Holder, then, and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
<PAGE>
ARTICLE VII
TRUSTEE
Section 7.01. Rights of Trustee. Subject to TIA
{ 315(a) through (d):
(A) The Trustee may rely on any document believed
by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(B) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Section
10.05. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(C) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care.
(D) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it
believes to be authorized or within its rights or
powers; provided that the Trustee's conduct does not
constitute negligence.
(E) The Trustee may consult with counsel of its
own choosing and the advice or opinion of such counsel
as to matters of law shall be full and complete
authorization and protection in respect of any action
taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of
such counsel.
(F) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance
with such request or direction.
Section 7.02. Individual Rights of Trustee. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the
Company or any of its Affiliates with the same rights it would
<PAGE>
have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee is subject to TIA {{ 310(b)
and 311.
Section 7.03. Money Held in Trust. The Trustee
shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.04. Trustee's Disclaimer. The Trustee
makes no representation as to the legality or validity or
adequacy of this Indenture or the Notes, it shall not be
responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be
responsible for any statement in the Notes other than its
certificate of authentication.
Section 7.05. Notice of Defaults. If a Default
occurs and is continuing and if it is known to the Trustee, the
Trustee shall mail to each Holder notice of the Default within
90 days after it occurs. Except in the case of a Default in
the payment of the principal of or interest on any Note, the
Trustee may withhold notice if and so long as a committee of
its Trust Officers in good faith determines that the
withholding of such notice is in the interests of the Holders.
Section 7.06. Reports by Trustee to Holders. Within
60 days after each May 15 beginning with the May 15 following
the Issue Date, the Trustee shall mail to each Holder a report
dated as of May 15 if required by TIA { 313(a). The Trustee
also shall comply with TIA {{ 313(b) and 313(c).
A copy of each such report at the time of its mailing
to Holders shall be filed with the Commission and each stock
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee in
writing if the Notes become listed on any national securities
exchange or of any delisting thereof.
Section 7.07. Compensation and Indemnity. The
Company agrees that it shall pay to the Trustee from time to
time such compensation as the Company and the Trustee shall
agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation relating to the
trustee of an express trust. The Company agrees that it shall
reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it.
Such expenses shall include the reasonable compensation,
<PAGE>
disbursements and expenses of the Trustee's agents and counsel.
Such expenses shall also include any taxes or other reasonable
costs incurred by the trust created under Section 8.03.
The Company shall indemnify each of the Trustee and
any predecessor Trustee for, and hold it harmless against, any
and all loss, damage, claim or liability or expense, including
taxes (other than taxes based on or measured by the income or
gross receipts of the Trustee) incurred by it in connection
with the administration of this trust and its duties hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the acceptance,
exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of
any claim asserted against the Trustee for which it may seek
indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder
unless the Company is actually prejudiced thereby. The Company
shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel.
The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through
negligence or bad faith.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a Lien prior to the Notes
on all money or property held or collected by the Trustee
except money or property held in trust to pay principal of or
interest on particular Notes.
When the Trustee incurs expenses or renders services
in connection with an Event of Default specified in
Section 6.01(7), the expenses and the compensation for the
services are intended to constitute expenses of administration
under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and
any Lien arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Company's
obligations pursuant to Article VIII and/or the termination of
this Indenture.
Section 7.08. Replacement of Trustee. A resignation
or removal of the Trustee and the appointment of a successor
Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Sec-
tion 7.08. The Trustee may resign by so notifying the Company
in writing at least 30 days prior to the date of the proposed
resignation. The Holders of a majority in aggregate principal
<PAGE>
amount of the outstanding Notes may remove the Trustee by so
notifying the Trustee in writing and may appoint a successor
Trustee with the Company's consent. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with
Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company
shall promptly appoint a successor Trustee. The Trustee shall
be entitled to payment of its fees and reimbursement of its
expenses while acting as Trustee, and to the extent such
amounts remain unpaid, the Trustee that has resigned or has
been removed shall retain the Lien afforded by Section 7.07.
Within one year after the successor Trustee takes office, the
Holders of a majority in aggregate principal amount of the
outstanding Notes may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. Immediately thereafter, subject to the Lien
provided in Section 7.07, the retiring Trustee shall transfer
all property held by it as Trustee to the successor Trustee,
the resignation or removal of the retiring Trustee shall become
effective and the successor Trustee shall have all the rights,
powers and duties of the retiring Trustee under this Indenture.
A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
aggregate principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If any Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
<PAGE>
Trustee. Any successor Trustee shall comply with TIA
{ 310(a)(5).
Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring
Trustee.
Section 7.09. Successor Trustee by Merger, etc. If
the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation or national banking
association, the resulting, surviving or transferee corporation
or national banking association without any further act shall
be the successor Trustee, if such corporation or association
complies with Section 7.10.
Section 7.10. Eligibility; Disqualification. This
Indenture shall always have a Trustee who satisfies the
requirements of TIA { 310(a)(1). The Trustee shall have (or,
in the case of a corporation included in a bank holding company
system, the related bank holding company subsidiary shall have)
a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.
The Trustee also shall comply with TIA { 310(b).
Section 7.11. Preferential Collection of Claims
Against the Company. The Trustee is subject to TIA { 311(a),
excluding from the operation of TIA { 311(a) any creditor
relationship listed in TIA { 311(b). A Trustee who has
resigned or been removed shall be subject to TIA { 311(a) to
the extent indicated therein.
Section 7.12. Duties of Trustee. (A) If a Default
or an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
(B) Except during the continuance of a Default or an
Event of Default:
(1) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no others
and no implied covenants or obligation shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
<PAGE>
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and which conform to the requirements of this
Indenture; provided, however, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements
of this Indenture.
(C) The Trustee shall not be relieved from liability
for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (B) of this Section 7.12;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05.
(D) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if
it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(E) Every provision of this Indenture that in any
way relates to the Trustee is subject to Sections 7.12(A), (B),
(C) and (D).
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01. Discharge of Liability on Notes;
Defeasance. (a) When (i) the Company delivers to the Trustee
all outstanding Notes (other than Notes replaced pursuant to
Section 2.07) for cancellation or (ii) all outstanding Notes
have become due and payable, and the Company irrevocably
deposits with the Trustee money sufficient to pay at maturity
all outstanding Notes, including interest thereon (other than
<PAGE>
Notes replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Sections 8.01(c)
and 8.06, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel as to the satisfaction of all
conditions to such satisfaction and discharge of this Indenture
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the
Company may at any time terminate (i) all its obligations under
the Notes and this Indenture ("legal defeasance"), or (ii) its
obligations under Sections 4.03, 4.04, 4.06, 4.08 through 4.21
and 4.23 and the operation of Section 6.01(3), 6.01(4),
6.01(5), 6.01(6), 6.01(7) (with respect only to Significant
Subsidiaries) and 6.01(8) and the limitation contained in
Section 5.01(3) ("covenant defeasance").
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event
of Default with respect thereto.
Upon satisfaction of the conditions set forth herein
and upon request of the Company, the Trustee shall acknowledge
in writing the discharge of those obligations that the Company
terminates.
(c) Notwithstanding clauses (a) and (b) above, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Notes
have been paid in full. Thereafter, the Company's obligations
in Sections 7.07, 8.04 and 8.05 shall survive.
Section 8.02. Conditions to Defeasance. The Company
may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations for the
payment of principal and interest, if any, on the Notes to
maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a
certificate from a nationally recognized firm of
independent accountants expressing their opinion that the
payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations
<PAGE>
plus any deposited money without investment will provide
cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all
the Notes to maturity or redemption, as the case may be;
(3) no Default has occurred and is continuing on the
date of such deposit and after giving effect thereto;
(4) the deposit does not constitute a default under
any other agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion
of Counsel to the effect that the trust resulting from the
deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company
Act of 1940;
(6) the Company delivers to the Trustee an Opinion
of Counsel stating that the Holders will not recognize
income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject
to federal income tax on the same amount and in the same
manner and at the same times as would have been the case
if such deposit and defeasance had not occurred, and, in
the case of legal defeasance only, such Opinion of Counsel
shall be based on a ruling of the Internal Revenue Service
or other change in applicable federal income tax law; and
(7) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that
all conditions precedent to the defeasance and discharge
of the Notes as contemplated by this Article VIII have
been complied with.
Notwithstanding the foregoing provisions of this
Section, the conditions set forth in the foregoing paragraphs
(2), (3), (4), (5), (6) and (7) need not be satisfied so long
as, at the time the Company makes the deposit described in
paragraph (1), (i) no Default under Section 6.01(1), 6.01(2),
6.01(7) or 6.01(8) has occurred and is continuing on the date
of such deposit and after giving effect thereto and (ii) either
(x) a notice of redemption has been mailed pursuant to Section
3.03 providing for redemption of all the Notes 30 days after
such mailing and the provisions of Section 3.01 with respect to
such redemption shall have been complied with or (y) the Stated
Maturity of all of the Notes will occur within 30 days. If the
conditions of the preceding sentence are satisfied the Company
shall be deemed to have exercised its covenant defeasance
option.
<PAGE>
Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of
Notes at a future date in accordance with Article III
(including by utilizing amounts under deposit).
Section 8.03. Application of Trust Money. The
Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article VIII.
It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of
and interest, if any, on the Notes.
Section 8.04. Repayment to Company. The Trustee and
the Paying Agent shall promptly turn over to the Company upon
request any excess money or securities held by them at any
time.
Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of
principal or interest that remains unclaimed for two years,
and, thereafter, Holders entitled to the money must look to the
Company for payment as general creditors.
Section 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against
any tax, fee or other charges imposed on or assessed against
U.S. Government Obligations deposited with the Trustee
hereunder or the principal and interest received on such U.S.
Government Obligations.
Section 8.06. Reinstatement. If the Trustee or
Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article VIII by reason of
any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to
this Article VIII until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided
that, if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the
money or U.S. Government Obligations held by the Trustee or
Paying Agent.
<PAGE>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders. The
Company, when authorized by a resolution of its Board of
Directors, and the Trustee may amend or supplement this
Indenture or the Notes without notice to or consent of any
Holder:
(1) to cure any ambiguity, defect or
inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Notes in
addition to certificated Notes;
(4) to comply with any requirements of the
Commission in order to effect or maintain the
qualification of this Indenture under the TIA;
(5) to make any change that would provide any
additional benefit or rights to the Holders or that
does not adversely affect the rights of any Holder; or
(6) to provide for issuance of the Exchange
Notes, which will have terms substantially identical in
all material respects to the Initial Notes (except that
the transfer restrictions contained in the Initial
Notes will be modified or eliminated, as appropriate),
and which will be treated together with any outstanding
Initial Notes, as a single issue of securities.
Notwithstanding the above, the Trustee and the
Company may not make any change that adversely affects the
rights of any Holders hereunder.
Section 9.02. With Consent of Holders. Subject to
Section 6.07, the Company, when authorized by resolution of its
Board of Directors, and the Trustee may amend this Indenture or
the Notes with the written consent of the Holders of a majority
in aggregate principal amount of the Notes then outstanding,
and the Holders of a majority in aggregate principal amount of
the Notes then outstanding by written notice to the Trustee may
waive future compliance by the Company with any provision of
this Indenture or the Notes.
<PAGE>
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 6.04, may not:
(A) change the stated maturity of the principal
of, or any installment of interest on, any Note or
reduce the principal amount thereof, the rate of
interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in
which any Note or any premium or the interest thereon
is payable, or impair the right to institute suit for
the enforcement of any such payment after the stated
maturity thereof (or, in the case of redemption, on or
after the redemption date);
(B) reduce the percentage in principal amount of
the outstanding Notes, the consent of the Holders of
which is required for any supplemental indenture or the
consent of such Holders is required for any waiver of
compliance with provisions of this Indenture or
Defaults hereunder and their consequences provided for
in this Indenture;
(C) modify any of the provisions relating to
supplemental indentures requiring the consent of
Holders or relating to the waiver of past defaults or
relating to the waiver of covenants, except to increase
any such percentage of outstanding Notes required for
such actions or to provide that certain other
provisions of this Indenture cannot be modified or
waived without the consent of each Holder affected
thereby;
(D) waive a default in the payment of the
principal of or interest on any Note or modify or waive
the Company's obligation to repurchase Notes under
Section 4.19 or 4.20;
(E) except as otherwise permitted by the
covenants contained in Article V, consent to the
assignment or transfer by the Company of any of its
rights and obligations under this Indenture;
(F) make any change in this Section 9.02 or
Section 6.04 or 6.07; or
(G) change the time at which any Note must be
redeemed or repaid in accordance with the terms of this
Indenture and the Notes.
<PAGE>
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
Any amendment, waiver or consent shall be deemed effective upon
receipt by the Trustee of the necessary consents and shall not
require execution of any supplemental indenture to be
effective.
After an amendment or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of
each Note affected thereby, with a copy to the Trustee, a
notice briefly describing the amendment or waiver. Any failure
of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of
any such amendment, waiver or consent. Except as otherwise
provided in this Section 9.02, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with
any provisions of this Indenture or the Notes.
Section 9.03. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by such
Holder and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's
Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the
consent as to his Note or portion of a Note. Such revocation
shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver
becomes effective.
After an amendment, supplement or waiver becomes
effective, it shall bind every Holder; provided that if such
amendment, supplement or waiver makes a change described in any
of clauses (A) through (G) of Section 9.02, such amendment,
supplement or waiver shall bind each Holder of a Note who has
consented to it; and provided, further, that if notice of such
amendment, supplement or waiver is reflected on a Note that
evidences the same debt as the consenting Holder's Note, such
amendment, supplement or waiver shall bind every subsequent
Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note.
Section 9.04. Record Date. The Company shall be
permitted to set a record date for purposes of determining the
identity of Holders entitled to vote or consent on any matter
arising under this Indenture. In the Company's sole
discretion, the record date shall be either (i) the record date
<PAGE>
as determined pursuant to { 316(c) of the TIA or (ii) such
other record date as the Company shall select.
Section 9.05. Notation on or Exchange of Notes. If
an amendment, supplement or waiver changes the terms of a Note,
the Trustee may (and, at the request of the Company, shall)
require the Holder of the Note to deliver it to the Trustee.
The Trustee may (and, at the request of the Company, shall)
place an appropriate notation on the Note about the changed
terms and return it to the Holder and the Trustee may (and, at
the request of the Company, shall) place an appropriate
notation on any Note thereafter authenticated. Alternatively,
if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall
authenticate a new Note that reflects the changed terms.
Section 9.06. Trustee May Sign Amendments, etc. The
Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article IX if the amendment,
supplement or waiver does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing
to sign such amendment, supplement or waiver, the Trustee shall
be entitled to receive and, subject to TIA { 315(a) through
(d), shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence
that such amendment, supplement or waiver is authorized or
permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
ARTICLE X
MISCELLANEOUS
Section 10.01. Trust Indenture Act of 1939. This
Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the
extent applicable, be governed by such provisions.
Section 10.02. Notices. Any notice or communication
shall be sufficiently given if in writing and delivered in
person or mailed by first class mail, postage prepaid,
addressed as follows:
<PAGE>
If to the Company, to:
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: General Counsel
If to the Trustee, to:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
The parties hereto by notice to the other parties may
designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed, postage prepaid,
to a Holder shall be mailed by first class mail to him at his
address as it appears on the Notes register maintained by the
Registrar and shall be sufficiently given to him if so mailed
within the time prescribed. Copies of any such communication
or notice to a Holder shall also be mailed to the Trustee.
Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with
respect to other Holders. Except for a notice to the Trustee
or the Company, which is deemed given only when received, if a
notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
Section 10.03. Communication by Holders with Other
Holders. Holders may communicate pursuant to TIA { 312(b) with
other Holders with respect to their rights under this Indenture
or the Notes. The Company, the Trustee, the Registrar and any
other person shall have the protection of TIA { 312(c).
Section 10.04. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by the
Company to the Trustee to take any action under this Indenture,
the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
<PAGE>
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
Section 10.05. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture (other than pursuant to Section 4.05(b)) shall
include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statement
or opinions contained in such certificate or opinion are
based;
(3) a brief statement that, in the opinion of such
Person, he has made such examination or investigation as
is necessary to enable him to express an opinion as to
whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
complied with; provided that with respect to matters of
fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
Section 10.06. Rules by Trustee, Paying Agent,
Registrar. The Trustee may make reasonable rules for action by
or at a meeting of Holders. The Paying Agent or Registrar may
make reasonable rules for its functions.
Section 10.07. Governing Law. The laws of the State
of New York shall govern this Indenture and the Notes without
regard to principles of conflicts of law. The Trustee, the
Company and the Holders agree to submit to the jurisdiction of
the courts of the State of New York in any action or proceeding
arising out of or relating to this Indenture or the Notes.
Section 10.08. No Interpretation of Other
Agreements. This Indenture may not be used to interpret
another indenture, loan or debt agreement of the Company or any
of its Subsidiaries. No such indenture, loan or debt agreement
may be used to interpret this Indenture.
<PAGE>
Section 10.09. No Recourse Against Others. No
director, officer, employee, stockholder or Affiliate, as such,
of the Company shall have any liability for any obligations of
the Company under the Notes or this Indenture or for any claim
based on, in respect of or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and
releases all such liability.
Section 10.10. Legal Holidays. A "Legal Holiday" is
a Saturday, Sunday or a day on which banking institutions in
New York, New York are not required to be open. If a payment
date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a
Legal Holiday and interest shall not accrue for the intervening
period.
Section 10.11. Successors. All agreements of the
Company in this Indenture and the Notes shall bind its
successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 10.12. Duplicate Originals. The parties may
sign any number of copies of this Indenture. Each signed copy
shall be an original, but all such executed copies together
represent the same agreement.
Section 10.13. Separability. In case any provision
in this Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby, and a Holder shall have no claim therefor
against any party hereto.
Section 10.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 10.15. Benefits of Indenture. Nothing in
this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their
successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first
written above.
ISP HOLDINGS INC.
By: /s/James P. Rogers
------------------------------
Name: James P. Rogers
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/Timothy J. Shea
------------------------------
Name: Timothy J. Shea
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS (A) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR"); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT
IS THREE YEARS AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE
OF THIS NOTE AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OF
THE ISSUER WAS THE OWNER OF THIS NOTE (THE "RESALE RESTRICTION
TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF
NEW YORK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, SUBJECT IN EACH OF
THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE
DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH ACCOUNT BE
AT ALL TIMES WITHIN ITS CONTROL AND TO COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS; AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE BEFORE THE RESALE
RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSES (C),
(D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
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REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE
FOREGOING RESTRICTIONS ON RESALE WILL NOT APPLY SUBSEQUENT TO
THE RESALE RESTRICTION TERMINATION DATE.
A-2
<PAGE>
No. $________
CUSIP No. 450302AC8
ISP HOLDINGS INC.
9 3/4% SENIOR NOTES DUE 2002
ISP HOLDINGS INC., a Delaware corporation (the
"Company"), promises to pay to
, or registered assigns, the principal sum of
Dollars on February 15, 2002 and to pay interest
thereon on February 15 and August 15, in each year, commencing
on February 15, 1997 (each an "Interest Payment Date"),
accruing from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, at the rate specified herein, until the principal hereof
is paid or duly provided for. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note is registered at the close of
business on the February 1 or August 1, whether or not a
Business Day, as the case may be, immediately preceding such
Interest Payment Date. Any such interest not so punctually
paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the
Notes, to the extent lawful, shall forthwith cease to be
payable to the Holder on such Interest Payment Date, and may be
paid to the Person in whose name this Note is registered at the
close of business on a special record date for the payment of
such defaulted interest to be fixed by the Trustee, notice of
which shall be given to Holders not less than 15 days prior to
such special record date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as
more fully provided in such Indenture.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
ISP HOLDINGS INC.
[Seal] By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the 9 3/4% Senior
Notes due 2002 described in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: ___________________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE SIDE INITIAL NOTE]
ISP HOLDINGS INC.
9 3/4% Senior Notes due 2002
1. Interest. ISP HOLDINGS INC., a Delaware
corporation (the "Company"), shall pay interest on overdue
principal at the rate of 9 3/4% per annum. Interest will be
computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Holder must surrender
this Note to a Paying Agent to collect principal payments. the
Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment
of public and private debts. With respect to certificated
Notes, the Company, however, may pay interest by a check
payable in such money. The Company may mail an interest check
to the Holder's registered address. If a payment date is a
Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening
period.
3. Paying Agent and Registrar. Initially, The Bank
of New York (the "Trustee") or its agent will act as Paying
Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without prior notice to any Holder.
The Company or any of its Subsidiaries or Affiliates may act in
any such capacity, except in certain circumstances.
4. Indenture. The Company issued the Notes under an
Indenture dated as of October 18, 1996 (the "Indenture")
between the Company and the Trustee. Capitalized terms used in
this Note and not defined in this Note shall have the meaning
set forth in the Indenture. The terms of the Notes include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in
effect on the date of the Indenture. The Notes are subject to
all such terms, and Holders are referred to the Indenture and
said Act for a statement of such terms.
The Notes are senior unsecured obligations of the
Company limited to the Initial Notes Amount. This Note is one
of the Initial Notes referred to in the Indenture. The Notes
include the Initial Notes and any Exchange Notes, as defined
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<PAGE>
below, issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture.
5. Redemption.
(a) Optional Redemption. In the event that on or
prior to October 15, 1999, (x) the Company consummates a sale
of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP or (z) on and after the
Determination Date, BMCA or its parent consummates sale of the
Common Stock of BMCA, the Company may, at its option, redeem,
but only to the extent of net cash proceeds therefrom actually
received by the Company, up to 50% (in the case of a redemption
under clause (x) or (y)) or 25% (in the case of a redemption
under clause (z)) of the principal amount of the Notes then
outstanding at a redemption price equal to 109.75% of the
principal amount thereof plus accrued interest thereon to the
date of redemption; provided, however, that, no such redemption
may be made if and to the extent that, after giving effect
thereto, less than 50% of the principal amount of Notes
originally issued would be outstanding. Any such redemption
shall be made within 75 days of the first consummation of any
such sale.
In the event a Change of Control occurs, the Company
may redeem all, but not less than all, of the Notes then
outstanding, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest to the
redemption date, plus the Applicable Premium. Notice of any
redemption to be made pursuant to this paragraph as a result of
the occurrence of a Change of Control must be given no later
than 10 days after the Change of Control Payment Date
applicable to the Change of Control giving rise to such
redemption, and redemption must be made within 30 days of the
date of the notice.
The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on
and after October 15, 1999, upon not less than 30 nor more than
60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the
year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
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<PAGE>
YEAR PERCENTAGE
1999 .......................... 104.8750%
2000 .......................... 102.4375%
2001 .......................... 100.0000%
(b) Mandatory Redemption. The Notes will not have
the benefit of any sinking fund.
6. Put Provisions. Upon a Change of Control, each
Holder of Notes will have the right to cause the Company to
repurchase all or any part (in integral multiples of $1,000) of
the Notes of such Holder at a repurchase price equal to 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect as set forth in the third paragraph of
Section 5(a)) plus accrued interest thereon to the date of
repurchase, as provided in, and subject to the terms of, the
Indenture.
7. Notice of Redemption. Notice of redemptions
pursuant to Section 5 will be mailed at least 30 days but not
more than 60 days before the applicable redemption date (or, if
applicable at such other time as is provided by Section 5(a))
to each Holder of Notes to be redeemed at the Holder's
registered address. If money sufficient to pay the redemption
price and accrued interest on all Notes to be redeemed on the
redemption date is deposited with the Paying Agent on the
redemption date, on and after such date interest ceases to
accrue on such Notes or portions of them. Notes in
denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000.
8. Proceeds on Disposition of Assets. Under certain
circumstances, the Company is required to apply the Net Cash
Proceeds (or a portion thereof) from Asset Sales to offer to
purchase Notes at a price equal to 100% of the principal amount
thereof plus accrued interest thereon to the date of purchase.
9. Denominations, Transfer, Exchange. The Notes are
in registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder may register the transfer or
exchange of Notes as provided in the Indenture. The Registrar
may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee
and any agent of the Company or the Trustee may treat the
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<PAGE>
Person in whose name this Note is registered with the Registrar
as the owner for all purposes.
11. Unclaimed Money. If money for the payment of
interest or principal remains unclaimed for two years, the
Trustee and the Paying Agent will pay the money back to the
Company at its written request. After such time, Holders
entitled to the money must look to the Company for payment
unless an abandoned property law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
12. Discharge Prior to Maturity. Subject to certain
conditions, if the Company deposits with the Trustee money or
U.S. Government Obligations sufficient for the payment of
principal and interest on the Notes to maturity, the Company
will be discharged (to the extent provided in the Indenture)
from the Indenture and the Notes.
13. Amendments, Supplements and Waivers. Subject to
certain exceptions requiring the consent of each Holder
affected, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and
any existing Default may be waived with the consent of the
Holders of a majority in principal amount of the then
outstanding Notes. Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for assumption of
the obligations of the Company to Holders in accordance with
the terms of the Indenture or make any change that does not
adversely affect the rights of any Holder.
14. Restrictive Covenants. The Indenture imposes
certain limitations on, among other things, the ability of the
Company to merge or consolidate with any other Person or sell,
lease or otherwise transfer all or substantially all of its
properties or assets, the ability of the Company or certain of
its Subsidiaries to make Restricted Payments and Restricted
Investments and the ability of the Company and certain of its
Subsidiaries to incur Debt, create Liens or engage in
transactions with Affiliates or issue Preferred Stock, all
subject to certain important limitations and qualifications
described in the Indenture. The Indenture allows for the
consummation of the Spin Off.
15. Successor Corporation. When a successor Person
or other entity assumes all the obligations of its predecessor
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<PAGE>
under the Notes and the Indenture, the predecessor Person will
be released from those obligations.
16. Defaults and Remedies. The Notes have the
Events of Default as set forth in Section 6.01 of the
Indenture. Subject to certain limitations in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy, insolvency
or reorganization relating to the Company, all outstanding
Notes shall become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any
trust or power. the Company must furnish quarterly compliance
certificates to the Trustee.
17. Trustee Dealings with the Company. The Trustee
under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services
for the Company or any of its Affiliates, and may otherwise
deal with the Company or any of its Affiliates, as if it were
not the Trustee.
18. No Recourse Against Others. A director,
officer, employee, stockholder or Affiliate, as such, of the
Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
19. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or
any authenticating agent.
20. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
A-9
<PAGE>
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other
identification numbers placed thereon.
22. Registration Rights. Pursuant to the
Registration Rights, attached as Schedule A to the Indenture,
the Company has certain obligations regarding an exchange offer
pursuant to which the Holder of this Note shall have the right
to exchange this Note for the Company's Series B 9 3/4% Senior
Notes due 2002 (the "Exchange Notes"), which have been
registered under the Securities Act, in like principal amount
and having identical terms as the Initial Notes (other than
certain restrictions on transfers). The Holders of the Initial
Notes shall be entitled to receive certain additional interest
payments in the event such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights. Within
five days after the occurrence of an event so resulting in such
additional interest payments, the Company shall provide the
Trustee with an Officers' Certificate describing such event and
providing the Trustee with all necessary details relating to
the payment of such interest, including, without limitation,
the interest rate, the effective date of such interest rate and
the method of calculating interest.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request
may be made to:
ISP Holdings Inc.
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: Secretary
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(insert assignee's social security or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: ___________________ Your Signature:
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee:_________________________
In connection with any transfer of any of the Notes evidenced
by this certificate occurring prior to the date that is three
years after the later of the date of original issuance of such
Notes and the last date, if any, on which such Notes were owned
by the Company or any Affiliate of the Company, the undersigned
confirms that such Notes are being transferred:
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<PAGE>
CHECK ONE BOX BELOW
(1) __ to the Company or a subsidiary thereof; or
(2) __ to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act of 1933, as
amended) in compliance with Rule 144A; or
(3) __ to an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) that has
furnished to the Trustee a signed letter containing
certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) __ outside the United States in compliance with Rule 903
or Rule 904 of Regulation S under the Securities Act
of 1933, as amended; or
(5) __ pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933, as
amended.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered Holder thereof;
provided that if box (3), (4) or (5) is checked, the Company or
the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions,
certifications and other information as the Trustee or the
Company has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act of 1933, as amended.
Signature Guarantee: Signature
___________________
Signature
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, check the appropriate box:
__ __
Section 4.19 / / Section 4.20 / /
____
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, state the principal amount:
$
Date:________________________Your Signature:
(Sign exactly as your name appears
on the other side of the Note)
Signature Guarantee:
(Signature must be guaranteed)
A-13
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
No. $________
CUSIP No.
ISP HOLDINGS INC.
SERIES B 9 3/4% SENIOR NOTES DUE 2002
ISP HOLDINGS INC., a Delaware corporation (the
"Company"), promises to pay to
, or registered assigns, the principal sum of
Dollars on February 15, 2002 and to pay interest
thereon on February 15 and August 15, in each year, commencing
on February 15, 1997 (each an "Interest Payment Date"),
accruing from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, at the rate specified herein, until the principal hereof
is paid or duly provided for. Interest shall be computed on
the basis of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, be paid to the
Person in whose name this Note is registered at the close of
business on the February 1 or August 1, whether or not a
Business Day, as the case may be, immediately preceding such
Interest Payment Date. Any such interest not so punctually
paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the
Notes, to the extent lawful, shall forthwith cease to be
payable to the Holder on such Interest Payment Date, and may be
paid to the Person in whose name this Note is registered at the
close of business on a special record date for the payment of
such defaulted interest to be fixed by the Trustee, notice of
which shall be given to Holders not less than 15 days prior to
such special record date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and
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<PAGE>
upon such notice as may be required by such exchange, all as
more fully provided in such Indenture.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note
to be signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
ISP HOLDINGS INC.
[Seal] By: ____________________________
Name:
Title:
By: __________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication
This is one of the Series B 9 3/4%
Notes due 2002 described in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: ___________________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE SIDE EXCHANGE NOTE]
ISP HOLDINGS INC.
Series B 9 3/4% Notes due 2002
1. Interest. ISP HOLDINGS INC., a Delaware
corporation (the "Company"), shall pay interest on overdue
principal at the rate of 9 3/4% per annum. Interest will be
computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Holder must surrender
this Note to a Paying Agent to collect principal payments. the
Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment
of public and private debts. With respect to certificated
Notes, the Company, however, may pay interest by a check
payable in such money. The Company may mail an interest check
to the Holder's registered address. If a payment date is a
Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening
period.
3. Paying Agent and Registrar. Initially, The Bank
of New York (the "Trustee") or its agent will act as Paying
Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without prior notice to any Holder.
The Company or any of its Subsidiaries or Affiliates may act in
any such capacity, except in certain circumstances.
4. Indenture. The Company issued the Notes under
an Indenture dated as of October 18, 1996 (the "Indenture")
between the Company and the Trustee. Capitalized terms used in
this Note and not defined in this Note shall have the meaning
set forth in the Indenture. The terms of the Notes include
those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in
effect on the date of the Indenture. The Notes are subject to
all such terms, and Holders are referred to the Indenture and
said Act for a statement of such terms.
The Notes are senior unsecured obligations of the
Company limited to the Initial Notes Amount. This Note is one
of the Exchange Notes referred to in the Indenture. The Notes
include the Exchange Notes and any Initial Notes in exchange
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<PAGE>
for which the Exchange Notes were issued pursuant to the
Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture.
5. Redemption.
(a) Optional Redemption. In the event that on or
prior to October 15, 1999, (x) the Company consummates a sale
of its Common Stock or (y) ISP or the Company consummates a
sale of the Common Stock of ISP or (z) on and after the
Determination Date, BMCA or its parent consummates sale of the
Common Stock of BMCA, the Company may, at its option, redeem,
but only to the extent of net cash proceeds therefrom actually
received by the Company, up to 50% (in the case of a redemption
under clause (x) or (y)) or 25% (in the case of a redemption
under clause (z)) of the principal amount of the Notes then
outstanding at a redemption price equal to 109.75 % of the
principal amount thereof plus accrued interest thereon to the
date of redemption; provided, however, that, no such redemption
may be made if and to the extent that, after giving effect
thereto, less than 50% of the principal amount of Notes
originally issued would be outstanding. Any such redemption
shall be made within 75 days of the first consummation of any
such sale.
In the event a Change of Control occurs, the Company
may redeem all, but not less than all, of the Notes then
outstanding, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest to the
redemption date, plus the Applicable Premium. Notice of any
redemption to be made pursuant to this paragraph as a result of
the occurrence of a Change of Control must be given no later
than 10 days after the Change of Control Payment Date
applicable to the Change of Control giving rise to such
redemption, and redemption must be made within 30 days of the
date of the notice.
The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on
and after October 15, 1999, upon not less than 30 nor more than
60 days' notice, at the following redemption prices (expressed
as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 15 of the
year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption:
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<PAGE>
YEAR PERCENTAGE
1999 .......................... 104.8750%
2000 .......................... 102.4375%
2001 .......................... 100.0000%
(b) Mandatory Redemption. The Notes will not have
the benefit of any sinking fund.
6. Put Provisions. Upon a Change of Control, each
Holder of Notes will have the right to cause the Company to
repurchase all or any part (in integral multiples of $1,000) of
the Notes of such Holder at a repurchase price equal to 101% of
the principal amount thereof (or, if lower, the redemption
price then in effect as set forth in the third paragraph of
Section 5(a)) plus accrued interest thereon to the date of
repurchase, as provided in, and subject to the terms of, the
Indenture.
7. Notice of Redemption. Notice of redemptions
pursuant to Section 5 will be mailed at least 30 days but not
more than 60 days before the applicable redemption date (or, if
applicable at such other time as is provided by Section 5(a))
to each Holder of Notes to be redeemed at the Holder's
registered address. If money sufficient to pay the redemption
price and accrued interest on all Notes to be redeemed on the
redemption date is deposited with the Paying Agent on the
redemption date, on and after such date interest ceases to
accrue on such Notes or portions of them. Notes in
denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000.
8. Proceeds on Disposition of Assets. Under
certain circumstances, the Company is required to apply the Net
Cash Proceeds (or a portion thereof) from Asset Sales to offer
to purchase Notes at a price equal to 100% of the principal
amount thereof plus accrued interest thereon to the date of
purchase.
9. Denominations, Transfer, Exchange. The Notes
are in registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder may register the transfer or
exchange of Notes as provided in the Indenture. The Registrar
may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
10. Persons Deemed Owners. The Company, the Trustee
and any agent of the Company or the Trustee may treat the
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<PAGE>
Person in whose name this Note is registered with the Registrar
as the owner for all purposes.
11. Unclaimed Money. If money for the payment of
interest or principal remains unclaimed for two years, the
Trustee and the Paying Agent will pay the money back to the
Company at its written request. After such time, Holders
entitled to the money must look to the Company for payment
unless an abandoned property law designates another Person, and
all liability of the Trustee and such Paying Agent with respect
to such money shall cease.
12. Discharge Prior to Maturity. Subject to certain
conditions, if the Company deposits with the Trustee money or
U.S. Government Obligations sufficient for the payment of
principal and interest on the Notes to maturity, the Company
will be discharged (to the extent provided in the Indenture)
from the Indenture and the Notes.
13. Amendments, Supplements and Waivers. Subject to
certain exceptions requiring the consent of each Holder
affected, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes, and
any existing Default may be waived with the consent of the
Holders of a majority in principal amount of the then
outstanding Notes. Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the
Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for assumption of
the obligations of the Company to Holders in accordance with
the terms of the Indenture or make any change that does not
adversely affect the rights of any Holder.
14. Restrictive Covenants. The Indenture imposes
certain limitations on, among other things, the ability of the
Company to merge or consolidate with any other Person or sell,
lease or otherwise transfer all or substantially all of its
properties or assets, the ability of the Company or certain of
its Subsidiaries to make Restricted Payments and Restricted
Investments and the ability of the Company and certain of its
Subsidiaries to incur Debt, create Liens or engage in
transactions with Affiliates or issue Preferred Stock, all
subject to certain important limitations and qualifications
described in the Indenture. The Indenture allows for the
consummation of the Spin Off.
15. Successor Corporation. When a successor Person
or other entity assumes all the obligations of its predecessor
B-7
<PAGE>
under the Notes and the Indenture, the predecessor Person will
be released from those obligations.
16. Defaults and Remedies. The Notes have the
Events of Default as set forth in Section 6.01 of the
Indenture. Subject to certain limitations in the Indenture, if
an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy, insolvency
or reorganization relating to the Company, all outstanding
Notes shall become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any
trust or power. the Company must furnish quarterly compliance
certificates to the Trustee.
17. Trustee Dealings with the Company. The Trustee
under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services
for the Company or any of its Affiliates, and may otherwise
deal with the Company or any of its Affiliates, as if it were
not the Trustee.
18. No Recourse Against Others. A director,
officer, employee, stockholder or Affiliate, as such, of the
Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
19. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or
any authenticating agent.
20. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
B-8
<PAGE>
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request
may be made to:
ISP Holdings Inc.
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07470
Attention: Secretary
B-9
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(insert assignee's social security or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: ___________________ Your Signature:
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee:_________________________
B-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, check the appropriate box:
__ __
Section 4.19 / / Section 4.20 / /
____
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.19 or 4.20 of
the Indenture, state the principal amount:
$
Date:________________________Your Signature:
(Sign exactly as your name appears
on the other side of the Note)
Signature Guarantee:
(Signature must be guaranteed)
B-11
<PAGE>
EXHIBIT C
[FORM OF LEGEND FOR BOOK-ENTRY SECURITIES]
Any Global Note authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other
legends required in the case of a Restricted Security) in
substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF
THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
C-1
<PAGE>
Schedule A
to Indenture
ISP HOLDINGS INC.
9 3/4% Senior Notes Due 2002
REGISTRATION RIGHTS
October 18, 1996
ISP Holdings Inc., a Delaware corporation (the
"Company"), hereby agrees for the benefit of the holders (the
"Holders") of its 9 3/4% Senior Notes due 2002 (the "Notes") as
follows:
1. Registered Exchange Offer. The Company shall
prepare and, not later than the date (the "Filing Deadline")
which is 60 days after the date of expiration (the "Expiration
Date") of the offer to exchange pursuant to which the Notes are
being issued, file with the Securities and Exchange Commission
(the "Commission") a registration statement (the "Exchange
Offer Registration Statement") on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to a proposed offer (the "Registered Exchange Offer")
to the Holders of the Notes to issue and deliver to such
Holders, in exchange for the Notes, a like principal amount of
debt securities of the Company identical in all material
respects to the Notes (the "Exchange Notes"), except for the
transfer restrictions relating to the Notes. The Company shall
use its best efforts to cause such Exchange Offer Registration
Statement to become effective under the Securities Act within
120 days after the Expiration Date. Following the declaration
of the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered
Exchange Offer to enable each Holder of the Notes electing to
exchange the Notes for Exchange Notes and (assuming that such
Holder is not an affiliate of the Company within the meaning of
the Securities Act, acquires the Exchange Notes in the ordinary
course of such Holder's business and has no arrangements with
any person to participate in the distribution of the Exchange
Notes) to trade such Exchange Notes from and after their
receipt without any limitations or restrictions under the
Securities Act and the securities laws of the several states of
the United States. In connection with such Registered Exchange
Offer, the Company shall take such further action, including,
without limitation, appropriate filings under state securities
laws, as may be necessary to realize the foregoing objective
subject to the proviso of Section 3(h).
<PAGE>
The Company shall include within the prospectus
contained in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution", which shall contain a
summary statement of the positions taken or policies made by
the staff of the Commission with respect to the potential
"underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
Exchange Notes received by such broker-dealer in the Registered
Exchange Offer (a "Participating Broker-Dealer"), whether such
positions or policies have been publicly disseminated by the
staff of the Commission or such positions or policies represent
the prevailing views of the staff of the Commission. Such
"Plan of Distribution" section shall also allow the use of the
prospectus by all persons subject to the prospectus delivery
requirements of the Securities Act, including Participating
Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange
Notes.
The Company shall use its best efforts to keep the
Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein, in order to
permit such prospectus to be lawfully delivered by all persons
subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange
Notes; provided that such period shall not exceed 180 days (or
such longer period if extended pursuant to Section 3(j) below).
In connection with the Registered Exchange Offer, the
Company shall:
(a) mail to each Holder a copy of the prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(b) keep the Registered Exchange Offer open for not
less than 20 business days after the date notice thereof
is mailed to the Holders (or longer if required by
applicable law);
(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough
of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the
last business day on which the Registered Exchange Offer
shall remain open; and
(e) otherwise comply in all respects with all
applicable laws.
<PAGE>
As soon as practicable after the close of the
Registered Exchange Offer the Company shall:
(i) accept for exchange all the Notes tendered and
not validly withdrawn pursuant to the Registered Exchange
Offer;
(ii) deliver to The Bank of New York, as trustee (the
"Trustee") for cancellation all the Notes so accepted for
exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder, Exchange Notes equal in principal
amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes may be issued under (i) the
Indenture (the "Indenture"), dated as of October 18, 1996,
between the Company and the Trustee or (ii) an indenture
substantially similar to the Indenture, which in either event
will provide that the Exchange Notes will not be subject to the
transfer restrictions set forth in the Indenture and that the
Exchange Notes and the Notes will vote and consent together on
all matters as one class and that none of the Exchange Notes or
the Notes will have the right to vote or consent as a separate
class on any matter.
2. Shelf Registration. If, (i) because of any
change in law or in currently prevailing interpretations of the
staff of the Commission, the Company is not permitted to effect
a Registered Exchange Offer, as contemplated by Section 1
hereof, (ii) the Registered Exchange Offer is not completed
within 180 days of the Issue Date (the "Completion Deadline")
or (iii) any Holder is not eligible to participate in the
Registered Exchange Offer or, in the case of any Holder that
participates in the Registered Exchange Offer, such Holder does
not receive freely tradeable Exchange Notes on the date of the
exchange, the Company shall take the following actions:
(a) The Company shall as promptly as reasonably
practicable file with the Commission and thereafter shall
use its best efforts to cause to be declared effective a
registration statement (the "Shelf Registration Statement"
and, together with the Exchange Offer Registration
Statement, "Registration Statements" and each a
"Registration Statement") on an appropriate form under the
Securities Act relating to the offer and sale of the Notes
by the Holders thereof from time to time in accordance
with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities
Act (hereafter, the "Shelf Registration").
(b) The Company shall use its best efforts to keep
the Shelf Registration Statement continuously effective in
<PAGE>
order to permit the prospectus included therein to be
lawfully delivered by the Holders of the Notes for a
period of three years (or for such longer period if
extended pursuant to Section 3(j) below) from the date of
original issuance of the Notes or such shorter period that
will terminate when all the Notes covered by the Shelf
Registration Statement have been sold pursuant thereto;
provided that the Company shall be deemed not to have used
its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily
takes any action that would result in Holders of the Notes
covered thereby not being able to offer and sell the Notes
during that period, unless such action is required by
applicable law.
(c) Notwithstanding any other provisions hereof to
the contrary, the Company shall cause the Shelf
Registration Statement and the related prospectus and any
amendment or supplement thereto, as of the effective date
of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
3. Registration Procedures. In connection with any
Shelf Registration contemplated by Section 2 hereof and, to the
extent applicable, any Registered Exchange Offer contemplated
by Section 1 hereof, the following provisions shall apply:
(a) The Company shall furnish to the Dealer Manager
(the "Dealer Manager") of the exchange offer under which
the Notes where issued, prior to the filing thereof with
the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the
prospectus included therein and shall obtain the consent
of the Dealer Manager to any such filing, which shall not
be unreasonably withheld.
(b) The Company shall give written notice to the
Holders of the Notes and any Participating Broker-Dealer
from whom the Company has received prior written notice
that it will be a Participating Broker-Dealer in the
Registered Exchange Offer:
(i) when the Registration Statement or any
amendment thereto has been filed with the Commission
and when the Registration Statement or any post-
effective amendment thereto has become effective;
<PAGE>
(ii) of any request by the Commission for
amendments or supplements to the Registration
Statement or the prospectus included therein or for
additional information, provided that the contents
need only be disclosed to one counsel appointed by
and on behalf of the Holders of the Notes as
described in Section 4;
(iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company or its legal
counsel of any notification with respect to the
suspension of the qualification of the Notes for sale
in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires
the Company to make changes in the Registration
Statement or the prospectus in order to make the
statements therein not misleading (which notice shall
be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have
been made).
(c) The Company shall use its best efforts to
prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement
at the earliest possible time.
(d) The Company shall furnish to each Holder of the
Notes included within the coverage of the Shelf
Registration, without charge, at least one copy of the
Registration Statement and any post-effective amendment
thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits
(including those, if any, incorporated by reference).
(e) The Company shall deliver to any Holder who so
requests, without charge, at least one copy of the
Exchange Offer Registration Statement and any post-
effective amendment thereto, including financial
statements and schedules, and, if any such Holder
requests, all exhibits (including those incorporated by
reference).
(f) The Company shall deliver to each Holder of the
Notes included within the coverage of the Shelf
Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus)
included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may
<PAGE>
reasonably request. The Company consents, subject to the
provisions hereof, to the use of the prospectus or any
amendment or supplement thereto by each of the selling
Holders of the Notes in connection with the offering and
sale of the Notes covered by the prospectus, or any
amendment or supplement thereto, included in the Shelf
Registration Statement.
(g) The Company shall deliver to any Participating
Broker-Dealer and such other persons required to deliver a
prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and
any amendment or supplement thereto as such persons may
reasonably request. The Company consents, subject to the
provisions hereof, to the use of the prospectus or any
amendment or supplement thereto by, if necessary, any
Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered
Exchange Offer in connection with the offering and sale of
the Exchange Notes covered by the prospectus, or any
amendment or supplement thereto, included in such Exchange
Offer Registration Statement.
(h) Prior to any public offering of the Notes,
pursuant to the Shelf Registration, the Company shall
register or qualify or cooperate with the Holders of the
Notes included therein and their respective counsel in
connection with the registration or qualification of the
Notes for offer and sale under the securities or blue sky
laws of such jurisdictions as any Holder of the Notes
reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Notes covered by the
Shelf Registration; provided that the Company shall not be
required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or
(ii) take any action which would subject it to general
service of process or to taxation in any jurisdiction
where it is not then so subject.
(i) The Company shall cooperate with the Holders of
the Notes to facilitate the timely preparation and
delivery of certificates representing the Notes to be sold
in the Shelf Registration free of any restrictive legends
and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior
to sales of the Notes pursuant to the Shelf Registration.
(j) Upon the occurrence of any event contemplated by
Section 3(b)(v) above, the Company shall promptly prepare
a post-effective amendment to the Registration Statement
or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered
<PAGE>
to Holders of the Notes or the Exchange Notes, the
prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading.
If the Company notifies the Holders of the Notes and any
known Participating Broker-Dealer in accordance with
Section 3(b)(v) above to suspend the use of the prospectus
until the requisite changes to the prospectus have been
made, then the Holders of the Notes and any such
Participating Broker-Dealers shall suspend use of such
prospectus, and the period of effectiveness of the Shelf
Registration Statement provided for in Section 2(b) above
and the Exchange Offer Registration Statement provided for
in Section 1 above shall each be extended by the number of
days from and including the date of the giving of such
notice to and including the date when the Holders of the
Notes and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant
to this Section 3(j).
(k) Not later than the effective date of the
applicable Registration Statement, the Company will
provide a CUSIP number for the Notes or Exchange Notes, as
the case may be, and provide the applicable trustee with
printed certificates for the Notes or Exchange Notes, as
the case may be, in a form eligible for deposit with The
Depository Trust Company.
(l) The Company will comply with all rules and
regulations of the Commission to the extent and so long as
they are applicable to the Registered Exchange Offer or
the Shelf Registration and will make generally available
to its securities holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after
the end of a 12-month period (or 90 days, if such period
is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the
effective date of the Shelf Registration, which statement
shall cover such 12-month period.
(m) The Company shall cause the Indenture (or an
indenture substantially identical to the Indenture in the
case of a Registered Exchange Offer) to be qualified under
the Trust Indenture Act of 1939, as amended.
(n) The Company may require each Holder of the Notes
to be sold pursuant to the Shelf Registration Statement to
furnish to the Company such information regarding the
Holder and the distribution of the Notes as the Company
may from time to time reasonably require for inclusion in
the Shelf Registration Statement.
<PAGE>
(o) The Company shall enter into such customary
agreements (including if requested an underwriting
agreement in customary form) and take all such other
action, if any, as any Holder of the Notes shall
reasonably request in order to facilitate the disposition
of the Notes pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the
Company shall (i) make reasonably available for inspection
by the Holders of the Notes, any underwriter participating
in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent
retained by the Holders of the Notes or any such
underwriter all relevant financial and other records,
pertinent corporate documents and properties of the
Company and (ii) cause the Company's officers, directors
and employees to supply all relevant information
reasonably requested by the Holders of the Notes or any
such underwriter, attorney, accountant or agent in
connection with the Shelf Registration Statement; provided
that the foregoing inspection and information gathering
shall be coordinated on behalf of the parties, by one
counsel designated by and on behalf of such parties as
described in Section 4.
(q) In the case of the Registered Exchange Offer,
the Company shall (i) make reasonably available for
inspection by any known Participating Broker-Dealer and
any attorney, accountant or other agent retained by such
Participating Broker-Dealer all relevant financial and
other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's
officers, directors and employees to supply all relevant
information reasonably requested by such Participating
Broker-Dealer or any such attorney, accountant or agent in
connection with the Exchange Offer Registration Statement;
provided that the foregoing inspection and information
gathering shall be coordinated on behalf of the parties,
by one counsel designated by and on behalf of such parties
as described in Section 4.
(r) In the case of any Shelf Registration, the
Company, if requested by any Holder of the Notes, shall
cause its counsel to deliver an opinion relating to the
Notes in customary form, cause its officers to execute and
deliver all customary documents and certificates requested
by any underwriters of the Notes and cause its independent
public accountants to provide to the selling Holders of
the Notes and any underwriter therefor a comfort letter in
customary form.
(s) In the case of the Registered Exchange Offer, if
requested by any known Participating Broker-Dealer, the
Company shall cause its outside counsel to deliver to such
<PAGE>
Participating Broker-Dealer a signed opinion in customary
form in connection with the preparation of a Registration
Statement and shall cause its independent public
accountants to deliver to such Participating Broker-Dealer
a comfort letter in customary form.
4. Registration Expenses. The Company shall bear
all expenses incurred in connection with the performance of its
obligations under Sections 1 through 3 hereof (including the
reasonable fees and expenses of Cahill Gordon & Reindel,
counsel to the Dealer Manager, incurred in connection with the
Registered Exchange Offer) and, in the event of a Shelf
Registration, shall bear or reimburse the Holders of the Notes
for the reasonable fees and disbursements of one firm of
counsel designated by the Holders of a majority in principal
amount of the Notes to act as counsel for the Holders of the
Notes in connection therewith, which counsel shall be
reasonably satisfactory to the Company.
5. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Holder of the Notes and each
person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act and each director, officer, employee or agent of such
Holder and each director, officer, employee or agent of each
such controlling person (each Holder, such controlling persons
and each such director, officer, employee and agent are
referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including, but not
limited to, any losses, claims, damages, liabilities or actions
relating to purchases and sales of the Notes), to which each
Indemnified Party may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or prospectus or in
any amendment or supplement thereto, or arise out of, or are
based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall
reimburse, as incurred, the Indemnified Parties for any legal
or other expenses reasonably incurred by them in connection
with investigating or defending or preparing to defend against
or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action in respect
thereof; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in a Registration Statement or prospectus or in
any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration in reliance upon
and in conformity with written information furnished to the
<PAGE>
Company by or on behalf of such Holder specifically for
inclusion therein; provided, further, that (A) the Company
shall not be obligated to indemnify or hold harmless any
Indemnified Party in respect of any loss, claim, damage,
liability or action to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in a preliminary Registration Statement
or preliminary prospectus if the applicable Holder failed to
deliver a copy of a final prospectus or an amended or
supplemented Registration Statement or prospectus that was made
available by the Company to such Indemnified Party prior to the
applicable sale to the person or persons asserting the claim
which is the basis of indemnification and such final prospectus
or amended or supplemented Registration Statement or prospectus
cured such defect and (B) this indemnity agreement will be in
addition to any liability which the Company may otherwise have
to such Indemnified Party. The Company will not settle or
compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder
(whether or not such Indemnified Party or any person who
controls such Indemnified Party within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding) without the
prior written consent of such Indemnified Party, which consent
shall not be unreasonably withheld, unless such settlement,
compromise or consent includes an unconditional release of such
Indemnified Party and each such controlling person from all
liability arising out of such claim, action, suit or
proceeding. No Indemnified Party will settle or compromise or
consent to the entry or any judgment in any pending or
threatened claim, action, suit or proceeding in respect of
which indemnification may be sought without the prior written
consent of the Company (which consent will not be unreasonably
withheld). The Company shall also indemnify underwriters,
selling brokers, dealer managers and similar securities
industry professionals participating in the distribution (as
described in such Registration Statement), their officers and
directors and each person who controls such persons (within the
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of the Notes if
requested by such Holders.
(b) The Company agrees to indemnify and hold
harmless any Participating Broker-Dealer and each person, if
any, who controls such Participating Broker-Dealer within the
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each director, officer, employee or agent
of such Participating Broker-Dealer and each director, officer,
employee or agent of each such controlling person (any
Participating Broker-Dealer, such controlling persons and each
such director, officer, employee and agent of such
<PAGE>
Participating Broker-Dealer or such controlling person are
referred to collectively as the "Exchange Offer Indemnified
Parties") from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect
thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales
of Exchange Notes), to which each Exchange Offer Indemnified
Party may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Exchange Offer Registration Statement or
prospectus contained therein or in any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Exchange
Offer Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending or preparing to defend against or appearing as a
third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof; provided,
however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Exchange
Offer Registration Statement or prospectus contained therein or
in any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by
or on behalf of such Participating Broker-Dealer specifically
for inclusion therein; provided, further, that (A) the Company
shall not be obligated to indemnify or hold harmless any
Exchange Offer Indemnified Party in respect of any loss, claim,
damage, liability or action to the extent that any such loss,
claim, damages, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission made in a preliminary Registration
Statement or preliminary prospectus if the applicable
Participating Broker-Dealer failed to deliver a copy of, a
final prospectus or an amended or supplemented Registration
Statement or prospectus that was made available by the Company
to such Exchange Offer Indemnified Party prior to the
applicable sale to the person or persons asserting the claim
which is the basis of indemnification and such final prospectus
or amended or supplemented Registration Statement or prospectus
cured such defect and (B) this indemnity agreement will be in
addition to any liability which the Company may otherwise have
to such Exchange Offer Indemnified Party. The Company will not
settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder
(whether or not such Exchange Offer Indemnified Party or any
person who controls such Exchange Offer Indemnified Party
within the meaning of Section 15 of the Securities Act or
<PAGE>
Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) without the prior written consent
of such Exchange Offer Indemnified Party, which consent shall
not be unreasonably withheld, unless such settlement,
compromise or consent includes an unconditional release of such
Exchange Offer Indemnified Party and each such controlling
person from all liability arising out of such claim, action,
suit or proceeding. No Exchange Offer Indemnified Party will
settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought without the
prior written consent of the Company (which will not be
unreasonably withheld).
(c) Each Holder of the Notes, severally and not
jointly, will indemnify and hold harmless the Company, each
director and officer of the Company and each person, if any,
who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act from and
against any losses, claims, damages or liabilities or any
actions in respect thereof, to which the Company or any such
director, officer or controlling person may become subject
under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a Registration
Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to
make the statements therein not misleading, but in each case
only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to
the Company by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth
immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such director,
officer or controlling person in connection with the
investigating or defending or preparing to defend against or
appearing as a third-party witness in connection with any loss,
claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which
such Holder may otherwise have to the Company or any of its
directors, officers or controlling persons.
(d) Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any
action or proceeding (including a governmental investigation),
such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party (i) will not
<PAGE>
relieve it from any liability under paragraph (a), (b) or (c)
above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the
indemnifying party of substantial rights or defenses and
(ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b) or
(c) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there
may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying
party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, which
approval shall not be unreasonably withheld, the indemnifying
party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that in connection with
such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the
same general allegations or circumstances) or (ii) the
indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party.
(e) In circumstances in which the indemnity
agreement provided for in the preceding paragraphs of this
Section 5 is unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) (other than by
reason of exceptions provided in such Section 5), each
indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof), in such
<PAGE>
proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the
one hand and the indemnified party on the other from the
offering of the Notes or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the
statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault of the parties
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company on the one
hand or such Holder or such other indemnified person, as the
case may be, on the other, the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company
and each indemnified party agrees that it would not be
equitable if the amount of such contribution were determined by
pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to in the first sentence of this
paragraph (e). Notwithstanding any other provision of this
Section 5(e), the Holders of the Notes shall not be required to
contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Notes
pursuant to a Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay
in respect of the same or a similar claim, and no person guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (e), each
director, officer, employee and agent of any indemnified party
and each person, if any, who controls such indemnified party
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to
contribution as such indemnified party and each director and
officer of the Company, and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company.
(f) The agreements contained in this Section 5 shall
survive the sale of the Notes and the Exchange Notes pursuant
to a Registration Statement and shall remain in full force and
effect, regardless of any termination or cancellation of the
Indenture or any investigation made by or on behalf of any
indemnified party.
<PAGE>
6. Additional Interest Under Certain Circumstances.
(a) Additional interest at a rate of 0.5% per annum of the
principal amount of the Notes (the "Additional Interest") shall
be assessed as follows:
(i) if the Exchange Offer Registration Statement is
not filed with the Commission by the Filing Deadline,
then, commencing on the Filing Deadline, Additional
Interest shall be assessed on the Notes;
(ii) if the Registered Exchange Offer is not
completed or a Shelf Registration is not declared
effective by the Commission by the Completion Deadline,
then, commencing on the Completion Deadline, Additional
Interest shall be assessed on the Notes; and
(iii) if (A) the Company has not exchanged Exchange
Notes for all the Notes validly tendered in accordance
with the terms of the Registered Exchange Offer on or
prior to 30 business days after the date on which the
Exchange Offer Registration Statement was declared
effective, or (B) if applicable, the Shelf Registration
Statement has been declared effective and it ceases to be
effective prior to three years (or such later date if such
three-year period is extended pursuant to Section 3(j)
above or such shorter period as is provided in
Section 2(b)) from the Expiration Date, then Additional
Interest shall be assessed on the Notes commencing on
(x) the 31st business day after such effective date in the
case of (A) above, or (y) the day such Shelf Registration
Statement ceases to be effective in the case of (B) above;
provided, however, that (1) upon the filing of the Exchange
Offer Registration Statement or the Completion Deadline in the
case of (i) above, (2) upon completion of the Registered
Exchange Offer or the effectiveness of the Shelf Registration
Statement in the case of (ii) above, or (3) upon the exchange
of Exchange Notes for all the Notes validly tendered in
accordance with the terms of the Registered Exchange Offer, or
upon the effectiveness of the Shelf Registration Statement
which has ceased to remain effective prior to three years (or
such later date if extended pursuant to Section 3(j) above or
such shorter period as is provided in Section 2(b)) from the
date of original issuance of the Notes in the case of (iii)
above, Additional Interest on the Notes as a result of such
clause (i), (ii) or (iii) shall immediately cease to accrue.
(b) Any amount of Additional Interest due pursuant
to clauses (i), (ii) or (iii) of Section 6(a) above will be
payable in cash semiannually in arrears on each Interest
Payment Date (as defined in the Notes), commencing with the
first such Interest Payment Date occurring after any such
Additional Interest commences to accrue. The amount of
Additional Interest will be determined by multiplying the
<PAGE>
Additional Interest by a fraction, the numerator of which is
the number of days such Additional Interest rate was applicable
during such period determined on the basis of a 360-day year
comprised of twelve 30-day months, and the denominator of which
is 360.
(c) If the Company effects the Registered Exchange
Offer, the Company will be entitled to close the Registered
Exchange Offer provided that the Company has accepted all the
Notes theretofore validly tendered in accordance with the terms
of the Registered Exchange Offer.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions hereof
may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given, except by the Company and the written consent of Holders
of a majority in aggregate principal amount of the Notes,
determined in accordance with the terms of the Indenture.
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand delivery, first-class mail, telex, telecopy, or air
courier which guarantees overnight delivery:
(1) if to a Holder of the Notes, in accordance with
Section 10.02 of the Indenture;
(2) if to the Company, at its address as follows:
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07970
Attention: General Counsel
All such notices and communications to the Company
shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by
recipient's telecopy operator, if telecopied; and on the day
delivered, if sent by overnight air courier guaranteeing next
day delivery. All such notices and communications to the
Holders shall be deemed to have been duly given if given as
provided in Section 10.02 of the Indenture.
(c) Successors and Assigns. The provisions hereof
shall be binding upon the Company and its successors and
assigns.
(d) Headings. The headings herein are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
<PAGE>
(e) Severability. If any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
<PAGE>
EXHIBIT 4.4
ISP HOLDINGS INC.
9% Senior Notes due 2003
REGISTRATION RIGHTS AGREEMENT
October 18, 1996
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
ISP Holdings Inc., a Delaware corporation (the "Com-
pany"), proposes to issue and sell to you (the "Initial Pur-
chaser") upon the terms set forth in a purchase agreement dated
October 15, 1996 (the "Purchase Agreement"), $325,000,000
aggregate principal amount at maturity of its 9% Senior Notes
due 2003 (the "Notes"). The Notes will be issued pursuant to
an indenture (the "Indenture") dated the date hereof between
the Company and The Bank of New York, as trustee (the "Trus-
tee"). As an inducement to the Initial Purchaser, the Company
agrees with the Purchaser, for the benefit of the holders (the
"Holders") of the Notes, including, without limitation, the
Initial Purchaser, as follows:
1. Registered Exchange Offer. The Company shall
prepare and, not later than the date (the "Filing Deadline")
which is 60 days after the date of original issuance of the
Notes (the "Issue Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the
"Exchange Offer Registration Statement") on an appropriate form
under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered
Exchange Offer") to the Holders of the Notes to issue and
deliver to such Holders, in exchange for the Notes, a like
principal amount of debt securities of the Company identical in
all material respects to the Notes (the "Exchange Notes"),
except for the transfer restrictions relating to the Notes.
The Company shall use its best efforts to cause such Exchange
Offer Registration Statement to become effective under the
Securities Act within 120 days after the Issue Date. Following
the declaration of the effectiveness of the Exchange Offer Reg-
istration Statement, the Company shall promptly commence the
<PAGE>
Registered Exchange Offer, it being the objective of such Reg-
istered Exchange Offer to enable each Holder of the Notes
electing to exchange the Notes for Exchange Notes and (assuming
that such Holder is not an affiliate of the Company within the
meaning of the Securities Act, acquires the Exchange Notes in
the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution
of the Exchange Notes) to trade such Exchange Notes from and
after their receipt without any limitations or restrictions
under the Securities Act and the securities laws of the several
states of the United States. In connection with such Regis-
tered Exchange Offer, the Company shall take such further
action, including, without limitation, appropriate filings
under state securities laws, as may be necessary to realize the
foregoing objective subject to the proviso of Section 3(h).
The Company shall include within the prospectus con-
tained in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution", which shall contain a summary
statement of the positions taken or policies made by the staff
of the Commission with respect to the potential "underwriter"
status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of Exchange Notes
received by such broker-dealer in the Registered Exchange Offer
(a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the
Commission or such positions or policies represent the prevail-
ing views of the staff of the Commission. Such "Plan of Dis-
tribution" section shall also allow the use of the prospectus
by all persons subject to the prospectus delivery requirements
of the Securities Act, including Participating Broker-Dealers,
and include a statement describing the means by which Partici-
pating Broker-Dealers may resell the Exchange Notes.
The Company shall use its best efforts to keep the
Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein, in order to
permit such prospectus to be lawfully delivered by all persons
subject to the prospectus delivery requirements of the Securi-
ties Act for such period of time as such persons must comply
with such requirements in order to resell the Exchange Notes;
provided that such period shall not exceed 180 days (or such
longer period if extended pursuant to Section 3(j) below).
If, upon consummation of the Exchange Offer, the Ini-
tial Purchaser holds Notes acquired by it as part of its ini-
tial distribution, the Company upon the request of the Initial
Purchaser shall simultaneously with the delivery of the
Exchange Notes pursuant to the Registered Exchange Offer issue
and deliver to the Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by the Initial Purchaser, a like
<PAGE>
principal amount of debt securities of the Company identical in
all material respects to the Notes (the "Private Exchange
Notes"). The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
In connection with the Registered Exchange Offer, the
Company shall:
(a) mail to each Holder a copy of the prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(b) keep the Registered Exchange Offer open for not
less than 20 business days after the date notice thereof
is mailed to the Holders (or longer if required by appli-
cable law);
(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough
of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the
last business day on which the Registered Exchange Offer
shall remain open; and
(e) otherwise comply in all respects with all appli-
cable laws.
As soon as practicable after the close of the Regis-
tered Exchange Offer the Company shall:
(i) accept for exchange all the Notes tendered and
not validly withdrawn pursuant to the Registered Exchange
Offer;
(ii) deliver to The Bank of New York, as trustee (the
"Trustee") for cancellation all the Notes so accepted for
exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder, Exchange Notes equal in principal
amount to the Notes of such Holder so accepted for
exchange.
The Exchange Notes and the Private Exchange Notes may
be issued under (i) the Indenture (the "Indenture"), dated as
of October 18, 1996, between the Company and the Trustee or
(ii) an indenture substantially similar to the Indenture, which
in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the
<PAGE>
Indenture and that the Exchange Notes, the Private Exchange
Notes and the Notes will vote and consent together on all mat-
ters as one class and that none of the Exchange Notes, the Pri-
vate Exchange Notes or the Notes will have the right to vote or
consent as a separate class on any matter.
2. Shelf Registration. If, (i) because of any
change in law or in currently prevailing interpretations of the
staff of the Commission, the Company is not permitted to effect
a Registered Exchange Offer, as contemplated by Section 1
hereof, (ii) the Registered Exchange Offer is not completed
within 180 days of the Issue Date (the "Completion Deadline"),
(iii) the Initial Purchaser so requests with respect to the
Notes or the Private Exchange Notes held by them following con-
summation of the Registered Exchange Offer or (iv) any Holder
is not eligible to participate in the Registered Exchange Offer
or the Private Exchange or, in the case of any Holder that par-
ticipates in the Registered Exchange Offer, such Holder does
not receive freely tradeable Exchange Notes on the date of the
exchange, the Company shall take the following actions:
(a) The Company shall as promptly as reasonably
practicable file with the Commission and thereafter shall
use its best efforts to cause to be declared effective a
registration statement (the "Shelf Registration Statement"
and, together with the Exchange Offer Registration State-
ment, "Registration Statements" and each a "Registration
Statement") on an appropriate form under the Securities
Act relating to the offer and sale of the Notes or, if
applicable, the Private Exchange Notes by the Holders
thereof from time to time in accordance with the methods
of distribution set forth in the Shelf Registration State-
ment and Rule 415 under the Securities Act (hereafter, the
"Shelf Registration").
(b) The Company shall use its best efforts to keep
the Shelf Registration Statement continuously effective in
order to permit the prospectus included therein to be law-
fully delivered by the Holders of the Notes or, if appli-
cable, the Private Exchange Notes for a period of three
years (or for such longer period if extended pursuant to
Section 3(j) below) from the Issue Date or such shorter
period that will terminate when all the Notes or, if
applicable, the Private Exchange Notes covered by the
Shelf Registration Statement have been sold pursuant
thereto; provided that the Company shall be deemed not to
have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it vol-
untarily takes any action that would result in Holders of
the Notes or, if applicable, the Private Exchange Notes
covered thereby not being able to offer and sell the Notes
<PAGE>
or, if applicable, the Private Exchange Notes during that
period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions hereof to
the contrary, the Company shall cause the Shelf Registra-
tion Statement and the related prospectus and any amend-
ment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement,
(i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regu-
lations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any
Shelf Registration contemplated by Section 2 hereof and, to the
extent applicable, any Registered Exchange Offer contemplated
by Section 1 hereof, the following provisions shall apply:
(a) The Company shall furnish to the Initial Pur-
chaser, prior to the filing thereof with the Commission, a
copy of the Registration Statement and each amendment
thereof and each supplement, if any, to the prospectus
included therein and shall obtain the consent of the Ini-
tial Purchaser to any such filing, which shall not be
unreasonably withheld.
(b) The Company shall give written notice to the
Initial Purchaser, the Holders of the Notes and any Par-
ticipating Broker-Dealer from whom the Company has
received prior written notice that it will be a Partici-
pating Broker-Dealer in the Registered Exchange Offer:
(i) when the Registration Statement or any
amendment thereto has been filed with the Commission
and when the Registration Statement or any post-
effective amendment thereto has become effective;
(ii) of any request by the Commission for amend-
ments or supplements to the Registration Statement or
the prospectus included therein or for additional
information, provided that the contents need only be
disclosed to the Initial Purchaser and one counsel
appointed by and on behalf of the Holders of the
Notes as described in Section 4;
(iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Regis-
tration Statement or the initiation of any proceed-
ings for that purpose;
<PAGE>
(iv) of the receipt by the Company or its legal
counsel of any notification with respect to the sus-
pension of the qualification of the Notes or, if
applicable, the Private Exchange Notes for sale in
any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event that requires
the Company to make changes in the Registration
Statement or the prospectus in order to make the
statements therein not misleading (which notice shall
be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have
been made).
(c) The Company shall use its best efforts to pre-
vent the issuance or obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement
at the earliest possible time.
(d) The Company shall furnish to each Holder of the
Notes or, if applicable, the Private Exchange Notes
included within the coverage of the Shelf Registration,
without charge, at least one copy of the Registration
Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits (including
those, if any, incorporated by reference).
(e) The Company shall deliver to the Initial Pur-
chaser and to any other Holder who so requests, without
charge, at least one copy of the Exchange Offer Registra-
tion Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the
Initial Purchaser or any such Holder requests, all exhib-
its (including those incorporated by reference).
(f) The Company shall deliver to the Initial Pur-
chaser and to each Holder of the Notes included within the
coverage of the Shelf Registration, without charge, as
many copies of the prospectus (including each preliminary
prospectus) included in the Shelf Registration Statement
and any amendment or supplement thereto as such person may
reasonably request. The Company consents, subject to the
provisions hereof, to the use of the prospectus or any
amendment or supplement thereto by the Initial Purchaser
and each of the selling Holders of the Notes in connection
with the offering and sale of the Notes or, if applicable,
the Private Exchange Notes covered by the prospectus, or
any amendment or supplement thereto, included in the Shelf
Registration Statement.
<PAGE>
(g) The Company shall deliver to the Initial Pur-
chaser, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the
Registered Exchange Offer, without charge, as many copies
of the final prospectus included in the Exchange Offer
Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Com-
pany consents, subject to the provisions hereof, to the
use of the prospectus or any amendment or supplement
thereto by the Initial Purchaser and, if necessary, any
Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered
Exchange Offer in connection with the offering and sale of
the Exchange Notes covered by the prospectus, or any
amendment or supplement thereto, included in such Exchange
Offer Registration Statement.
(h) Prior to any public offering of the Notes or, if
applicable, the Private Exchange Notes, pursuant to the
Shelf Registration, the Company shall register or qualify
or cooperate with the Initial Purchaser and the Holders of
the Notes or, if applicable, the Private Exchange Notes
included therein and their respective counsel in connec-
tion with the registration or qualification of the Notes
or, if applicable, the Private Exchange Notes for offer
and sale under the securities or blue sky laws of such
jurisdictions as any Holder of the Notes reasonably
requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale
in such jurisdictions of the Notes or, if applicable, the
Private Exchange Notes covered by the Shelf Registration;
provided that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action
which would subject it to general service of process or to
taxation in any jurisdiction where it is not then so
subject.
(i) The Company shall cooperate with the Holders of
the Notes or, if applicable, the Private Exchange Notes to
facilitate the timely preparation and delivery of certifi-
cates representing the Notes to be sold in the Shelf Reg-
istration free of any restrictive legends and in such
denominations and registered in such names as the Holders
may request a reasonable period of time prior to sales of
the Notes or, if applicable, the Private Exchange Notes
pursuant to the Shelf Registration.
(j) Upon the occurrence of any event contemplated by
Section 3(b)(v) above, the Company shall promptly prepare
a post-effective amendment to the Registration Statement
or a supplement to the related prospectus or file any
<PAGE>
other required document so that, as thereafter delivered
to Holders of the Notes, the Exchange Notes or, if appli-
cable, the Private Exchange Notes, the prospectus will not
contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading. If the Company notifies the
Initial Purchaser, the Holders of the Notes and any known
Participating Broker-Dealer in accordance with Section
3(b)(v) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made,
then the Initial Purchaser, the Holders of the Notes and
any such Participating Broker-Dealers shall suspend use of
such prospectus, and the period of effectiveness of the
Shelf Registration Statement provided for in Section 2(b)
above and the Exchange Offer Registration Statement pro-
vided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving
of such notice to and including the date when the Initial
Purchaser, the Holders of the Notes and any known Partici-
pating Broker-Dealer shall have received such amended or
supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the appli-
cable Registration Statement, the Company will provide a
CUSIP number for the Notes or Exchange Notes, as the case
may be, and provide the applicable trustee with printed
certificates for the Notes or Exchange Notes, as the case
may be, in a form eligible for deposit with The Depository
Trust Company.
(l) The Company will comply with all rules and regu-
lations of the Commission to the extent and so long as
they are applicable to the Registered Exchange Offer or
the Shelf Registration and will make generally available
to its securities holders (or otherwise provide in accor-
dance with Section 11(a) of the Securities Act) an earn-
ings statement satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45 days after the end
of a 12-month period (or 90 days, if such period is a fis-
cal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date
of the Shelf Registration, which statement shall cover
such 12-month period.
(m) The Company shall cause the Indenture (or an
indenture substantially identical to the Indenture in the
case of a Registered Exchange Offer) to be qualified under
the Trust Indenture Act of 1939, as amended.
(n) The Company may require each Holder of the Notes
to be sold pursuant to the Shelf Registration Statement to
<PAGE>
furnish to the Company such information regarding the
Holder and the distribution of the Notes as the Company
may from time to time reasonably require for inclusion in
the Shelf Registration Statement.
(o) The Company shall enter into such customary
agreements (including if requested an underwriting agree-
ment in customary form) and take all such other action, if
any, as any Holder of the Notes shall reasonably request
in order to facilitate the disposition of the Notes pursu-
ant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Com-
pany shall (i) make reasonably available for inspection by
the Holders of the Notes, any underwriter participating in
any disposition pursuant to the Shelf Registration State-
ment and any attorney, accountant or other agent retained
by the Holders of the Notes or any such underwriter all
relevant financial and other records, pertinent corporate
documents and properties of the Company and (ii) cause the
Company's officers, directors and employees to supply all
relevant information reasonably requested by the Holders
of the Notes or any such underwriter, attorney, accountant
or agent in connection with the Shelf Registration State-
ment; provided that the foregoing inspection and informa-
tion gathering shall be coordinated on behalf of the par-
ties (other than the Initial Purchaser), by one counsel
designated by and on behalf of such parties as described
in Section 4.
(q) In the case of the Registered Exchange Offer,
the Company shall (i) make reasonably available for
inspection by the Initial Purchaser, any known Partici-
pating Broker-Dealer and any attorney, accountant or other
agent retained by the Initial Purchaser, such Partici-
pating Broker-Dealer all relevant financial and other
records, pertinent corporate documents and properties of
the Company and (ii) cause the Company's officers, direc-
tors and employees to supply all relevant information rea-
sonably requested by the Initial Purchaser, such Partici-
pating Broker-Dealer or any such attorney, accountant or
agent in connection with the Exchange Offer Registration
Statement; provided that the foregoing inspection and
information gathering shall be coordinated on behalf of
the parties (other than the Initial Purchaser), by one
counsel designated by and on behalf of such parties as
described in Section 4.
(r) In the case of any Shelf Registration, the Com-
pany, if requested by any Holder of the Notes or, if
applicable, the Private Exchange Notes, shall cause its
counsel to deliver an opinion relating to the Notes or, if
<PAGE>
applicable, the Private Exchange Notes, in customary form,
cause its officers to execute and deliver all customary
documents and certificates requested by any underwriters
of the Notes or, if applicable, the Private Exchange
Notes, and cause its independent public accountants to
provide to the selling Holders of the Notes or, if appli-
cable, the Private Exchange Notes, and any underwriter
therefor a comfort letter in customary form.
(s) In the case of the Registered Exchange Offer, if
requested by the Initial Purchaser or any known Partici-
pating Broker-Dealer, the Company shall cause its outside
counsel to deliver to the Initial Purchaser or such Par-
ticipating Broker-Dealer a signed opinion in the form set
forth in Section 5(c)(A) of the Purchase Agreement with
such changes as are customary in connection with the prep-
aration of a registration statement and shall cause its
independent public accountants to deliver to the Initial
Purchaser or such Participating Broker-Dealer a comfort
letter in customary form.
4. Registration Expenses. The Company shall bear
all expenses incurred in connection with the performance of its
obligations under Sections 1 through 3 hereof (including the
reasonable fees and expenses of Cahill Gordon & Reindel, coun-
sel to the Initial Purchaser, incurred in connection with the
Registered Exchange Offer) and, in the event of a Shelf Regis-
tration, shall bear or reimburse the Holders of the Notes or,
if applicable, the Private Exchange Notes for the reasonable
fees and disbursements of one firm of counsel designated by the
Holders of a majority in principal amount of the Notes and, if
applicable, the Private Exchange Notes to act as counsel for
the Holders of the Notes and, if applicable, the Private
Exchange Notes in connection therewith, which counsel shall be
reasonably satisfactory to the Company.
5. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Holder of the Notes, or, if
applicable, the Private Exchange Notes and each person, if any,
who controls such Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act and each
director, officer, employee or agent of such Holder and each
director, officer, employee or agent of each such controlling
person (each Holder, such controlling persons and each such
director, officer, employee and agent are referred to collec-
tively as the "Indemnified Parties") from and against any
losses, claims, damages or liabilities, joint or several, or
any actions in respect thereof (including, but not limited to,
any losses, claims, damages, liabilities or actions relating to
purchases and sales of the Notes, or, if applicable, the Pri-
vate Exchange Notes), to which each Indemnified Party may
become subject under the Securities Act, the Exchange Act or
<PAGE>
otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or
supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the state-
ments therein not misleading, and shall reimburse, as incurred,
the Indemnified Parties for any legal or other expenses reason-
ably incurred by them in connection with investigating or
defending or preparing to defend against or appearing as a
third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof; provided, how-
ever, that the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in a Registra-
tion Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf
Registration in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such
Holder specifically for inclusion therein; provided, further,
that (A) the Company shall not be obligated to indemnify or
hold harmless any Indemnified Party in respect of any loss,
claim, damage, liability or action to the extent that any such
loss, claim, damage, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in a preliminary Registration
Statement or preliminary prospectus if the applicable Holder or
the Initial Purchaser failed to deliver a copy of a final pro-
spectus or an amended or supplemented Registration Statement or
prospectus that was made available by the Company to such
Indemnified Party prior to the applicable sale to the person or
persons asserting the claim which is the basis of indemnifica-
tion and such final prospectus or amended or supplemented Reg-
istration Statement or prospectus cured such defect and
(B) this indemnity agreement will be in addition to any lia-
bility which the Company may otherwise have to such Indemnified
Party. The Company will not settle or compromise or consent to
the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Indemnified Party
or any person who controls such Indemnified Party within the
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act is a party to such claim, action, suit or pro-
ceeding) without the prior written consent of such Indemnified
Party, which consent shall not be unreasonably withheld, unless
such settlement, compromise or consent includes an uncondi-
tional release of such Indemnified Party and each such control-
ling person from all liability arising out of such claim,
action, suit or proceeding. No Indemnified Party will settle
or compromise or consent to the entry or any judgment in any
<PAGE>
pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought without the
prior written consent of the Company (which consent will not be
unreasonably withheld). The Company shall also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distri-
bution (as described in such Registration Statement), their
officers and directors and each person who controls such per-
sons (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Holders of the
Notes if requested by such Holders.
(b) The Company agrees to indemnify and hold harm-
less the Initial Purchaser, any Participating Broker-Dealer and
each person, if any, who controls the Initial Purchaser or such
Participating Broker-Dealer within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act and each
director, officer, employee or agent of the Initial Purchaser
or such Participating Broker-Dealer and each director, officer,
employee or agent of each such controlling person (the Initial
Purchaser,any Participating Broker-Dealer, such controlling
persons and each such director, officer, employee and agent of
such Participating Broker-Dealer or such controlling person are
referred to collectively as the "Exchange Offer Indemnified
Parties") from and against any losses, claims, damages or lia-
bilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages,
liabilities or actions relating to purchases and sales of
Exchange Notes), to which each Exchange Offer Indemnified Party
may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabili-
ties or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact con-
tained in the Exchange Offer Registration Statement or prospec-
tus contained therein or in any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Exchange
Offer Indemnified Parties for any legal or other expenses rea-
sonably incurred by them in connection with investigating or
defending or preparing to defend against or appearing as a
third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof; provided, how-
ever, that the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any Exchange
Offer Registration Statement or prospectus contained therein or
in any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by
<PAGE>
or on behalf of the Initial Purchaser, such Participating
Broker-Dealer specifically for inclusion therein; provided,
further, that (A) the Company shall not be obligated to indem-
nify or hold harmless any Exchange Offer Indemnified Party in
respect of any loss, claim, damage, liability or action to the
extent that any such loss, claim, damages, liability or action
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in a pre-
liminary Registration Statement or preliminary prospectus if
the Initial Purchaser or applicable Participating Broker-Dealer
failed to deliver a copy of, a final prospectus or an amended
or supplemented Registration Statement or prospectus that was
made available by the Company to such Exchange Offer Indem-
nified Party prior to the applicable sale to the person or per-
sons asserting the claim which is the basis of indemnification
and such final prospectus or amended or supplemented Registra-
tion Statement or prospectus cured such defect and (B) this
indemnity agreement will be in addition to any liability which
the Company may otherwise have to such Exchange Offer Indem-
nified Party. The Company will not settle or compromise or
consent to the entry of any judgment in any pending or threat-
ened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such
Exchange Offer Indemnified Party or any person who controls
such Exchange Offer Indemnified Party within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act is a party to such claim, action, suit or proceeding) with-
out the prior written consent of such Exchange Offer Indem-
nified Party, which consent shall not be unreasonably withheld,
unless such settlement, compromise or consent includes an
unconditional release of such Exchange Offer Indemnified Party
and each such controlling person from all liability arising out
of such claim, action, suit or proceeding. No Exchange Offer
Indemnified Party will settle or compromise or consent to the
entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
may be sought without the prior written consent of the Company
(which will not be unreasonably withheld).
(c) Each Holder of the Notes or, if applicable, Pri-
vate Exchange Notes, severally and not jointly, will indemnify
and hold harmless the Company, each director and officer of the
Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Sec-
tion 20 of the Exchange Act from and against any losses,
claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such director, officer or
controlling person may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement or prospectus or in
<PAGE>
any amendment or supplement thereto or in any preliminary pro-
spectus relating to a Shelf Registration, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omis-
sion or alleged omission was made in reliance upon and in con-
formity with written information furnished to the Company by or
on behalf of such Holder specifically for inclusion therein;
and, subject to the limitation set forth immediately preceding
this clause, shall reimburse, as incurred, the Company for any
legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection
with the investigating or defending or preparing to defend
against or appearing as a third-party witness in connection
with any loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company
or any of its directors, officers or controlling persons.
(d) Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any
action or proceeding (including a governmental investigation),
such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a), (b) or (c)
above unless and to the extent it did not otherwise learn of
such action and such failure results in the forfeiture by the
indemnifying party of substantial rights or defenses and
(ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a), (b) or
(c) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be enti-
tled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly noti-
fied, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that
if the defendants in any such action include both the indem-
nified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be one or
more legal defenses available to it and/or other indemnified
parties which are different from or additional to those avail-
able to the indemnifying party, the indemnifying party shall
not have the right to direct the defense of such action on
behalf of such indemnified party or parties and such indem-
nified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to
<PAGE>
such indemnified party of its election so to assume the defense
thereof and approval by such indemnified party of counsel
appointed to defend such action, which approval shall not be
unreasonably withheld, the indemnifying party will not be lia-
ble to such indemnified party under this Section 5 for any
legal or other expenses, other than reasonable costs of inves-
tigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified
party shall have employed separate counsel in accordance with
the proviso to the next preceding sentence (it being under-
stood, however, that in connection with such action the indem-
nifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one
action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations
or circumstances) or (ii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(e) In circumstances in which the indemnity agree-
ment provided for in the preceding paragraphs of this Section 5
is unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) (other than by reason of excep-
tions provided in such Section 5), each indemnifying party, in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabili-
ties (or actions in respect thereof), in such proportion as is
appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes
or (ii) if the allocation provided by the foregoing clause (i)
is not permitted by applicable law, not only such relative ben-
efits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other
in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof). The
relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omis-
sion to state a material fact relates to information supplied
by the Company on the one hand or such Holder or such other
indemnified person, as the case may be, on the other, the par-
ties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the cir-
cumstances. The Company and each indemnified party agrees that
it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the
<PAGE>
equitable considerations referred to in the first sentence of
this paragraph (e). Notwithstanding any other provision of
this Section 5(e), the Holders of the Notes or, if applicable,
the Private Exchange Notes shall not be required to contribute
any amount in excess of the amount by which the net proceeds
received by such Holders from the sale of the Notes or the Pri-
vate Exchange Notes, as the case may be, pursuant to a Regis-
tration Statement exceeds the amount of damages which such
Holders have otherwise been required to pay in respect of the
same or a similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any per-
son who was not guilty of such fraudulent misrepresentation.
For purposes of this paragraph (e), each director, officer,
employee and agent of any indemnified party and each person, if
any, who controls such indemnified party within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such indem-
nified party and each director and officer of the Company, and
each person, if any, who controls the Company within the mean-
ing of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the
Company.
(f) The agreements contained in this Section 5 shall
survive the sale of the Notes, the Exchange Notes or, if appli-
cable, the Private Exchange Notes pursuant to a Registration
Statement and shall remain in full force and effect, regardless
of any termination or cancellation of the Indenture or any
investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances.
(a) Additional interest at a rate of 0.5% per annum of the
principal amount of the Notes (the "Additional Interest") shall
be assessed as follows:
(i) if the Exchange Offer Registration Statement is
not filed with the Commission by the Filing Deadline,
then, commencing on the Filing Deadline, Additional Inter-
est shall be assessed on the Notes;
(ii) if the Registered Exchange Offer is not com-
pleted or a Shelf Registration is not declared effective
by the Commission by the Completion Deadline, then, com-
mencing on the Completion Deadline, Additional Interest
shall be assessed on the Notes; and
(iii) if (A) the Company has not exchanged Exchange
Notes for all the Notes validly tendered in accordance
with the terms of the Registered Exchange Offer on or
prior to 30 business days after the date on which the
Exchange Offer Registration Statement was declared
<PAGE>
effective, or (B) if applicable, the Shelf Registration
Statement has been declared effective and it ceases to be
effective prior to three years (or such later date if such
three-year period is extended pursuant to Section 3(j)
above or such shorter period as is provided in
Section 2(b)) from the Issue Date, then Additional Inter-
est shall be assessed on the Notes commencing on (x) the
31st business day after such effective date in the case of
(A) above, or (y) the day such Shelf Registration State-
ment ceases to be effective in the case of (B) above;
provided, however, that (1) upon the filing of the Exchange
Offer Registration Statement or the Completion Deadline in the
case of (i) above, (2) upon completion of the Registered
Exchange Offer or the effectiveness of the Shelf Registration
Statement in the case of (ii) above, or (3) upon the exchange
of Exchange Notes for all the Notes validly tendered in accor-
dance with the terms of the Registered Exchange Offer, or upon
the effectiveness of the Shelf Registration Statement which has
ceased to remain effective prior to three years (or such later
date if extended pursuant to Section 3(j) above or such shorter
period as is provided in Section 2(b)) from the date of origi-
nal issuance of the Notes in the case of (iii) above, Addi-
tional Interest on the Notes as a result of such clause (i),
(ii) or (iii) shall immediately cease to accrue.
(b) Any amount of Additional Interest due pursuant
to clauses (i), (ii) or (iii) of Section 6(a) above will be
payable in cash semiannually in arrears on each Interest Pay-
ment Date (as defined in the Notes), commencing with the first
such Interest Payment Date occurring after any such Additional
Interest commences to accrue. The amount of Additional Inter-
est will be determined by multiplying the Additional Interest
by a fraction, the numerator of which is the number of days
such Additional Interest rate was applicable during such period
determined on the basis of a 360-day year comprised of twelve
30-day months, and the denominator of which is 360.
(c) If the Company effects the Registered Exchange
Offer, the Company will be entitled to close the Registered
Exchange Offer provided that the Company has accepted all the
Notes theretofore validly tendered in accordance with the terms
of the Registered Exchange Offer.
7. Miscellaneous.
(a) Amendments and Waivers. The provisions hereof
may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given, except by the Company and the written consent of Holders
of a majority in aggregate principal amount of the Notes,
determined in accordance with the terms of the Indenture.
<PAGE>
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand delivery, first-class mail, telex, telecopy, or air cou-
rier which guarantees overnight delivery:
(1) if to a Holder of the Notes, in accordance with
Section 10.02 of the Indenture, with a copy to the Initial
Purchaser as follows:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Michael L. Offen
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention : Michael A. Becker, Esq.
(2) if to the Initial Purchaser, at the addresses
specified in Section 7(b)(1);
(3) if to the Company, at its address as follows:
c/o ISP Management Company Inc.
1361 Alps Road
Wayne, New Jersey 07970
Attention: General Counsel
All such notices and communications to the Company
shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by recipi-
ent's telecopy operator, if telecopied; and on the day deliv-
ered, if sent by overnight air courier guaranteeing next day
delivery. All such notices and communications to the Holders
shall be deemed to have been duly given if given as provided in
Section 10.02 of the Indenture.
(c) Successors and Assigns. The provisions hereof
shall be binding upon the Company and its successors and
assigns.
(d) Headings. The headings herein are for conve-
nience of reference only and shall not limit or otherwise
affect the meaning hereof.
(e) Severability. If any one or more of the provi-
sions contained herein, or the application thereof in any
<PAGE>
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
<PAGE>
If the foregoing is in accordance with your under-
standing of our agreement, please sign and return to the Com-
pany a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between
the Initial Purchaser and the Company in accordance with its
terms.
Very truly yours
ISP HOLDINGS INC.
By:/s/ James P. Rogers
-----------------------
Name: James P. Rogers
Title: Senior Vice President
Confirmed and accepted as of
the date first above written:
BEAR, STEARNS & CO. INC.
By:/s/ J. Andrew Bugas
----------------------
Name: J. Andrew Bugas
Title: Senior Managing Director
<PAGE>
EXHIBIT 10.6
AMENDMENT
AMENDMENT No. 5, dated as of October 18, 1996, to AMENDED AND RESTATED
MANAGEMENT AGREEMENT dated as of March 3, 1992 (the "Agreement"), as previously
amended by Amendments dated as of January 1, 1994, May 31, 1994, December 31,
1994 and December 31, 1995, among GAF Corporation ("GAF"), ISP Holdings Inc.
("ISP Holdings"), G-I Holdings Inc. ("G-I Holdings"), G Industries Corp.
("Industries"), Merick Inc. ("Merick"), GAF Chemicals Corporation ("Chemicals"),
GAF Building Materials Corporation ("Building Materials"), GAF Broadcasting
Company, Inc. ("Broadcasting"), Building Materials Corporation of America
("BMCA"), U.S. Intec, Inc. ("USI"), and International Specialty Products Inc.
(the "Company").
WHEREAS, ISP Holdings desires to utilize the services provided by the
Company under the Agreement, and the Company desires to provide to ISP Holdings
such services;
NOW, THEREFORE, the parties hereby amend the Agreement as follows:
1. Section 3 of the Agreement is amended, effective as of the date
hereof, by adding the following thereto:
"In addition, ISP Holdings shall pay the Company a management
fee at the rate of $8,333.33 per month for each calendar month
(or portion thereof) during which the Company provides
Services to ISP Holdings hereunder."
2. Effective as of the date hereof, ISP Holdings shall become to a
party to the Agreement, and shall constitute a member of the "Overhead Group"
(as defined in the Agreement).
1
<PAGE>
3. In all other respects, the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
GAF CORPORATION INTERNATIONAL SPECIALTY
ISP HOLDINGS INC. PRODUCTS INC.
G-I HOLDINGS INC.
G INDUSTRIES CORP.
MERICK INC.
GAF CHEMICALS CORPORATION
GAF BUILDING MATERIALS CORPORATION
GAF BROADCASTING COMPANY, INC.
BUILDING MATERIALS CORPORATION By: /s/James P. Rogers
OF AMERICA -----------------------------
U.S. INTEC, INC. Name: James P. Rogers
Title: Senior Vice President
By: /s/James P. Rogers
------------------------------
Name: James P. Rogers
Title: Senior Vice President
2
<PAGE>
EXHIBIT 10.7
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of October 18, 1996, among GAF
Corporation, a Delaware corporation (including its successors "GAF"), G-I
Holdings Inc., a Delaware corporation (including its successors "G-I Holdings"),
G Industries Corp., a Delaware corporation (including its successors "G
Industries"), GAF Chemicals Corporation, a Delaware corporation (including its
successors "GCC"), and ISP Holdings Inc., a Delaware corporation (including its
successors "ISP Holdings").
W I T N E S S E T H
WHEREAS, GAF intends to effect a series of transactions (the "Spin Off
Transactions") involving its subsidiaries and certain assets of its subsidiaries
that will result, among other things, in the capital stock of ISP Holdings being
distributed to the stockholders of GAF;
WHEREAS, the principal components of the Spin Off Transactions and the
conditions to the effectiveness thereof are described in that certain Offering
Memorandum of ISP Holdings dated October 15, 1996 (the "Offering Memorandum" and
capitalized terms used herein not otherwise defined herein having the meanings
assigned to them therein) relating to ISP Holdings' 9% Senior Notes due 2003;
WHEREAS, GAF, G-I Holdings, G Industries, GCC, on the one hand, and ISP
Holdings, on the other hand, desire to indemnify and hold the other harmless
with respect to certain liabilities following consummation of the Spin Off
Transactions.
NOW THEREFORE, in consideration of the mutual promises and subject to the
terms and conditions contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 General. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Accrued Tax Liabilities: all Liabilities of ISP Holdings and its
Post Spin Subsidiaries relating to Taxes.
<PAGE>
Affiliate: with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified Person; provided,
however, that for purposes of this Agreement, ISP Holdings and its Post Spin
Subsidiaries shall not be deemed to be Affiliates of any member of the GAF Group
and no member of the GAF Group shall be deemed to be an Affiliate of ISP
Holdings and its Post Spin Subsidiaries.
Asbestos Liabilities: any claim, demand, Liability or obligation,
known or unknown, contingent or otherwise, accrued or unaccrued, for which GAF
or any Affiliate (which solely for purposes of this definition shall include ISP
Holdings, its Post Spin Subsidiaries and their respective Affiliates) thereof is
responsible or alleged to be responsible relating to, directly or indirectly,
the manufacture, sale, distribution, use or installation of asbestos or
asbestos-containing products or materials, whether in respect of personal injury
or property damage and all investigative and defense costs related thereto
whether or not reimbursable by insurance.
Claim of Environmental Liability: any claims or demands asserted,
and any Liabilities, obligations, judgments, costs, penalties, expenses or
damages known or unknown, disputed or undisputed, relating to, resulting from or
arising from, directly or indirectly, any of the following matters for which any
member of the GAF Group is liable or responsible: (a) any suit, action,
administrative proceeding, notice, investigation or demand asserted or
threatened by any third party, including any Governmental Authority, arising
under or relating, directly or indirectly, to any Environmental Law; (b)
requirements imposed by any Environmental Law, including costs of remediation,
restoration or costs incurred in complying with Environmental Laws; or (c)
personal injury, bodily injury or property damage as a result of the presence or
Release of Hazardous Substances; and all investigative and defense costs related
thereto whether or not reimbursable by insurance.
Environmental Law: any and all statutes, ordinances, rules,
regulations, orders, directives or requirements of any Governmental Authority
which regulate or govern or are related to Hazardous Substances in any way.
2
<PAGE>
Environmental Matter: matters or circumstances relating to, directly
or indirectly, any actual or potential Claim of Environmental Liability.
GAF Group: means GAF, its Post Spin Subsidiaries and their
respective Affiliates.
GAF Liabilities: all of the Liabilities of the GAF Group (other than
the Spin Off Tax Liabilities), including Asbestos Liabilities, Environmental
Matters, Plan Liabilities, Litigation Matters and Liabilities for Taxes of the
GAF Group, whether arising before, during or after the Spin Off Transactions.
GAF Plan: any bonus, deferred compensation, incentive compensation,
savings, stock purchase, pension, profit sharing or retirement plan, or any
similar plan, program or arrangement, whether formal or informal and whether
legally binding or not, maintained or contributed to by any member of the GAF
Group.
Governmental Authority: any nation, government or legislature or any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, taxation or administrative
functions of or pertaining to government.
Hazardous Substance: any element, compound, mixture, substance,
toxic substance, hazardous substance, hazardous materials, toxic waste,
hazardous waste, pollutant or contaminant including, without limitation,
asbestos and asbestos-containing products, as defined or regulated by:
Environmental Laws, including without limitation, the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601 et seq., (CERCLA), the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq., (RCRA), the Clean Air Act, as amended,
42 U.S.C. Section 7401 et seq., (CAA), the Emergency Planning and Community
Right to Know Act, as amended, 42 U.S.C. Section 11001 et seq., (EPCRKA), the
Safe Drinking Water Act, as amended, 42 U.S.C. Section 300 et seq. (SDWA), the
Pollution Prevention Act of 1990, as amended, 42 U.S.C. Section 13101 et seq.
(PPA), the Clean Water Act, as amended, 33 U.S.C. Section 1251 et seq. (CWA),
the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C.
Section 136 et seq. (FIFRA), the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq., (TSCA), and all state and local statutes, laws, or
ordinances corresponding
3
<PAGE>
to the foregoing federal statutes, or relating to any environmental matter,
together with any amendments to any of the foregoing state, local and federal
statutes, laws, ordinances, all regulations promulgated under the foregoing
state, local and federal statutes, laws or ordinances, all substitutions of the
foregoing state, local and federal statutes, laws or ordinances, as well as
words of similar connotation, import or meaning referred to in any other
federal, state or local statutes, law, ordinance, rule or regulation concerning
the environment.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification pursuant to Article II, any and all losses, liabilities,
damages, claims, demands, judgments or settlements of any nature or kind, known
or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated,
including all reasonable costs and expenses (legal, accounting or otherwise as
such costs are incurred) relating thereto, suffered by such Indemnitee with
respect to such claim.
Indemnifying Party: a Person who or which is obligated under this
Agreement to provide indemnification.
Indemnitee: a Person who may seek indemnification under this
Agreement.
ISP: International Specialty Products Inc., a Delaware corporation.
ISP Holdings Liabilities: (i) all Liabilities of ISP and its
Subsidiaries, (ii) all Liabilities relating to the Senior Notes, the Series B
Notes, the Exchange Offer Notes and any exchange notes issued by ISP Holdings in
exchange for the Exchange Offer Notes, (iii) all other Liabilities reflected in
the pro forma consolidated balance sheet of ISP Holdings or the notes thereto as
set forth in the Offering Memorandum and (iv) the Accrued Tax Liabilities, and
other than, in each case, the GAF Liabilities and the Spin Off Tax Liabilities.
Liabilities: all debts, liabilities, expenses,
costs and obligations of any kind, whether accrued, fixed,
contingent, liquidated, unliquidated, or reflected on a
balance sheet and whenever arising, whether or not covered
by insurance.
4
<PAGE>
Litigation Matters: all matters relating to claims, actions, suits
or other proceedings, whether at law or in equity, pending at the Spin Off Date
against any member of the GAF Group and all such matters that arise or commence
after the Spin Off Date with respect to actions or omissions by a member of the
GAF Group prior to the Spin Off Date, other than a claim, action, suit or other
proceeding commenced after the Spin Off Date against ISP Holdings, its Post Spin
Subsidiaries or any of their respective Affiliates to the extent relating to an
ISP Holdings Liability.
Person: an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Plan Liabilities: all Liabilities relating to a GAF Plan. but only
to the extent relating to employees or former employees of the GAF Group.
Post Spin Subsidiaries: with respect to any Person, a Subsidiary of
such Person after giving effect to the Spin Off Transactions.
Release: any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including, without limitation, the movement of Hazardous
Substances through ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata.
Representative: with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants,
counsel or representatives.
Spin Off Date: the date on which the Spin Off Transactions are
effected.
Spin Off Tax Liabilities: any Liability for Taxes (net of any Tax
benefits realized by an Indemnitee) that may be payable with respect to the Spin
Off Transactions.
Subsidiary: with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, more than 50% of the stock or other equity
5
<PAGE>
interest entitled to vote on the election of members to the board of directors
or similar governing body.
Tax: all taxes of any kind whatsoever, including federal, state,
local or foreign taxes, levies, imposts, duties, licenses, registration fees and
charges of any nature whatsoever, unemployment taxes and social security taxes,
including interest and penalties thereon.
Third Party Claim: any claim, suit, arbitration inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal asserted by a
Person who is not an Indemnitee.
ARTICLE II
EFFECTIVENESS, ASSUMPTION AND INDEMNIFICATION
2.1 Effectiveness and Survival of Agreement. This Agreement shall
only be effective if, and shall have no force and effect unless, the Spin Off
Transactions are consummated. In the event that the Spin Off Transactions are
consummated, all covenants and agreements of the parties contained in this
Agreement shall survive the Spin Off Date.
2.2 Indemnification and Release.
(a) (i) GAF and G-I Holdings shall jointly and severally indemnify,
defend and hold harmless ISP Holdings, its Post Spin Subsidiaries and each of
their respective present and future Representatives and Affiliates from and
against all GAF Liabilities and any and all Indemnifiable Losses of ISP
Holdings, its Post Spin Subsidiaries and each of their respective
Representatives and Affiliates arising out of or due to, directly or indirectly,
the GAF Liabilities, whether such GAF Liabilities arose before, or arise after,
the Spin Off Date.
(ii) GAF, G-I Holdings, G Industries and GCC shall jointly and
severally indemnify, defend and hold harmless ISP Holdings, its Post Spin
Subsidiaries and each of their respective Representatives and Affiliates from
and against all Spin Off Tax Liabilities and any and all Indemnifiable Losses of
ISP Holdings, its Post Spin Subsidiaries and each of their respective
Representatives
6
<PAGE>
and Affiliates arising out of or due to, directly or indirectly, the Spin Off
Tax Liabilities.
(iii) GAF, G-I Holdings, G Industries and GCC hereby release and
discharge ISP Holdings, its Post Spin Subsidiaries and their respective
Representatives and Affiliates from all Liabilities for which ISP Holdings is
indemnified under Section 2.2(a)(i) or (ii) of this Agreement.
(b) (i) ISP Holdings shall indemnify, defend and hold harmless the
GAF Group and each of their respective Representatives and Affiliates from and
against all ISP Holdings Liabilities and any and all Indemnifiable Losses of the
GAF Group and each of their respective Representatives and Affiliates arising
out of or due to, directly or indirectly, the ISP Holdings Liabilities, whether
such ISP Holdings Liabilities arose before, or arise after, the Spin Off Date.
(ii) ISP Holdings hereby releases and discharges the GAF Group and
each of their Representatives and Affiliates from all Liabilities for which the
GAF Group is indemnified under Section 2.2(b)(i) of this Agreement.
2.3 Procedure for Indemnification.
(a) If an Indemnitee shall receive notice of the assertion of any
Third Party Claim with respect to which an Indemnifying Party may be obligated
under this Agreement to provide indemnification, such Indemnitee shall give such
Indemnifying Party prompt notice thereof after becoming aware of such Third
Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section 2.3 shall not relieve any Indemnifying party
of its obligations under this Article II, except to the extent that such
Indemnifying Party is materially prejudiced thereby. Such notice shall describe
the Third Party Claim in reasonable detail, and, if practicable, shall indicate
the estimated amount of the Indemnifiable Loss that has been or may be sustained
by such Indemnitee.
(b) The Indemnifying Party, at such Indemnifying Party's own expense
and through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably satisfactory to the Indemnitee), may elect to defend any Third Party
Claim. If the Indemnifying Party elects to defend a Third Party Claim, it shall,
within 30 Business
7
<PAGE>
Days after receiving notice of such Third Party Claim (or sooner, if the nature
of such Third Party Claim so requires), notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third Party
Claim. Such Indemnifying Party shall pay such Indemnitee's reasonable
out-of-pocket expenses incurred in connection with such cooperation. After
notice from an Indemnifying Party to an Indemnitee of its election to assume the
defense of a Third Party Claim, such Indemnifying Party shall not be liable to
such Indemnitee under this Article II for any legal or other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof.
If an Indemnifying Party elects not to defend against a Third Party Claim, or
fails to notify an Indemnitee of its election as provided in this Section 2.3,
such Indemnitee may defend, compromise and settle such Third Party Claim;
provided, however, that no such Indemnitee may compromise or settle any such
Third Party Claim without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
the Indemnifying Party shall not, without the written consent of the Indemnitee,
which consent shall not be unreasonably withheld, settle or compromise any Third
Party Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
Indemnitee of a written release from all Liabilities in respect of such Third
Party Claim.
(c) In the event an Indemnitee should have a claim (including any
potential claim) against any Indemnifying Party under this Article II that does
not involve a Third Party Claim, the Indemnitee shall give such Indemnifying
Party prompt notice of such claim; provided, however, that the failure of any
Indemnitee to give notice as provided in this Section 2.3 shall not relieve any
Indemnifying Party of its obligations under this Article II, except to the
extent that such Indemnifying Party is materially prejudiced thereby. Such
notice shall describe the claim (or potential claim) in reasonable detail, and,
if practicable, shall indicate the estimated amount of the Indemnifiable Loss
that has been or may be sustained by such Indemnitee. If the Indemnifying Party
does not notify the Indemnitee within 30 Business Days following its receipt of
such notice that the Indemnifying Party disputes its liability to the Indemnitee
under this Article II, such claim specified by the Indemnitee in such notice
shall be
8
<PAGE>
conclusively deemed a liability of the Indemnifying Party and the Indemnifying
Party shall pay the amount of such liability to the Indemnitee within five days
after expiration of such 30 Business Day period. If the Indemnifying Party
timely disputes its liability with respect to such claim, the Indemnifying Party
and the Indemnitee shall proceed in good faith to negotiate a resolution of such
dispute.
2.4 Remedies Cumulative. The remedies provided in this Article II
shall be cumulative and shall not preclude assertion by an Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
ARTICLE III
MISCELLANEOUS
Section 3.1 Notices. All communications hereunder will be in writing
and, if sent to ISP Holdings, will be mailed, delivered or telecopied and
confirmed to it at ISP Holdings Inc., c/o ISP Management Company Inc., 1361 Alps
Road, Wayne, New Jersey 07470, Attention: Secretary, telecopy number
201-628-4090, and if sent to GAF, G-I Holdings, G Industries or GCC, will be
mailed, delivered or telecopied and confirmed to it at GAF Corporation, 1361
Alps Road, Wayne, New Jersey 07470, Attention: Secretary, telecopy number
201-628-4090.
Section 3.2 Counterparts. This Indemnification Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all of such counterparts shall together constitute
one instrument.
Section 3.3 Governing Law. This Indemnification Agreement shall be
construed in accordance with the laws of the State of New York.
Section 3.4 Successors. This Indemnification Agreement shall inure
to the benefit of, and shall be binding upon, the successors and assigns of the
parties hereto.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement as of the date first above written.
ISP HOLDINGS INC.
By: /s/James P. Rogers
-------------------------------
Name: James P. Rogers
Title: Senior Vice President
GAF CORPORATION
By: /s/James P. Rogers
-------------------------------
Name: James P. Rogers
Title: Senior Vice President
G-I HOLDINGS INC.
By: /s/James P. Rogers
-------------------------------
Name: James P. Rogers
Title: Senior Vice President
G INDUSTRIES CORP.
By: /s/James P. Rogers
-------------------------------
Name: James P. Rogers
Title: Senior Vice President
GAF CHEMICALS CORPORATION
By: /s/James P. Rogers
-------------------------------
Name: James P. Rogers
Title: Senior Vice President
10
<PAGE>
EXHIBIT 10.14
GAF CORPORATION
1361 Alps Road
Wayne, New Jersey 07470
Samuel J. Heyman
Chairman and Chief Executive Officer
October 15, 1996
Dr. Peter Heinze
3 Quail Hill Road
Pittsburgh, PA 15238
Dear Peter:
I am pleased to confirm our offer and (with your counter-
signature to this letter) your acceptance of the position of President
and Chief Operating Officer, reporting to me, and member of the Board
of Directors, of International Specialty Products Inc. ("ISP"). This
offer is contingent upon approval of your appointment and this
Agreement by the ISP Board of Directors, the completion of final
reference checks, and the execution of the enclosed Confidentiality,
Invention and Non-Competition and Employee Arbitration Agreements.
Upon receipt of your counter-signature to this letter, I will
recommend that the Board approve your appointment and this Agreement.
The details of our understanding are as follows:
1. BASE SALARY. Your initial base salary will be $375,000 per
-----------
year, which is a monthly rate of $31,250.00. Your salary will be
reviewed on our common merit increase date of April 1, 1997 and any
increase will be prorated for 1997.
2. INCENTIVE COMPENSATION. You will be eligible to participate
----------------------
in ISP's Executive Incentive Compensation ("EIC") program. A brief
summary of the plan is attached for your information. You will be
paid EIC at the same time as EIC is paid to other participants in the
ISP EIC program. With respect to EIC:
(a) For 1996 we will provide you with a bonus equal to one
half of the difference between $385,000 and the bonus you receive from
your employer in respect of services performed for them by you in
1996.
(b) For years 1997 and thereafter, your EIC will be based
on your performance, as well as the performance of ISP. You
acknowledge that, except as provided in clause (a) above, there will
be no guaranteed EIC; however, assuming that you and ISP perform as we
hope and expect, you will have an EIC target of
<PAGE>
Dr. Peter Heinze
October 15, 1996
Page 2
80% of your base salary with an opportunity to receive up to 150% of
your base salary.
3. STOCK OPTIONS. I will recommend to the Compensation and
-------------
Pension Committee of the Board of Directors (the "Committee") that, at
the first meeting (the "Meeting") of the Committee after the
commencement of your employment, you be granted non-qualified options
to purchase 125,000 shares of ISP's common stock (the "Grant") under
the terms of the ISP 1991 Incentive Plan for Key Employees (the
"Plan"). Thereafter, you will be eligible for additional awards under
the Plan beginning in June, 1998. A copy of the Plan as currently in
effect is attached to this Agreement. In addition, I will recommend
at the Meeting that you be granted 31,250 shares of Future Leadership
Options ("Future Leadership Grant", together with the Grant, referred
to as the "Grants"), which will have an exercise price equal to the
greater of (1) the closing market price on the day of grant less $5.00
or (2) 50% of such closing market price. Notwithstanding the terms of
the Plan, the vesting of options issued to you pursuant to the 125,000
share Grant and the 31,250 share Future Leadership Grant, and only
those Grants, will accelerate upon a "Change in Control" of ISP. For
the purpose of this letter, Change in Control shall have the meaning
ascribed to such term in the Plan.
Furthermore, so long as you are an employee of ISP in good standing on
the date of each grant, you will be eligible for additional grants of
Future Leadership Options of:
18,750 shares January 1998
18,750 shares January 1999
18,750 shares January 2000
18,750 shares January 2001
18,750 shares January 2002
4. ISP BENEFIT PLANS. You will be eligible to participate in
-----------------
ISP benefit plans and programs, including medical, dental, group life
insurance, long-term disability, business travel accident, vacation
and the GAF Corporation Capital Accumulation Plan ("GAFCAP"), in the
same manner and to the same extent as other ISP executives.
5. RELOCATION. You will, within six months after the first day
----------
of your employment by ISP (the "Employment Date"), relocate your
principal residence either to New York, New York, or to a location in
New Jersey within 35 miles of 1361 Alps Road, Wayne, New Jersey,
whether through the execution of a contract to purchase an existing
house or to construct a new home. ISP will reimburse you for the
following items only: reasonable temporary living expenses for up to
90 days, reasonable legal, mortgage and
<PAGE>
Dr. Peter Heinze
October 15, 1996
Page 3
appraisal fees and survey costs relating to the purchase of your new
home, and reasonable moving expenses (of a moving company selected by
ISP), together with a tax gross-up for such items, all as in
accordance with ISP Relocation Policy. Simultaneously, with your
purchase of a home as provided in the first sentence of this
Paragraph, ISP (or its designee) shall purchase your Pittsburgh, PA
home for $715,000 in cash, upon terms and conditions customary for the
purchase and sale of residential homes in Pittsburgh, PA, provided,
that the purchase of your new home occurs within six months of the
Employment Date.
6. VACATION. You will be entitled to four weeks of paid
--------
vacation per year.
7. COMPANY AUTOMOBILE. ISP will provide you with a leased
------------------
automobile for your business and personal use in accordance with
company policy and Internal Revenue Service regulations.
8. BUSINESS TRAVEL. Within the United States, all business
---------------
travel by air will be coach class. Overseas business travel will
generally be business class.
9. TERMINATION BY ISP OTHER THAN FOR CAUSE. In the event ISP
---------------------------------------
terminates your employment at any time other than for cause, ISP will
continue to pay you your then base salary, on a semi-monthly basis,
from the last date of your employment until the last day of the
severance period (the "Severance Period"):
Termination Date Severance Period
---------------- ----------------
Before the first anniversary
of the Employment Date Eighteen Months
On or after the first
anniversary of Employment Date,
and before the third anniversary
of the Employment Date Twelve Months
On or after the third Period then
anniversary of Employment Date applicable to ISP executive
officers generally
In addition, in the event of a "Change in Control" of ISP and either
(a) ISP or its successor terminates your employment, other than for
cause, within twelve (12) months following the change in control, or
(b) you suffer, within twelve (12) months following the change in
control, a substantial and meaningful reduction, other than for cause,
in your then current responsibilities or
<PAGE>
Dr. Peter Heinze
October 15, 1996
Page 4
your then current salary and benefits, and you terminate your
employment with ISP or its successor within sixty (60) days of such
reduction in responsibilities or salary and benefits, you will
continue to receive your base salary, on a semi-monthly basis, in lieu
of any other severance, for twenty-four months following such
termination.
If at any time during the Severance Period you accept new
employment at a base salary equal to or higher than your base salary
on the date of termination of your employment by ISP, the severance
payments will cease at the effective date of such new employment. If
at any time during the Severance Period you accept new employment at a
base salary less than that in effect on the date of the termination of
your employment by ISP, or perform consulting services in which you
receive compensation, the severance payments will be reduced by the
amount of salary or consulting compensation you receive. You will be
eligible to participate in ISP's medical and dental plans under the
same terms as applicable to active employees of ISP, unless you
commence new employment during the Severance Period, in which event
such eligibility will terminate on the first date of such new
employment; however, during the Severance Period you will no longer be
eligible to participate in GAFCAP and ISP will not provide, and you
will not be eligible for, life insurance, long term disability,
business travel accident or any other insurance or to participate in
any other benefit plans or programs that ISP provides or makes
available to its employees. In no event will ISP have any obligation
to pay you any amount beyond the last day of the Severance Period,
irrespective of why your employment with ISP is terminated.
Furthermore, ISP shall have no obligation to make any termination
benefit available to you hereunder unless you execute at the request
of ISP a Separation and Release Agreement on terms reasonably
requested by ISP.
10. COMMENCEMENT OF EMPLOYMENT. You agree to commence your
--------------------------
employment with ISP no later than November 18, 1996.
11. NO CONTRACT OF EMPLOYMENT. You acknowledge that nothing in
-------------------------
this Agreement creates any obligation on the part of ISP to continue
to employ you in any capacity; rather, you are an employee at will and
your employment by ISP may be terminated at any time with or without
cause, provided however, that, following such termination, ISP will
remain responsible for any obligations ISP has expressly assumed in
this Agreement as a result of the termination of your employment.
<PAGE>
Dr. Peter Heinze
October 15, 1996
Page 5
Peter, I am excited that you will be joining our organization.
We are confident that you will play a key hands-on leadership role and
will make an invaluable contribution to ISP's future success.
Sincerely,
/s/ Samuel J. Heyman
SJH/ls
AGREED AND ACCEPTED:
/s/ Dr. Peter R. Heinze 10/16/96
-----------------------------
Dr. Peter R. Heinze
<PAGE>
Exhibit 12
ISP HOLDINGS INC.
RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
(Thousands, except ratio data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED PRO FORMA
-------------------------------------------- ------------------- -----------------------------
Nine Nine
Oct. 1, Sept. 29, Year Months Months
1991 1992 1993 1994 1995 1995 1996 1995 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income from Continuing
Operations Before
Income Taxes and
Extraordinary Items 75,682 85,782 49,823 72,484 106,102 81,205 98,202 60,352 46,892 63,889
Add:
Interest Expense 52,693 30,595 24,500 28,676 33,091 24,821 21,879 78,841 59,134 56,192
Company's 50% Share
of Joint Venture
Taxes 5,603 6,434 1,878 1,191 5,038 3,026 4,041 5,038 3,026 4,041
Company's 50% Share
of Joint Venture
Interest Expense 35 16 50 6 8 6 4 8 6 4
Interest Component of
Rental Expense 1,763 2,015 2,333 2,466 2,715 2,036 2,138 2,715 2,036 2,138
-------- -------- -------- -------- -------- -------- ---------- ------- -------- --------
Earnings Available for
Fixed Charges 135,776 124,842 78,584 104,823 146,954 111,094 126,264 146,954 111,094 126,264
======== ======== ======== ======== ======== ======== ========== ======= ======== ========
Fixed Charges:
- -------------
Interest Expense 52,693 30,595 24,500 28,676 33,091 24,821 21,879 78,841 59,134 56,192
Add:
Capitalized Interest 205 414 901 428 400 383 118 400 383 118
Company's 50% Share
of Joint Venture
Interest Expense 35 16 50 6 8 6 4 8 6 4
Interest Component of
Rental Expense 1,763 2,015 2,333 2,466 2,715 2,036 2,138 2,715 2,036 2,138
-------- -------- -------- -------- -------- -------- ---------- ------- -------- --------
Total Fixed Charges 54,696 33,040 27,784 31,576 36,214 27,246 24,139 81,964 61,559 58,452
======== ======== ======== ======== ======== ======== ========== ======= ======== ========
Ratio of Earnings to
Fixed Charges 2.48 3.78 2.83 3.32 4.06 4.08 5.23 1.79 1.80 2.16
======== ======== ======== ======== ======== ======== ========== ======= ======== ========
</TABLE>
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
--------------------
STATE OF
COMPANY INCORPORATION
------- -------------
Belleville Realty Corp. Delaware
International Specialty Products
Inc.(1) Delaware
ISP Management Company, Inc. Delaware
ISP Chemicals Inc. Delaware
ISP Newark Inc. Delaware
ISP Van Dyk Inc. Delaware
ISP Fine Chemicals Inc. Delaware
ISP Minerals Inc. Delaware
ISP Filters Inc. Delaware
ISP Technologies Inc. Delaware
ISP Mineral Products Inc. Delaware
ISP Environmental Services Inc. Delaware
Bluehall Incorporated Delaware
Verona Inc. Delaware
ISP Realty Corporation Delaware
ISP Real Estate Company, Inc. Delaware
ISP Investments Inc. Delaware
ISP Global Technologies Inc. Delaware
ISP International Filters
Inc. Delaware
ISP International Corp. Delaware
ISP (Puerto Rico) Inc. Delaware
ISP Andina, C.A. Venezuela
ISP Argentina S.A. Argentina
ISP Asia Pacific Pte Ltd. Singapore
ISP (Australasia) Pte Ltd. Australia
ISP (Belgium) N.V. Belgium
ISP (Belgium) International
N.V. Belgium
ISP do Brasil Ltda. Brazil
ISP (Canada) Inc. Canada
ISP Ceska Republika Spol,
S.R.O. Czech. Rep.
________________
(1) Approximately 83% of the common stock of International Specialty
Products Inc. is owned by ISP Holdings Inc..
<PAGE>
List of Subsidiaries
--------------------
STATE OF
COMPANY INCORPORATION
------- -------------
ISP (China) Limited China
ISP Filters (Canada) Inc. Canada
ISP Filters Pte Ltd. Singapore
ISP Global Operations
(Barbados) Inc. Barbados
ISP Global Technologies
(Belgium) S.A. Belgium
ISP Global Technologies
(Germany) Holding GmbH Germany
ISP Global Technologies
Deutschland GmbH Germany
HPF-Hanseatic
Filterprodukte GmbH Germany
International Specialty
Products ISP (France) S.A. France
ISP Ireland(2) Ireland
ISP Freight Services N.V. Belgium
ISP (Great Britain) Co. Ltd. England
ISP (Hong Kong) Limited Hong Kong
ISP (Italia) S.r.l. Italy
ISP (Japan) Ltd. Japan
ISP (Korea) Limited Korea
ISP Mexico, S.A. de C.V. Mexico
ISP (Norden) A.B. Sweden
ISP (Osterreich) Ges.m.g.h. Austria
ISP (Polska) Sp.z. o.p. Poland
ISP Sales (Barbados) Inc. Barbados
ISP Sales (U.K.) Limited Ireland
ISP (Singapore) Pte Ltd. Singapore
ISP (Switzerland) A.G. Switzerland
ISP (Thailand) Co., Ltd. Thailand
Chemfields Pharmaceuticals
Private Limited(3) India
__________________
(2) 25% owned by ISP (Italia) S.r.l.; 75% owned by International
Specialty Products ISP (France) S.A.
(3) 50.1% owned by ISP Global Technologies Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
ISP Holdings Inc.:
As independent public accountants, we hereby consent to the use of our report
and all references to our firm included in or made a part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
December 13, 1996
<PAGE>
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
____________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
_____________________
ISP HOLDINGS INC.
(Exact name of obligor as specified in its charter)
Delaware 51-0376469
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
ISP HOLDINGS INC.
818 Washington Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip code)
_____________________
Series B 9% Senior Notes due 2003
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 4th day of December, 1996.
THE BANK OF NEW YORK
By: /s/ VIVIAN GEORGES
-------------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,650,068
Interest-bearing balances .......... 738,260
Securities:
Held-to-maturity securities ........ 784,969
Available-for-sale securities ...... 2,033,407
Federal funds sold and securities
purchased under agreements to resell in
domestic offices of the bank:
Federal funds sold ................... 3,699,232
Securities purchased under
agreements to resell ................. 20,000
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................28,109,045
LESS: Allowance for loan and
lease losses ..............586,658
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 27,521,958
Assets held in trading accounts ...... 678,844
Premises and fixed assets (including
capitalized leases) ................ 608,217
Other real estate owned .............. 50,599
Investments in unconsolidated
subsidiaries and associated
companies .......................... 235,670
Customers' liability to this bank on
acceptances outstanding ............ 904,948
Intangible assets .................... 450,230
Other assets ......................... 1,299,464
-----------
Total assets ......................... $42,675,866
===========
<PAGE>
LIABILITIES
Deposits:
In domestic offices ................ $19,223,050
Noninterest-bearing .......7,675,758
Interest-bearing .........11,547,292
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,527,685
Noninterest-bearing ..........48,502
Interest-bearing .........11,479,183
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,498,351
Securities sold under agreements
to repurchase .................... 126,974
Demand notes issued to the U.S.
Treasury ........................... 231,865
Trading liabilities .................. 479,390
Other borrowed money:
With original maturity of one year
or less .......................... 2,521,578
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 905,850
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,543,657
-----------
Total liabilities .................... 39,099,580
-----------
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ........................... 2,124,231
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... ( 8,063)
Cumulative foreign currency transla-
tion adjustments ................... ( 7,832)
-----------
Total equity capital ................. 3,576,286
-----------
Total liabilities and equity
capital ............................ $42,675,866
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Alan R. Griffith ) Directors
Thomas A. Renyi )
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
________________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
________________________
ISP HOLDINGS INC.
(Exact name of obligor as specified in its charter)
Delaware 51-0376469
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
ISP HOLDINGS INC.
818 Washington Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip code)
________________________
Series B 9 3/4% Senior Notes due 2002
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 4th day of December, 1996.
THE BANK OF NEW YORK
By: /s/ VIVIAN GEORGES
-----------------------------
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1996,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,650,068
Interest-bearing balances .......... 738,260
Securities:
Held-to-maturity securities ........ 784,969
Available-for-sale securities ...... 2,033,407
Federal funds sold and securities
purchased under agreements to resell in
domestic offices of the bank:
Federal funds sold ................... 3,699,232
Securities purchased under
agreements to resell ................. 20,000
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................28,109,045
LESS: Allowance for loan and
lease losses ..............586,658
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 27,521,958
Assets held in trading accounts ...... 678,844
Premises and fixed assets (including
capitalized leases) ................ 608,217
Other real estate owned .............. 50,599
Investments in unconsolidated
subsidiaries and associated
companies .......................... 235,670
Customers' liability to this bank on
acceptances outstanding ............ 904,948
Intangible assets .................... 450,230
Other assets ......................... 1,299,464
-----------
Total assets ......................... $42,675,866
===========
<PAGE>
LIABILITIES
Deposits:
In domestic offices ................ $19,223,050
Noninterest-bearing .......7,675,758
Interest-bearing .........11,547,292
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,527,685
Noninterest-bearing ..........48,502
Interest-bearing .........11,479,183
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,498,351
Securities sold under agreements
to repurchase .................... 126,974
Demand notes issued to the U.S.
Treasury ........................... 231,865
Trading liabilities .................. 479,390
Other borrowed money:
With original maturity of one year
or less .......................... 2,521,578
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 905,850
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,543,657
-----------
Total liabilities .................... 39,099,580
-----------
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ........................... 2,124,231
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... ( 8,063)
Cumulative foreign currency transla-
tion adjustments ................... ( 7,832)
-----------
Total equity capital ................. 3,576,286
-----------
Total liabilities and equity
capital ............................ $42,675,866
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Alan R. Griffith ) Directors
Thomas A. Renyi )
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FORM S-4
REGISTRATION STATEMENT OF ISP HOLDINGS INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 14,080
<SECURITIES> 135,900
<RECEIVABLES> 60,327
<ALLOWANCES> 2,879
<INVENTORY> 107,969
<CURRENT-ASSETS> 491,003
<PP&E> 475,550
<DEPRECIATION> 159,960
<TOTAL-ASSETS> 1,460,389
<CURRENT-LIABILITIES> 201,002
<BONDS> 280,254
0
0
<COMMON> 0
<OTHER-SE> (1,707)
<TOTAL-LIABILITY-AND-EQUITY> 1,460,389
<SALES> 689,002
<TOTAL-REVENUES> 689,002
<CGS> 414,672
<TOTAL-COSTS> 414,672
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,091
<INCOME-PRETAX> 106,102
<INCOME-TAX> 38,727
<INCOME-CONTINUING> 55,069
<DISCONTINUED> (22,241)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,828
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE FORM S-4
REGISTRATION STATEMENT OF ISP HOLDINGS INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-29-1996
<CASH> 11,767
<SECURITIES> 99,952
<RECEIVABLES> 72,764
<ALLOWANCES> 2,916
<INVENTORY> 98,354
<CURRENT-ASSETS> 572,179
<PP&E> 482,416
<DEPRECIATION> 184,250
<TOTAL-ASSETS> 1,537,288
<CURRENT-LIABILITIES> 159,134
<BONDS> 239,760
0
0
<COMMON> 0
<OTHER-SE> 61,653
<TOTAL-LIABILITY-AND-EQUITY> 1,537,288
<SALES> 544,135
<TOTAL-REVENUES> 544,135
<CGS> 320,295
<TOTAL-COSTS> 320,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,879
<INCOME-PRETAX> 98,202
<INCOME-TAX> 35,647
<INCOME-CONTINUING> 51,753
<DISCONTINUED> 18,029
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,782
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
